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Wind farm charges may fall but island generators still hit hardest

Wind farm developers in Scotland could see cuts of up to 60 per cent in the costs of using the electricity grid under plans announced yesterday by energy regulator Ofgem.

While the industry and politicians welcomed the proposal to reduce transmission charges following a long-running campaign, they warned that the plans would make generation on the Scottish islands up to seven times more expensive than on the mainland.

Under the proposals, the method for charging for transmission using the high voltage grid network would continue to be location-based, with generators paying more if they are sited further from areas of high electricity demand.

But Ofgem said changes could be introduced to reflect the growth of renewable energy, which would take more account of the type of generation and how often the network is being used to transmit power.

The proposed changes would save a large wind farm in the north of Scotland an estimated £1.5 million in costs a year.

Niall Stuart, chief executive of industry body Scottish Renewables, described the proposal as a “step towards fairer charges for projects on the Scottish mainland”. He said: “The changes will make the industry more competitive and allow it to invest more heavily in technologies and the skills of the workforce.”

But Stuart said the review of charges under Ofgem’s “Project TransmiT” would also make renewable electricity generation from wind and marine energy on the Scottish islands up to seven times more expensive than on the mainland.

“This would mean the proposed Stornoway wind farm paying more than £11m annually compared to a £300,000 charge for an equivalent-sized project in south-west England,” he said.

Scottish energy minister Fergus Ewing said he was concerned that the proposals did “not go far enough in delivering a solution on transmission charges for Scotland and in particular our island communities”.

Transmission charges account for 4 per cent of households’ power bills. Ofgem will make a decision in April after hearing industry views. The changes could be in force from 2013.