Energy industry regulator Ofgem has revealed draft plans to change the way in which the costs of feeding transmission are divided. For Scotland's renewable energy sector the changes could reduce costs associated with feeding into the National Grid by up to 80%.
In 2010 Ofgem commenced an independent review of charging arrangements for gas and electricity transmission networks, known as Project TransmiT. Energy consultant Redpoint was appointed to assess the impact on energy mix of removing the high costs of transmission for the north of Scotland and the subsidies for the south of England.
The current pricing strategy aims to keep consumer costs down, which has encouraged location of power plants close to population centres. The cost of feeding power into the National Grid is currently £24 per kilowatt for generators in the North of Scotland, western Scotland and Skye, with slightly lower charges in Peterhead, and charges of around £12 in the south of Scotland. However, in the south of England subsidies of more than £6 per kilowatt are available.
These feeding prices are projected to increase over the next 10 years to pay for upgrades to the National Grid, with projected charges of as much as £60 per kilowatt for the north of Scotland, with a £12 subsidy in the south of England.
The draft pricing and investment model reveals how the costs of feeding transmissions in Scotland would be reduced to less than £5 if flat-rate charging were to be applied, sharing the costs of transmission equally across the country. This change could see a reduction in the estimated £17 billion of nuclear investment and instead encourage more wind and marine turbines to be built in and around Scotland.
The proposed changes do not include access to the grid for generators on Scottish islands, where high access fees will continue to inhibit investment.
The draft report will go for consultation in December, with the Project TransmiT due to conclude at the end of the year.
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