North-south divide threatens green energy investment – Scotsman

to a leading industry figure.

By Perry Gourley

The concern centres on the way charges are levied for using the GB-wide

electricity transmission system which makes it more likely that projects in

heavily populated areas will receive backing under a renewable energy

subsidy scheme.

Adam Morrison, project director of the proposed Moray West offshore wind

farm off the Aberdeenshire coast, has now called for immediate reform to

address the problem.

He argues the current mechanism – known as Transmission Network Use of

System (TNUoS) charges – risks making projects that are more distant from

population centres prohibitively expensive as it increases costs to

generators depending on how far they are from the big demand centres in the

south-east of the UK.

Higher costs for northern generators makes it more difficult to win subsidy

support under the Contract for Difference auction system developed by the

UK government where only projects bidding the lowest price to produce power

win backing.

Morrison said the financial burden of grid charges which were affordable

when renewable prices were high becomes uneconomical at the sub-£50 per

megawatt hour (MWhr) level seen in the last CfD auction in 2019 after huge

industry progress on cutting costs.

“When renewables were £150MWhr, TNUoS represented only about 4 per cent of

the cost per unit generated in the north, and could be absorbed,” said

Morrison.

But the falling cost of offshore wind has meant TNUoS charges now represent

a much greater burden of around 17 per cent, making northern projects more

expensive compared with projects in the south.

“New projects in the north, which like Moray West have planning consent and

are ready to provide benefits, are becoming stranded on the drawing board

just because of their location,” said Morrison, who was head of electrical

at sister site Moray East which is now under construction.

“Reform is needed now to encourage, rather than discourage, the development

of renewable resources where they are found.”

Morrison’s comments came in an article published by Scottish property

consultancy Galbraith’s energy magazine.

Partner Richard Higgins said: “The Crown Estate in Scotland has recently

opened the bidding process for the next round of offshore windfarm projects.

“As offshore wind has become increasingly competitive, all aspects on the

project and operational cost side, including TNUoS, will be vital in

determining project viability.

“The wider returns to the developers, supply chain and local as well as the

Scottish economy to an extent hinge on a more level playing field.”

https://www.scotsman.com/business/north-south-divide-threatens-green-energy-investment-2910272