Regulations putting GB renewables at ‘significant disadvantage’ to EU peers

Transmission charges set by Ofgem are disincentivising the development of home-grown wind power by making it cheaper to import via interconnectors from the EU, a new report by RenewableUK has warned.

New analysis by the Renewable Infrastructure Development Group (RIDG), shows operators in Germany, France and the Netherlands are able to export energy ‘significantly’ cheaper than projects in the UK, because they pay very low or no transmission charges.

The analysis shows that on average, EU generators pay £0.46 per megawatt hour (MWh) in transmission system charges, while in Scotland the average this year is £6.42/MWh. The average for the north of Scotland is even higher at £7.36/MW.

Of 36 countries in the European transmission network, the analysis says 20 do not charge generators at all and only five levy charges based on location, which include Great Britain, Ireland and Northern Ireland.

While Scottish generators pay the highest transmission charges in Europe to move power to England, interconnectors from Europe do not have to pay to use the GB transmission system.

These price differences put Scottish generators at a “significant disadvantage” compared to sites in France, Netherlands, Belgium, Germany, Denmark or Norway, says the report.

It claims the gaps are likely to play a significant role in determining where renewable energy projects get built in the future as the sector relies less on subsidy mechanisms and more on market forces across Europe.

The report says the UK’s transmission charges regime could put billions of pounds of green infrastructure investment at risk by making it cheaper to import power from the Continent.

By 2027, it says that while total capacity between Scotland and England & Wales will be roughly 7.7GW, interconnector capacity to continental Europe will be 13.6GW.

Barnaby Wharton, RenewableUK’s director of future electricity systems said: “The UK has the best wind resource in Europe, and we should be making the most of the clean electricity we’re producing for UK consumers at the lowest cost and ensuring we can export the massive amount of power we’re generating when there’s a surplus.

“The current approach to transmission grid charging is not sustainable if we want global Britain to become a bigger player in the international power market. If Ofgem is serious about supporting UK’s net zero emissions target, it should change its approach to ensure we can take advantage of the bountiful natural resources we have.

“Ofgem needs to have a specific net zero remit to ensure we maximise our zero carbon generation as a matter of urgency – and this should be addressed by ministers alongside the government’s forthcoming Strategy and Policy Statement for Ofgem.”

Responding to the report, Morag Watson, director of policy at Scottish Renewables, said: “The regulations which govern how our electricity network is paid for are out of date and do not reflect the need to meet net zero in the most efficient way possible.

“A worsening of this situation currently looks likely to occur though this decade. That would make the development of the renewable energy projects which Scotland needs to supply its energy and drive economic growth less likely, at a time when those projects are more urgently needed than ever.”