United Kingdom

United Kingdom

Consensus on fairer charges

Plans by the Scottish government to levy a uniform charge for each unit of energy on the system -- regardless of the distance the electricity must travel to reach customers -- would greatly reduce costs to wind power generators by spreading them across the consumer base.

Currently charges are highest for generation remote from centres of demand, meaning a generator in Scotland has to pay millions of pounds more than a generator in Yorkshire and yet still more than one in London. The system works against development of Scotland's vast renewable resources, says energy minister Jim Mather.

"The charging system encourages generation near large centres of population and takes no account of where energy resources are located," he says. "No other country in Europe uses this system -- it has to end." With existing and consented renewables projects, Scotland is already on track to exceed its 2011 target of 31% green power.

"But we can do so much more," says Mather. "It is only common sense to have a fair, simple charging regime to promote renewable energy, ending the current discrimination and giving developers certainty for investment decisions." Under the new model, the charging method would be changed from paying for the maximum entry capacity -- currently around £1 per MWh -- to paying for the use of the system per MWh.

The move has the backing of green energy trade body Scottish Renewables and power companies Scottish and Southern Energy (SSE) and Iberdrola subsidiary ScottishPower. The proposal now goes for consideration to energy regulator Ofgem and system operator National Grid. Both until now have insisted that the current regime of charges that reflect the demands on the network is the fairest to all users of the system. Mather claims the case for reform is "unanswerable" and that Ofgem has already indicated a positive response.

Jason Ormiston of Scottish Renewables says: "High and volatile transmission charges in the north of Scotland and in the islands amount to massive hurdles for renewables developers and it is a hurdle that too many struggle to get over. If you are serious about renewables you should not put barriers in the way of deployment." He calls on Ofgem and National Grid to look at the proposals for a new charging model seriously "because the need for zero carbon and home-grown electricity generation has never been greater."

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