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Shetland windfarm - Viking Energy


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Only when the 'CT surplus' bank account has enough money to buy something then it happens.

 

You're forgetting annual running costs of approx. £10 million (can't remember exact figure, please feel free to correct).

 

Even if you don't commit to new spending you still have to support the existing SCT run operations.

 

With no new income into SCT funds then it's just ever decreasing circles.

 

Or, as you may be suggesting, if you slash all SCT services and supported bodies then you get economic turmoil!

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The rents are claimed to be guaranteed regardless of profitability as understand it. This has guaranteed to co-operation of the landowners/tenants as they genuinely have nothing to lose and everything to gain for doing no more than signing the dotted line. Literally.

 

So a very small minority are gaurenteed millions of rent from the VE aka the charitable trust, is anyone else smelling a familiar rat :roll:

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we can charge them rental close to the profit figures that are being bandied about with the present proposals, at virtually zero risk to ourselves.

 

Far to simplistic. What company would invest twice as much money for the same level of profits?!

 

Yes, if we could force home an Act of Parliament similar to the Sullom Voe Act in the early seventies then we could potentially charge any electricity company rents accordingly on any windfarm built.

 

It's not as simplistic as double the investment for the same return for SSE as 100% owner either though. Firstly, if we believe the spin, the Shetland windfarm is going to have a far greater output from the same number of units than would be achieved further south, hence a far higher gross income. Secondly, I did say "close to the profit figures", not "the same as profit figures" and I also said also a charge per kw leaving the site, which could be where the real money actually came from. In addition we can afford to go for a lower return anyway, we'd have no interest to pay on borrowed money, nor an initial investment to recoup, every penny would be clean money just for letting them be there. If SSE aren't at least willing to come to the table and talk about it on the basis of such an arrangement, it's no place for us to be either best as I can see. We can afford to haggle on that basis, of course SSE won't argee to anything higher than makes them money, and the only way to find out how high they're willing to go to get this up and running is by holding out and haggling. As things stand it comes off very much as we've already put ourselves in a position of us needing SSE more than they need us, that was not smart IMHO, it should have been the other way around.

 

I fail to see what possible need there is for an equivalent Act to the Sullom Voe one, this is a wholly land based arrangement, and unlike oil, the national interest, and therefor pressure on it is miniscule by comparison. Surely it is purely a private business agreement between the landowner and the developer as to the terms agreed for the siting, or otherwise of the infrastructure. It matters not whether the vast majority of the site in question belongs (as it does) to one entity (SIC), or if it belongs to many, they've got to reach agreements with each one. If they need to lay their cable across the corner of Joannie Pundie's kale yaurd to get to the shore, and Joannie Pundie says, okay, but £x per inch to lay him, and £y per kw that flows through him, Joannie is perfectly entitled to do so, and they'll have to deal with him, regardless of what arrangement they've come to with any other owner. By being the majority owner the SIC would have that leverage over SSE as sole operator, and could, if they chose wring every possible penny out of SSE and plough that back in to the Charry Trust for all of Shetland's benefit, at zero risk to existing funds.

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Some interesting thoughts there Ghostrider. If your suggestions were at all workable then I would have been in favour of such an arrangement at a suitable return of income, but my gut feeling is despite how good a concept it might be, it might not be as easy to execute. Haven't really given it a lot of thought so I could be very wrong on this though.

 

Would like to hear David Thomson's views on such a solution but would suspect they haven't even considered it as your proposal clearly wouldn't haven't involved the burradale group.

 

Re. Shagger's smelly rat, if you're inferring that I am on the take here I can only stress, once again, that I am not evenly remotely close to getting a single penny out of this project.

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It was rather a forked question that I'd asked.

 

Question why no investment house has given their backing and why it has been turned into a 50/50 commercial venture as such to procure the relevant funds.

 

Fair enough. Did VE go looking for investment funding tho? News to me if they did.

 

Indeed. Would any advanced investment house dealing with Basel II risk adjusted capital have given them backing? Really only one answer.

 

So instead a union has been formed with local government with a trust under scrutiny and without a track record of delivering to shareholders (Shetland people) any value add! i.e. increasing investment capability through investment. By all means spend - but fill that pot too!

 

Sustainability is the word of the day/year/decade/century . . .

 

[edit]

Edited to make clear what I mean by value add

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Originally Published on the Shetland News website on 27 February, 2008

 

Blowing bread onto the table

 

THE VIKING windfarm project is still stimulating a healthy debate. The latest windfarm design will soon be released to the Shetland public, together with the outcomes of last year's extensive consultation process.

