Project TransmiT GRID CHARGES COME DOWN FOR MAINLAND RENEWABLES BUT UNECONOMIC CHARGES A ‘BLOW’ FOR SCOTTISH ISLANDS
20 December 2011
The costs for renewable electricity projects to connect to the grid on the Scottish mainland will reduce considerably under proposals published by Ofgem today. However, the regulator’s review of charges, Project TransmiT, would make renewable electricity generation on the Scottish islands up to seven times more expensive than on the mainland.
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.
“The changes will make the industry more competitive and allow it to invest more heavily in new technologies and the skills of the workforce.”
“The current system discourages investors from taking forward projects in Scotland as costs are higher than elsewhere in the UK.”
The proposals would cut grid charges by about 60 per cent for new wind developments in the north of the country, saving a large wind farm around £1.5m per year.
However, Mr Stuart highlighted that developments on Orkney, Shetland and the Western Isles still face huge charges, with a wind farm on 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. 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.
“The charges quoted for the islands potentially make development uneconomic, meaning a number of highly, highly productive wind farms 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.”
Scottish Renewables has calculated that planned marine projects totalling 1,600MW in the Pentland Firth and Orkney Waters would be charged £70m per annum under the proposed new tariffs, compared to a £3.2m charge if the same projects were installed in Cornwall.
“The review was designed to ensure that the transmission charging framework was supporting the transition to a low carbon economy but we don’t believe that can be achieved without unleashing the huge wind, wave and tidal potential of Scotland’s islands through a fairer charging framework."
ENDS
Notes to Editors
All electricity generators pay to connect their projects to the grid through Transmission Network Use of System (TNUoS) charges. These are influenced by location, with the highest charges in the North of Scotland.
Ofgem’s proposals will mean TNUoS (Transmission Network Use of System) charges will move to a new tariff called Improved Incremental Cost Related Pricing.
Please find Ofgem’s Press Release on today’s announcement.
Scottish Renewables responded to Ofgem’s consultation, called Project TransmiT, which can be viewed on our website.
