Ofgem: cut transmission charges for Scottish renewables

Ofgem is backing controversial proposals to narrow the north-south divide on transmission charges, it announced on Thursday.

Generators located far away from cities, where the power is used, will continue to pay higher grid charges than those near demand centres. However, the gap will be reduced.

The new regime is to kick in next April, subject to consultation. If it goes ahead, wind generators in Scotland will pay an average of £13/kW less than under the current framework and those in the southwest £5/kW more.

While this will raise consumer bills on average £1.60 a year up to 2020, Ofgem expects it to reduce bills by up to £8.30 a year the following decade.

A statement from the regulator said it would “facilitate the timely move to a low carbon energy sector, while maintaining a robust and efficient supply of electricity across Britain’s high voltage network”.

The decision follows a long drawn-out and heated debate between different parts of the industry.

RWE Npower, which is set to be a net loser, last month said the proposed changes represented a “hidden subsidy to Scottish renewables”. It commissioned research from consultancy Nera that said it would cost the average household £12 a year to 2030.

SSE, which stands to benefit, called the old regime “outdated”. A spokesman argued: “Renewables need to be located in remote locations; nuclear has only a few siting options, therefore the extreme costs for remote and northern plant are simply a cost burden for the necessary location of electricity generation plant.”

The move will help the case for an undersea transmission link to the Isle of Lewis that has been long delayed by cost concerns. However, Scottish Renewables said it will not be enough to get island renewables projects going and targeted financial support from government was still needed.