ENERGY regulator Ofgem has written to SSE demanding an immediate update on plans to turn the Western Isles into a major green energy exporter, amid rising fears the £700 million project is set to collapse.

With a deadline approaching next month that could prevent the islands from playing a big part in renewable energy for a number of years, Ofgem intervened on behalf of worried developers and politicians.

The letter to the Perth-based energy company said: "It is important that changes in your timetable are communicated clearly so that all stakeholders are able to plan appropriately - We therefore request that you provide an update on your project timetable and assumptions by the end of this week."

The project to build two 450MW underwater cables between Lewis and Beauly is seen as essential to making maximum use of the country's ample natural resources. It would provide a means to export electricity from wind farms on the islands, plus offshore wind, wave and tidal power in years to come. But doubts began to mount over the project after SSE confirmed last autumn that costs had leaped from the original £490m estimate.

Although SSE has hired engineering conglomerate ABB to oversee the project, it has yet to submit the needs case to Ofgem that would give the final green light.

John Cunningham, a renewables specialist at Western Isles Council, said that Western Isles developers had an agreement with the regulator that this would happen after generation projects using a minimum of one-third of the cable's capacity transferred monies to underwrite the scheme, which has happened.

SSE contends that it is impossible to say with certainty how attractive the islands will be to developers until a row over their transmission costs has been resolved. They currently pay far higher rates than mainland generators, and an Ofgem steering group is working to come up with a solution.

Cunningham said: "The charges aren't the business of SSE. They are going above their station by not submitting the needs case to Ofgem."

He said if SSE failed to move the project on by next month, its procurement deal with ABB would lapse, and it would be "a number of years" before cabling could be available again.

An SSE spokeswoman said: "We will need to be able to show there is a need before we submit the project to Ofgem. The steering group needs to come to a conclusion or make a clear policy decision in order to take the project forward within the regulatory process."