Scottish First Minister Nicola Sturgeon has called for an end to higher transmission costs faced by generation north of the border, in a speech at trade body Scottish Renewables’ annual conference.
Sturgeon (pictured) said the current system of energy network charges “has been a barrier to energy investment in Scotland for far too long” and that the Scottish government would be pushing to ensure a UK review of regulation would create change.
The review was promised in the UK Government’s energy white paper and Sturgeon said she believed regulator Ofgem would be receptive to changes to support net zero.
Current charges impose “higher transmission costs on generation far away from Great Britain’s demand centres… that’s no longer appropriate in age when moving to net zero is the planet’s top priority,” the Scottish leader added.
Cornwall Insights’ review of National Grid’s five-year view of Transmission Network Use of System (TNUoS) charges found that these annual costs for a typical 40MW onshore wind site in northern Scotland are forecast to rise to £1.28m by 2025-26.
This is an increase of 180% in nine years where costs stood at £460,000 in 2016-17.
Cornwall Insight analyst Laura Woolsey said: “Charging methodologies for TNUoS utilise location-based signals, and generators in regions where power is assumed to be flowing further to reach customers will face higher charges than those deemed closer to demand.
“Power flows have typically been north to south, with historic economic factors typically seeing higher demand bases in the south and greater levels of power generation in the north.”
The trend for more northern located generators has been magnified by the growth of onshore wind in Scotland, she said.
“Some developers are now seeing these costs as a potential barrier for further deployment of renewables assets on the pathway to net zero.”
While locational signals are important in incentivising generators to locate closer to demand, many generators face little option on development locations.
To put it more explicitly, Woolsey said, large onshore wind developments are only viable in a “few specific locations” across the country.
“Notably, Northern Scotland and incentives to locate further south to benefit from the lower network charging are unlikely to align with other requirements such as wind speeds, land costs and the likelihood of planning approval.”
Sturgeon said the Scottish government was also using its devolved powers “to the full” to promote growth of renewables, with offshore wind development a “particular priority”.
“I think all of you understand why the ScotWind process is being reconsidered however I know the delay this has caused is deeply unwelcome.”
“I know how keen you are to put in your bids and then start developing and delivering projects. We want that too and I know Crown Estate Scotland will be concluding the review tomorrow.
She said it would continue to work with CES throughout the process, including to develop the supply chain, with projects required to set out a supply chain development statement.
“Each project will set out the impact the project will have on the supply chain, that means the supply chain can be taken into account as part of the final lease agreement”.