September 19, 2011
England, Scotland

English wind turbine firms are subsidised

By Tristan Stewart-Robertson, The Scotsman, scotsman.com 19 September 2011

Scottish renewable energy firms are paying £56 million a year to connect their power to the National Grid while those in England effectively get subsidies, claims the industry today.

Figures being published at the Scottish Renewables Marine Energy Conference in Inverness show marine projects in the Pentland Firth and Orkney Waters face total annual charges of £56 million compared with an £11 million subsidy for developments off the south-west of England, the only other place marine renewables are being tested.

Scottish Renewables said 2,600 jobs and £2.4 billion in investment were at risk if the industry slowed down because of the charges.

Current transmission charges are determined by Ofgem depending on where the generator is located, giving the north of Scotland the highest UK charges compared with other areas.

The Westminster government carried out an Electricity Market Reforms (EMR) consultation earlier this year and the energy regulator Ofgem is reviewing the charging framework – known as the Transmission Network Use of System (TNUoS) – through Project TransmiT. Ofgem said it aimed to have a new charging regime in place by April 2012.

Niall Stuart, chief executive of Scottish Renewables, said: “Scotland has long been recognised internationally as the leader in pioneering wave and tidal research and development and is home to 25 per cent of Europe’s tidal resource and 10 per cent of its wave resource.

“But these charges could result in development going elsewhere, despite Scotland’s fantastic wave and tidal resource.

“The projected grid charge bill for the Pentland Firth and Orkney Waters in the first year of operation is £2 million a year more than all the direct public sector support to the wave and tidal industry in its development. This is hardly the way to support and build this new industry.”

The north of Scotland pays £21.49p/kW per annum to transmit power to the National Grid, according to the research by Scottish Renewables. Projects around Orkney face an additional charge for subsea connections, costing £20.54p/kW of installed capacity per year.

Some parts of the UK get incentives, or “negative TNUoS charges” to generate power – including £7.04p/kW in south west England.

Last night energy minster Fergus Ewing said: “The locational energy charging approach makes no sense, and is a barrier to renewable energy generation in Scotland.

It is not fit for purpose to deliver a more sustainable, low carbon energy mix, ensure security of energy supply and meet Scottish, UK and EU renewable energy targets.

“Ofgem’s review must deliver a fundamental and effective change to create a fairer charging regime”

A department of energy and climate change spokeswoman said: “Ofgem is currently looking at the transmission charging regime through Project TransmiT.

“Whilst details of the review must be matters for Ofgem, government is clear that the transmission charging regime must deliver on our high level objectives on low carbon generation and security of supply.”