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United Kingdom

Single market a mixed blessing -- For BETTA or for worse in Britain

Introduction of a single electricity market and transmission grid for Britain should be in place by April 2004, the government has confirmed. But the Scottish wind industry is concerned that new Britain-wide electricity trading rules will mean that wind output north of the border will incur penalties for its intermittency similar to those experienced by generators under NETA -- the "new" electricity trading arrangements in England and Wales.

Energy minister Brian Wilson claims the British Energy Trading and Transmission Arrangements (BETTA) will promote the growth of renewables. He says major change to the whole UK energy infrastructure is needed if the huge potential for renewables in Scotland is to be realised. "It is no use generating renewable electricity in the Highlands and Islands unless we have the right infrastructure to enable that power to be accessed," he says.

Lack of capacity on the electricity interconnector between Scotland and England has restricted power flows south from Scottish renewable energy generators. And different trading rules in Scotland from the rest of Britain have meant that renewables generators have had to contract their output to one of the two main incumbent electricity companies.

Wilson pledges to improve the grid infrastructure in Scotland before BETTA comes into effect, with the costs fairly spread across all electricity users in Britain and not just those in the relatively sparsely populated Highlands. "This is a national undertaking rather than a local one."

Vital for renewables

He continues: "The government believes the time is now right to create such a market for the whole of Britain. And it is absolutely vital, for renewables that we get it right first time." The government is to hold a consultation on the new rules, but it proposes using NETA as the template for a single British trading, balancing and settlement system, and for single charging methods for connecting to and use of the transmission system. It also proposes a single British system operator and access to the Scotland-England interconnector on the same terms as the rest of the transmission system.

Rob Forrest from the Scottish Renewables Forum regards BETTA as a mixed blessing. "It is positive in that it potentially removes interconnector constraint, improves competition in Scotland and spreads costs of network upgrades across all British users," he says. A downside is that it will bring the penalising effects of NETA to bear on Scottish generators for the first time. The system by which NETA requires that imbalances of supply and demand be accounted for places disproportionate penalties on an intermittent energy resource like wind power.

Forrest argues that BETTA will not be enough by itself to lead to significant increases in renewables capacity in Scotland. It places too much emphasis on driving down the price of electricity while not recognising the importance of renewable energy in terms of its environmental benefits and all the economic spin-offs of renewables, such as creating a successful industry and jobs, he says.

Moreover, it is likely to stimulate only incremental improvements to the grid -- not the scale of change the industry needs, says Forrest. He calls on government to provide "a vision of a future electricity grid." It needs to provide leadership and commitment to ensure that the investment needed for significant grid upgrades will be made and that investors in that upgrade will have confidence that their costs can be recovered over time, he says.

Another barrier to investment in renewables is uncertainty over the structure of BETTA. Forrest points out that the public consultation has slipped, despite the target implementation date of April 2004. "Any uncertainty about the details or the timing causes investors to become nervous and undermines all the other positive developments in the industry."

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