SSEN Transmission could see its regulated asset value (RAV) increasing to over £6 billion by 2026, the end of the current price review period (RIIO2), it said in a trading update.
The company, which owns and operates the transmission system in northern Scotland and the Scottish islands, made the prediction as it confirmed it planned to submit ‘needs cases’ to Ofgem for major projects this year. Initial needs cases are expected be submitted for Skye Reinforcement this summer and an upgrade to the 275kW Argyll line this autumn. A Final Needs Case for the first of two planned East Coast HVDC links from Peterhead to England is also expected to be submitted by the end of 2021.
SSEN Transmission said the projects were “over and above” the upgrades and extensions included in its RIIO-T2 ‘Certain View’. It said these projects and additional expenditure needed to deliver a pathway towards net zero, which will be added to RIIO2 costs under Uncertainty Mechanisms, “could bring total RIIO-T2 expenditure to over £4 billion”.
Extra generation capacity that is forecast to connect in a ‘Certain View’ set out in its business plan for RIIO2 is 3.1 GW, comprising 2.7 GW of onshore wind in the Moray Firth and near the Firth of Forth, and 0.4 GW of onshore wind developments across the north of Scotland, bringing the total connected generation under the Certain View to 11.2 GW by the end of the RIIO-T2 period.
But SSEN said “that alone will not result in the connected generation capacity required to meet net zero targets”. Its modelling indicates that in a ‘likely outturn’ connected generation will increase to 13.6 GW and it may reach 15.7 GW by 31 March 2026. ‘
The hike in RAV continues the trend of the last decade, which has seen SSEN Transmission’s RAV grow from £1.1 billion in 2012/13 to £3.3 billion in 2018/19 and £3.7 billion in 2020/21.
SSEN said the total generation capacity connected to the north of Scotland transmission system is forecast to double during the RIIO-T1 period to 8.1 GW by 31 March 2021.

Returns under debate
In the update SSEN Transmission said it forecast an outturn Return on Regulatory Equity (RORE) for the RIIO-T1 period, which ended in April, including tax and debt performance of 9.1%.
SSEN Transmission is one of nine network companies who have argued the return on assets allowed by regulator Ofgem over the upcoming RIIO2 period (2021-2026) is too low and appealed to the Competition and Markets Authority (CMA).
In its application for review the company said the Gas and Electricity Markets Authority (GEMA) “has provided a financial package, in particular as regards the “Weighted Average Cost of Capital” or “WACC” (WACC), which is markedly too low: this financial package will under- compensate investors and fail to attract the necessary investment in the business, ultimately to the detriment of consumers. Falling behind Net Zero pathways over the next five years of the RIIO-T2 price control period will make it significantly harder to get back on track in future years and risks costing existing and future consumers more in the long term.”
It said that over the regulatory settlement for the period they said Ofgem’s decision, which set the Cost of Equity element of the WACC for SSEN Transmission has been set at 4.25% (with a further reduction to 4.02% to reflect expected outperformance), was wrong. Among evidence it cited estimated by consultancy Oxera of between 4.98% and 6.78% depending on assumptions such as gearing.
The CMA has until October to make a decision on the companies’ appeals.