SHETLAND is preparing for a second energy boom after regulators signalled approval for a £709 million subsea electricity cable linking the islands to the mainland, aimed at unlocking the power of wind.

Ofgem said it is minded to green-light the Scottish and Southern Energy Networks (SSEN) 600 megawatt link, which would allow new wind farms on Shetland to export renewable electricity to the rest of the UK and help ensure security of supply on the islands.

But critics hit out after the regulator indicated it will reject similar plans in the Western Isles. It instead suggested a smaller, 450MW cable would better protect consumers than paying for a “significantly underutilised link” which would connect to two wind farms on Lewis.

SNP MP Angus MacNeil, who represents the Outer Hebrides, said he was dismayed by the decision, adding: “It would be a mistake to build 450MW instead of 600MW. This would mean that the project would be unlikely to go ahead in an area which has the strongest wind resource in Europe.”

Scottish Labour’s Highland and Islands MSP Rhoda Grant branded it “totally short-sighted”.

Ofgem signalled approval for Shetland’s proposed 260km cable, which would run from Weisdale to Caithness, subject to SSEN demonstrating by the end of this year that the planned Viking Energy Wind Farm project has been awarded subsidies through the UK Government’s Contracts for Difference (CfD) auction – a move it said would protect consumers.

This would allow the Viking Wind Farm – a joint venture between a community trust and SSE, with a potential output which would make it the third largest in the UK – to export energy generated by its 103 turbines to the mainland.

Those behind the scheme argue it will inject millions of pounds into the local economy every year, with the Shetland Charitable Trust, set up in 1976 to handle cash generated by the area’s booming oil industry, holding a substantial stake in it.

The proposed wind farm was previously the subject of a mammoth court battle which eventually led to the UK Supreme Court throwing out objections in 2015.

Aaron Priest, head of development at Viking Energy Shetland, said it was “delighted to see the transmission connection project taking this big step forward”.

He added: “Shetland is one of the last parts of the country not connected to the GB electricity grid. It is important to rectify this, not only as it will allow Shetland to fully harness renewable energy for the islands and elsewhere, but it will also secure a wealth of long-term socio-economic benefits for Shetland.”

Industry body Scottish Renewables said it welcomed backing for Shetland’s plans, but raised concerns consumers could be denied access to low-cost renewable generation in the Western Isles.

Senior policy manager Hannah Smith said: “Analysis by SSEN shows the cost differential between a 450MW and 600MW link is less than five per cent of the total cost of the project, but would provide a third more capacity for new renewable electricity generation and deliver an additional 30% of socio-economic benefit to the Western Isles.”

SSEN estimated the Shetland cable could be completed by 2024, when the Viking Wind Farm would also be operational.

An initial estimate for the 600MW link for the Western Isles put the cost at around £663m, while a 450MW cable would come in at around £617m.

Colin Nicol, managing director of SSEN, hailed Ofgem’s decision to provisionally approve the Shetland cable as an “important milestone”, but urged it to reconsider its stance on the Western Isles project.

In a statement, Ofgem said it would support an alternative proposal for the Western Isles “that more appropriately protects consumers from the additional costs of funding a potentially significantly underutilised link”.

It said this could be either a 450MW link, or even a 600MW cable delivered at a reduced cost.

The move comes at a time of renewed interest in oil exploration off Shetland.