Planned new renewables charging system a ‘blow to islands’

The costs of transmitting electricity through the proposed inter-connector cable from Shetland to the Scottish mainland would be cut under plans being considered by electricity regulator Ofgem.

But windfarms and other renewables projects in the Scottish islands would still be charged up to seven times more than those on the mainland, according to industry umbrella organisation Scottish Renewables.

Ofgem today invited views on proposals in its Project TransmiT review to change the formula which sets transmission charges to create a more level playing field. However it also said it would consult on ruling out the introduction of a postage stamp system where all generators pay the same charge regardless of location.

Hannah Nixon, Ofgem senior partner for transmission, said: “The current formula was designed for a different era when Britain’s power all came from conventional sources like coal and gas. The mix of generators producing power is changing rapidly.

“More renewable and low carbon generators are connecting to the grid. So the charging formula needs to be updated to reflect the new realities of the generation mix. Renewable generators with a variable output are not using the networks continually. The formula needs to reflect this to ensure their charges are fairer.”

Niall Stuart, chief executive of Scottish Renewables, said: “This is a step towards fairer charges for projects on the Scottish mainland, and the reforms will encourage rather than block investment in renewable electricity in Scotland – home to the best wind, wave and tidal resources in the whole of the UK.

“These proposals would also result in lower charges for new renewables developments compared to polluting coal or gas plants, one of the main sources of the UK’s carbon emissions.”

But he said developments in Shetland, Orkney and the Western Isles still face huge charges, with a windfarm in the Western Isles paying £77,000 for every MW (Megawatt) of capacity in 2012 under the reforms, compared to a charge of £2,000 per MW in south west England.

“The charges quoted for the islands potentially make development uneconomic, meaning a number of highly, highly productive windfarms may not go ahead; a blow to communities in Stornoway and Shetland which would have benefitted from significant revenues over the coming years.

“Neither is it good for consumers, with onshore wind on the islands being an extremely competitive source of clean, renewable energy.

“It is also a blow to our emerging wave and tidal sector. Orkney, Shetland and the Western Isles all have major plans for marine energy developments as they have the best resource, but they also have the heaviest charges.”


Add Your Comment
  • David Bunney

    • December 20th, 2011 17:23

    Dear Sir/Madam,
    The notion of what is economic and what is fair depends on the viewpoint.
    It is self-evident that a producer in Scotland let alone in the islands, would want socialisation of all the transport costs and other necessary power-reserve (to manage intermittency and lack of other grid services) costs associated with wind generation, whilst maximising their private profit from in-feed tarrifs and ROCs payments. People in other parts of the country might have a different view and may feel that the huge cost to consumers and tax-payers (who are the same people) might not warrant the ‘benefits’ of the dash to green energy. Would it be acceptable to for example cover all the difference in transportation costs of an electronics manufacturing factory in Shetland, Orkney and the Western Isles and also to pay them a huge subsidy (or negative tax) for locating there so as that factory could undercut prices of factories located in Aberdeen, London or Birmingham?
    I recognise that changing connection and usage charges to such a high-level destroys any business case for developing RES generation in the islands. The issue encompasses local economics, with national ones and concept of fairness, with the underlying need or desire to decarbonise generation. Fundamentally how much is a MW of green energy created in the islands worth to a consumer in say London compared with a MW of coal powered generation in Didcot (Oxfordshire). The infrastructure required is huge and costly both financially and in terms of CO2 to make it. The future grid will also require additional storage or large amounts of gas turbine generation to produce energy when the wind isn’t blowing…
    I dread the effects of global warming and GB does need to take a stand. However who is profiting here and who is paying their fair share????
    An electricity consumer based in south-east England.

  • J Tulloch

    • December 21st, 2011 19:33

    Anyone interested in engineering aspects of low carbon power generation will find the following excellent article by Prof Colin McInnes in “Ingenia,” the magazine of the Royal Academy of Engineering, fascinating


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