SCOTLAND’S renewable energy sector is being held back by UK grid connection charges, a cross-party groups of MPs have concluded.
The Scottish Affairs Committee is calling for an urgent review of the costs which it fears is also putting the country’s green power industry at a disadvantage compared to the sectors in England and Wales which pay no or lower fees.
Under the current system, charges apply to connect to the grid in Scotland, but in Wales developers are actually paid to connect to the grid.
In a report published today, the Commons committee said the issue will affect the development of renewable projects in Scotland as it reduces confidence in investment, which can create jobs and deliver a just transition.
The report said: “We received evidence about the different locational charges across the UK and how there is a higher impact on Scottish developers. In Scotland developers must pay to connect to the grid, whereas in Wales developers are paid to connect to the grid.
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“Scottish Renewables stated that: ‘TNUoS charges for a wind farm in Scotland will increase £4.50–£5.50 per MWh while an equivalent wind farm in Wales will get paid £2.80 per MWh.’ This evidence pointed at transmission charges being a barrier to renewable energy development."
It pointed out that the UK energy regulator Ofgem was reviewing charges across he UK but said it was not happening at a “fast-enough pace”.
The report concluded: “Locational transmission charges weigh more heavily on developers in Scotland when projects in other areas of the UK, like Wales, are paid to connect to the grid.
“The financial burden of transmission charges and grid investment needs to be justly shared across the UK and not fall heavily, and unjustly, on the developers of renewable energy projects in Scotland. The current review by Ofgem about locational transmission charges is not happening at a fast-enough pace.”
Charges are currently based on the distance between where the electricity is produced and where it is used.
The report said: “The grid needs to be reinforced and expanded to ensure that renewable energy generated in Scotland can connect to the grid and benefit the rest of the UK.....Ofgem should make bold decisions by prioritising reinforcement of the grid in areas where there is potential for a high renewable energy yield. Since net-zero targets have already been set in law, Scotland should be enabled to play its part fully in the renewable energy mix of the UK.”
Committee convener the SNP MP Pete Wishart said: “In 2019, over 97% of electricity consumed in Scotland was from renewable energy sources. It is a great success, but more can be done to decarbonise the grid.
“In our committee’s latest report, we have identified the need to ensure Scotland is not left behind in the renewables race and nowhere is this more apparent than within the current transmission charging regime.
“We therefore strongly recommend that Ofgem must now address the issues around transmission charges in Scotland and help us meet net zero.
“We found this is not justly shared across the UK as it currently stands. Scottish developers must be incentivised, not disadvantaged.”
A spokesman for Ofgem said: “The current transmission charges mean large generators that are further from demand pay more, reflecting the higher costs of transporting the energy they generate a longer distance.
“At the same time, energy consumers in Scotland generally pay less, because they are closer to the source of generation.
“There are significant wind generation projects both in development and under construction in Scotland, suggesting that Scottish renewables are an attractive investment.”
He added the Ofgem recognised the “critical” importance of renewables in achieving net zero.
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