The £709 million power link would connect new wind farms on Shetland with mainland Scotland, enabling the export of electricity to the rest of Britain.
Earlier this year, Ofgem said it was minded to approve the project, however, it was based on the largest planned project – Viking Energy Wind Farm – securing subsidies through the UK Government’s Contracts for Difference (CfD) auction.
The regulator says that would have provided confidence that the wind farm is likely to progress as well as protect consumers from the risk of paying for an “underutilised” transmission link to the Shetland Isles.
The Viking Energy Wind Farm was, however, not successful in securing a CfD in last month’s auction.
Ofgem has also rejected SSEN’s proposal to build a 600MW transmission link to connect the Western Isles to mainland Scotland.
The regulator had previously said it was minded not to approve the £623 million link but would approve a revised submission for a 450MW link or consider the case for the initial plans “if consumers were more appropriately protected from the risk of paying for an oversized link”.
SSEN’s proposal was based on the two largest planned projects, Stornoway and Uisenis Wind Farms (formerly both Lewis Wind Power projects), securing subsidies in the recent auction.
However, only one of the projects was successful, which Ofgem believes “increases the risk that consumers would be paying for a significantly underutilised transmission link”.
The regulator said: “Ofgem’s committed to helping deliver most effective and fastest route to a net zero emissions economy at the lowest cost to consumers.
“It encourages SSEN to submit revised proposals for both transmission links, including establishing more certainty for consumers that the wind farm projects will go ahead. Ofgem is engaging with SSEN to secure evidenced and realistic proposals from them and will endeavour to consider them as soon as possible.”