By Martin Williams Senior News Reporter – Herald
ELECTRICITY transmission charges are acting as a barrier for investment in
green energy projects in Scotland and will hit the transition to a low
carbon economy, experts have warned.
A new analysis by Scottish and Southern Electricity Networks Transmission,
which is responsible for the network for the north of Scotland calls for
reform of the current charging regime which means that renewable generators
in Scotland pay “significantly” higher costs to connect their electricity
to the National Grid than those in other parts of Great Britain.
There are concerns that the current charging system discriminates against
energy operations in Scotland as the calculations are linked to their
distance from big population areas.
Currently the Beinneun wind farm in the Highlands, pays £5.54/MWh, while an
equivalent wind farm – Pen y Cymoedd – in Wales, will pay £2.80 per unit.
A survey of industry stakeholders found that 93% supported reform of the
regime to support the tough Scottish and UK emissions targets as Glasgow
prepares to host the UN Climate Change Conference (COP26) in Glasgow in
November.
SSEN said that “with Scotland boasting the greatest wind resource to meet
the UK’s net-zero targets, this creates a huge barrier for further
low-carbon investment, despite great support for further deployment through
UK and Scottish government policy”.
Their study also found that 84% of renewable industry stakeholders felt
that the charging system acts as a barrier to the delivery of their
renewable projects in Scotland.”
SSEN said it had been contacted by three Scottish local authorities who
expressed “deep concerns” over the current high costs in Scotland and
highlighted that this it was an issue that has been raised for many years,
with no progress made.
“Concerns were raised around Transmission Network Use of System [charges]
acting as a barrier to renewable developments utilising the natural
resources of Scotland to progress to Net Zero, alongside the economic gain
that can be achieved from the deployment of renewables,” SSEN said.
The Scottish Government’s climate change plan aims for net-zero emissions
by 2045, with interim targets that include a 75% reduction from 1990s
emissions levels by the end of this decade.
Last month the UK government set what it called the “world’s most ambitious
climate change target” into law to cut emissions by 78% by 2035 compared to
1990 levels.
This amounts to a 60% reduction on today’s levels.
It is accepted that hitting the targets would require more renewable
electricity, low-carbon heating, electric cars and, for many, cutting down
on meat and dairy.
TNUoS charges are meant to recover the cost of installing and maintaining
the shared electricity system in England, Wales, Scotland and Offshore.
While the infrastructure of the electricity transmission is owned by three
companies including SSEN, the job of moving the power through the network
is undertaken by the National Grid.
The National Grid then passes on the costs of doing that through charges to
the three companies.
The National Grid says the charges vary by location, to reflect the the
costs of a customer’s use of the transmission network using a formula
approved by the industry regulator Ofgem. They take into account levels of
demand and the amount of electricity generation.
It its discussions with SSEN it said that the higher costs for generation
in Scotland, reflects is the result of having to transport electricity
further including to large areas of demand in the south of England.
SSEN says that its discussions with stakeholders showed that charging
should should not be based on location and that a full review of the
charging mechanism is required.
Andrew Urquhart, head of whole system at SSEN Transmission, said: “Our
generation customers and wider stakeholders have been consistently telling
us that charges for transmission access in the north of Scotland, as well
as uncertainty about future charges, are acting as a barrier to the
commercial viability of renewable energy projects. This, in turn, is making
it difficult for us to determine system investment needs for our
transmission network.
“It is clear from our analysis and engagement to date that there is
overwhelming support for TNUoS reform and that urgent action is required to
address current barriers in the context of the climate emergency.
“Given the level of concern raised by our stakeholders, we hope the
feedback outlined in our report will help to encourage action on the need
for an urgent review of the current regime to support the UK’s ambitious
net-zero targets and green recovery goals.”
Morag Watson, director of policy at Scottish Renewables, said the
regulations which govern how the electricity network is paid for are “out
of date and do not reflect the need to meet net-zero in the most efficient
way possible”.
She said: “A worsening of this situation currently looks likely to occur
though this decade. That would make the development of the renewable energy
projects which Scotland needs to supply its energy and drive economic
growth less likely, at a time when those projects are more urgently needed
than ever.”
Discussions with economic development agencies also discovered concerns
nothing has been done to address the charges issue.
SSEN said they expressed disappointment that large scale renewable energy
schemes did not progress, “losing out on jobs, skills training, supply
chain opportunities, and believed that TNUoS played a role in this”.
SSEN said that the National Grid agreed that TNUoS is difficult to predict,
and indicated that there is benefit in reviewing the underlying charging
principles and methodology.
“It was noted it is important that any review considers the impact that the
methodology has on consumers as well as on the system as a whole,” said SSEN.
The analysis of the view of onshore and offshore wind and solar developers
consulted with said there was an agreement that the charges could be “the
blockade that deters reaching Net Zero”.
The consultees told SSEN: “The barrier to the deployment of renewables has
a negative effect on the delivery of associated social and economic
benefits for local communities.”
They said that Scottish renewable generators are at a “significant
competitive disadvantage in subsidies, due to the decreasing cost of
renewable energy and the cost of TNUoS increasing”.
The International Energy Agency (IEA) has predicted a major surge in CO2
emissions from energy this year, as the world rebounds from the pandemic.
An independent Climate Change Committee (CCC) analysis accepted by the UK
government says low-carbon investment must scale up to £50bn a year in the
UK. But it adds that in time fuel savings from more efficient equipment
will cancel out investment costs.
The CCC believes around 1% of GDP – national wealth – would need to be
spent on shifting away from fossil fuels over 30 years.
SSE Thermal and Equinor yesterday unveiled plans to jointly develop a new
low-carbon power station at Peterhead, which could become one of the UK’s
first power stations equipped with carbon capture technology.
Ofgem and the National Grid were approached for comment
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