By Kari Williamson
Had the wave and tidal projects been developed further south – i.e. across the border to England – they would have been eligible for £11m in subsidies.
The current transmission charging regime issued by Ofgem is calculated according to where the generator is located. The north of Scotland has the highest charges anywhere in the UK, whereas projects in some parts of the UK, such as Cornwall, receive a subsidy payment instead.
Figures published at the Scottish Renewables Marine Energy Conference in Inverness show that the proposed 1.6 GW of wave and tidal projects in the Pentland Firth and Orkney Waters face an annual grid charge of £56m, compared to an £11m subsidy if they were sited off the south west coast of England – home to Wave Hub, the only other test site for marine renewables in the UK.
Threatening the industry
Niall Stuart, Chief Executive of Scottish Renewables, says: “Scotland has long been recognised internationally as the leader in pioneering wave and tidal research and development and is home to 25% of Europe’s tidal resource and 10% of its wave resource. However, these charges could actually result in development going elsewhere, despite Scotland’s fantastic wave and tidal resource.
“High charges are acting as a barrier to investment and development in Scotland, and costs threaten to slow progress towards both the Scottish Government and UK Government’s 2020 renewable energy targets.”
He adds that any slowdown in the development of the wave and tidal industry could put thousands of jobs at risk.
“The projected grid charge bill for the Pentland Firth and Orkney Waters in the first year of operation is £2 million a year more than all the direct public sector support to the wave and tidal industry in its development. This is hardly the way to support and build this new industry.”
Reviewing charges
Ofgem is currently reviewing the charging framework known as the Transmission Network Use of System (TNUoS) through Project TransmiT.
Stuart says: “It is essential that Ofgem’s review of charges delivers the right framework to encourage investment in our world leading wave and tidal sector, and supports progress towards our ambitions for marine energy development around Scotland’s coastline.”
Energy Minister's response
In response to Scottish Renewables' research on transmission charges, Scotland's Energy Minster Fergus Ewing says: "The locational energy charging approach means that generators in the North of Scotland have the highest transmission charges in the UK, while those in other parts of the UK are subsidised.
"This approach makes no sense, and is a barrier to renewable energy generation in Scotland. It is not fit for purpose to deliver a more sustainable, low carbon energy mix, ensure security of energy supply and meet Scottish, UK and EU renewable energy targets.
"Ofgem's review of transmission charging must deliver a fundamental and effective change to create a fairer charging regime - one that does not penalise generators and developers in the very areas with the best renewable resource."