 

A planning application for the windfarm will be lodged this summer. A planning decision will be based on cold analysis of the facts as presented in the Environmental Impact Assessment, which is being prepared. The application will be analysed by amongst others Shetland Islands Council's planning staff and planning board, the Scottish Government and Scottish Ministers, Scottish Natural Heritage, the RSPB and the Scottish Environmental Protection Agency. The planning process will be an effective judge of whether or not the windfarm is environmentally acceptable.

 

Climate change is now accepted as a reality, as is the need to cut carbon emissions to try to do something about climate change before it's too late. The EU is in the process of setting mandatory requirements for 20 per cent of all Europe's energy to come from renewable sources by 2020. This could require a doubling of the UK's, already ambitious, targets for renewable electricity. The demand for, and value of, renewable electricity is only going to increase. Shetland is the windiest place in Europe and for the foreseeable future wind power is the only technology capable of meeting these targets.

 

We currently estimate that the Viking project would yield annual profits of around £18 million into the Shetland economy. Over and above this, it would pay out a disturbance payment of around £1.5-£2.5 million pounds per year. There is no blueprint for where this money would go, but it is expected that a substantial proportion would go to the communities in Shetland most directly affected by the windfarm.

 

In addition, rents would, quite rightly, be paid to people in return for using their land. The sum of around £2.5-£5 million per year would be paid to landowners. On crofting estates 50 per cent of this sum would be shared with crofting tenants. There are over 200 crofting tenants in the area under consideration. Approximately another £4 million would be introduced to the local economy every year through jobs, services and local supply chain activity.

 

The potential financial rewards to Shetland are significant by anyone's standards. The bulk of the money would flow directly into community funds. The ability of this community to develop and maintain its community facilities and services could be transformed at a time when rewards from the oil industry will be in very considerable decline.

 

In short, the windfarm has every prospect of putting financial bread on this community's table for generations to come, while helping contribute to international environmental efforts. For the project to proceed, it must be developed in the right places, in the right way and for the genuine long-term benefit of the Shetland community.

 

Yours faithfully,

Aaron Priest.

Project Manager- Viking Energy

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^^

 

(** MOD EDIT ** - just to remove above quote)

 

At least we are getting somewhere.

 

SCT invests or borrows £500 million for I think 50% of the venture

 

The burradale guys get £1.8million being 10% of the profits

 

SSE get 100% of the produced renewable energy to sell.

 

Frank Hunter, Brian Anderson (Nothing personal here guys - just pointing out who are the winners), the busta estate and the crofters get £2.5million

 

Voe, Brae and Nort about areas get £1.5 million disturbance money.

 

So therefore after all those have been to the trough - the CT gets whats left.

 

Sounds like a very, very poor investment for the majority.

 

Methinks VE are going to have to try harder, and establish why the majorities money is going to swell the coffers of the few.

 

How about a disturbance payment to the majority - a couple of million each year so that we can cope without having any CT funds left!!! :shock:

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Indeed. Would any advanced investment house dealing with Basel II risk adjusted capital have given them backing? Really only one answer.

 

So Troot, you're basically saying that there will be no bank out there who will be willing to give them the funding they will be looking for, right?

 

I disagree. If this ever reaches the stage where they will actually be able to begin building the windfarm then all necessary planning will have been granted, energy price fixed contracts signed, land rents agreed, inter-connector laid, etc., etc. then that would surely convince any lender that the project is viable.

 

The only potential unknown that could cripple things after that would be the actual installation of the windfarm. If, as some suggest, they'll just end up with a lot of "hellery" stuck in heathery bogs over Da Kames and hence no electricity will be produced then yes, we're all doomed! :shock:

 

However, my personal opinion on 21st century mechanics is that erecting 160 wind turbines wouldn't be the most onerous task in this day and age. Messy possibly, but very much achievable!

:wink:

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I disagree. If this ever reaches the stage where they will actually be able to begin building the windfarm then all necessary planning will have been granted, energy price fixed contracts signed, land rents agreed, inter-connector laid, etc., etc. then that would surely convince any lender that the project is viable.

 

I don't believe that's what's happenning. You may want to review that.

 

You are saying that current investment on the timelines projected for that spend is just to get it to the point of approval. Then further investment will and can be sought from banks?

 

If at reaching that point would they still need to go to an investment house to receive funding? It's all kit an kaboodle CT money.

 

That is the point. Risk weighting against cost of capital! Where is the money coming from to do that?

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Shouldn't Shetland concentrate on becoming totally self sufficient in energy with minimal disruption to the environment?

 

No, because then when the oil runs out we'll be back where we were in the early seventies, depending on fishing, fish farming and tourism. All of these are about as big as they will ever be and together are not enough to keep us in the manner to which we have become accustomed.

 

We need something to replace the oil money.

 

Edit: Ok, so there was no fish farming in the seventies, but then the knitwear was a significant earner back then, whereas there is almost no knitting now.

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  • admin changed the title to Shetland windfarm - Viking Energy

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