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TIREE ARRAY- PROJECT INDIGESTION

Article by Rob Trythall of No-Tiree-Array

On the 7th Dec 2012  SPR /Iberdrola announced, that it had put the proposed Tiree  Arrayon hold for 12 months “ and “ all development work on the project will stop at the end of 2012′

But SPR did not state WHY !

All  SPR stated  was that ‘during ‘, this supposed  ‘12 month project pause’  SPR ‘will work with others to study initial detailed environmental studies of the site’ . SPR went on to make reference ‘to monitor  the offshore wind industry progress …to  fully developing technical solutions that are able to deal with the physical conditions at the wind farm site‘.

But SPR, on their  website, expressed this ‘pause’  more explicitly to be  ‘….. with a view to developing a technical solution that is fit for purpose in dealing with the physical characteristics of this site.’

So what does this SPR project-speak mean? .

By implication, currently, there is no technical solution fit for purpose to develop the proposed Argyll(Tiree) Array.

Is there a convenient convergence of technical, environmental and financial issues which have provoked SPR’s 12 month halt?

The concept  of a ‘pause‘ was put in starker perspective, with SPR’s further 21st Dec update   which used the “IF” word , in stating ‘…if the project is restarted...’

Ten months ago, before SPR  announced any delays to the proposed Array, NTA published an interview with Jonathan Cole, Managing Director Iberdrola  (Global Offshore Wind).  Cole advised in Feb 2012 that   ‘the construction of Argyll Array will probably take place a “few years” after the first portion of Iberdrola’s biggest offshore challenge — the 7.2GW East Anglia Round 3 zone that it is jointly developing with Swedish utility Vattenfall’

So,10 months ago SPR /Iberdrola hinted at delay to the proposed Tiree Array.

That delay has now come to fruition. But SPR has not given any clear reason WHY?

Lets explore the convergence of  Technical, Environmental, and Financial issues:-

(1) Technical:

The technical trajectory of offshore wind in 2009, when the proposed Array was originally announced, has proven to be recklessly optimistic. In Aug  2010 SPR was looking to 2nd Qtr 2012  to make its consents submission. The political dimension, to deliver this proposed Array by 2020, was embraced by the developer as a facilitating raison d’être.

No other European offshore Array has been built or proposed in  ‘the very aggressive sea conditions ‘ that exist in the waters off Tiree(SPR’s words). Scottish Government has yet to complete the appropriate turbine Testing Centre.

The economies of scale have dictated a requirement to deploy minimum 6MW rated turbines. Only one manufacturer has a tested,  approved 6MW offshore model in production.  The same economies of scale, linked to the environmental issues motivating SPR to consider reducing the Array area, and statutory mitigation obligations, push SPR  towards the 10MW turbine. The reduced area could still accommodate  180/10 MW turbines to maximise the Array to its originally proposed 1800MW.   A 10MW turbine is on a drawing board, somewhere,  in the ‘ cloud’ !

Foundation options are very limited and, as yet, not Argyll(Tiree) Array suitable.

Meanwhile in June 2012 the UK Offshore Task Force report indicated that offshore costs, subject to UK Government’s endorsement of its recommendations, may be  reduced to £100/MWh. This figure co-insides with UK Government’s indicative requirement to maintain subsidy. No coincidence there then!! Which is the cart, or horse, in this arrangement is not clear.

 

(2) Environmental: Possible delay due to environmental issues existed from the start. In their Aug 2010 SPR Scoping Request to Marine Scotland, SPR  referred to Tiree’s’ ‘Basking Shark Hot-Spot status‘, and the Great Northern Diver’s status with reference to the JNCC’s recommendation ‘that when the complete suite of marine SPAs in inshore areas as being determined, the inshore areas of Coll and Tiree ( or parts thereof ) should be considered for inclusion‘.

Ostensibly these considerations prompted the original 18 month delay announced in  Mar 2012, and manifested themselves again at the end of Oct 2012 when SPR  intimated they were considering reducing by approx 1/3rd the overall size of the wind farm.

Five weeks later (7th Dec)  SPR  announced their 12 month halt, and a week later (13th DecScottish Government  published details of its MPA consultation. This included the proposed Tiree  Array in  the MPA search areas.

 

 

One can only speculate as to any link or co-incidence between  Scottish Government’s inclusion of the Array Area for possible MPA status, and SPR’s decision to halt development .

(3) Financial:This is the area of greatest speculation. Iberdrola is currently in a major debt reduction /restructuring programme to satisfy its bankers with regard to its future investment plans.

SPR/ Iberdrola may be suffering from project indigestion .

In Feb 2012 SPR’s Cole stated that ‘construction of Argyll Array will probably take place a “few years” after the first portion of Iberdrola’s biggest offshore challenge — the 7.2GW East Anglia Round 3 zone that it is jointly developing with Swedish utility Vattenfall’.

This has proved prescient.  Ten days after announcing their project halt to the proposed Argyll( Tiree) Array , SPR/Iberdrola announced submission of their planning application for  East Anglia Phase 1(1200MW- 43Km offshore). Simultaneously SPR /Iberdrola entered a preferred turbine supplier agreement with AREVA Wind for the Wikinger offshore wind project in the Baltic Sea.

E.Anglia is still subject to consent. Both projects do not have final investment decisions. Both projects, with construction now hoped for in  2016 and 2017, are running  approx 12-18 months later than originally scheduled.

SPR’s  Cole said in Feb, Tiree Array was probably not going to take place till after the E Anglia project. If consented and the investors decide to invest, E Anglia cannot be a realised till 2017. Co incidentally, if SPR decide to restart the Tiree Array project, the earliest SPR consents submission could be made would be end 2015. Allowing for the L&C and investment decision process,SPR/Iberdrola  would not have to make any investment commitment to the Tiree Array till 2017 ie after completion of the E Anglia project.

The excessive cash flow requirements of the Wikinger, and E. Anglia projects, may have been the basis of SPR-Iberdrola’s expedient commercial logic to halt all development on the Tiree Array.

So, with no clear reason given for this halt , where does Tiree Array go from here?  NTA asked SPR, and received this enigmatic response;-

The pause will delay the submission for a planning consent.  The precise delay is determined by the amount of effort put into addressing the remaining workload (medium effort over an extended timeframe v major effort over a shortened timeframe) plus the seasonal nature of collecting some of the baseline data we still need.  This effort is not determined yet.  The programme to complete the project will be reviewed in 12 months.

NTA started 2012 with SPR targeting 2nd half 2013 to make the Consents Submission.

NTA ends 2012 with;-

  • SPR putting a halt to all Array development.
  • A project review in 12 months time
  • An indeterminate date for any Consents Submission.

This article originally appeared on the No-Tiree-Array website on Jan 3rd 2013

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