Businesses invited to tender for new power system

Businesses working in the energy sector have been invited to tender for contracts related to supplying a new power network.

A new energy “solution” is needed to replace Lerwick Power Station which is nearing the end of its operational life. Power into the local grid from Sullom Voe Oil Terminal may also cease after 2017.

Scottish Hydro Electric Power Distribution (SHEPD) issued 14 businesses and organisations a formal invitation to tender (ITT) for supplying a new power network in Shetland.

According to SHEPD, it will welcome bids from companies that might provide part or the whole of the new system. Shetland’s electricity system is entirely independent from that of the mainland as there is no interconnector cable and the island system needs to be capable of meeting local demand at all times, peaking in winter at around 47MW.

Documents set out the detailed future requirements of the islands’ electricity network and the criteria on which bids will be assessed.

Tenders are being invited under four lots and could include thermal power plants, renewable generators, demand side management systems, electricity storage devices or cable connections.

An extensive public consultation which helped to shape the competitive process was carried out between October 2014 and February 2015, preceding a pre-qualification stage which then followed between April and September 2015.

Bidders now have until October 2016 to respond with detailed proposals, after which the assessment process will take place alongside modelling work to ensure that the elements of the new system will work together successfully. This is expected to result in a recommendation to the energy regulator Ofgem in early 2017 which will then be the subject of final consultation.

 

The issuing of the formal invitation to tender is a key milestone towards securing a new energy solution for Shetland. DAN PEARSON

SHEPD project manager Dan Pearson said: “The issuing of the formal invitation to tender is a key milestone towards securing a new energy solution for Shetland. The documents set out the key technical and commercial information that bidders need to prepare detailed and costed proposals to provide the energy our customers need.

“We have worked closely with Ofgem, our independent auditor and specialist consultants at each stage to reach this point in what is a complex procurement process. The level of engagement from the market has been very positive and we will be offering bidders an opportunity next month to obtain any final clarification they may need.

“We will receive bids in the autumn and the final stage of shaping Shetland’s future energy system can then begin. This process began with our customers in Shetland and we look forward to returning to present details of the outcome ahead of the final regulatory approval process next year.”

SHEPD, which delivers electricity to around 750,000 customers in the north of Scotland, submitted a plan to Ofgem in 2013 for a new dual-fuel power station north of Lerwick to be delivered in 2017, which would have worked alongside the Northern Isles New Energy Solutions (Nines) project and generation from renewables.

The following April, Ofgem rejected the proposal, primarily on the grounds of cost, and instructed SHEPD to undertake a competitive tendering process.