Following a consultation, The Shetlands Northern Isles New Energy Solutions (NINES) pilot smart grid project has been given the thumbs up by Britain’s regulator Ofgem.
The project will pilot a set of solutions, including demand side response and energy storage, that if successful could be implemented to reduce the overall cost of meeting the electricity needs of Shetland, an island archipelago located about 170 km north of mainland Scotland.
Shetland relies entirely on local sources of generation, as it is not connected to Britain’s electricity network.
The majority of the demand is currently supplied by the old Lerwick Power Station (LPS), a 67 MW diesel-fired generator. It’s becoming increasingly expensive to maintain and operate, due to its age and inefficiency. It is also in breach of environmental requirements, but has been granted temporary derogations on condition that either adequate emissions controls are introduced or it is replaced.
In view of this, at the last price control review Ofgem placed a requirement on the operator, Scottish Hydro Electric Power Distribution (SHEPD), to produce an Integrated Plan to manage supply and demand on the islands, including replacing the LPS, by the end of January 2013.
SHEPD’s response was the NINES project as the first phase of this Plan, with the learning to inform the second phase, in which the LPS would be replaced. It is expected that the solutions will allow a significant reduction in the capacity of the LP replacement and enable the connection of more renewable generators.
Currently, there is significant interest from wind generators to exploit the excellent wind resource on the islands. There is however insufficient demand to utilize this type of generation and maintain a stable system.
The additional funding costs were around £15 million for this new project, and Ofgem’s consultation was aimed to assess whether it should be pursued. Consumers will bear the extra costs in the short-term, with a view to offset in the second phase by savings.
Ofgem has said it will modify SHEPD’s license to enable the project to be formally submitted as a part of the Integrated Plan, with agreement for the proposals from all the consultation respondents.
They have also indicated that it will require SHEPD to disseminate the learning from the project to the other distribution network operators and interested parties.