by a Newsnet reporter
It has been revealed that preliminary findings of a study carried out by energy regulator Ofgem fatally undermine the UK government’s plans to expand nuclear power. The report also highlights how the UK systematically discriminates against the development of Scotland’s vast renewable energy potential in favour of energy producers in the south of England.
The BBC’s Scottish Business and Economy Editor Douglas Fraser has reported that under new proposals being considered by Ofgem’s Project TransmiT the extra charge currently borne by electricity generation in the north of Scotland could be slashed by 80%.
The charging regime currently in place penalises generators far from the large population centres of the south of England, and subsidises generators closer to these areas. Electricity generators in the far north and west of Scotland are presently charged £24 per kilowatt, meanwhile an electricity generating company in the south of English receives a subsidy of over £6 per kilowatt.
The access charging system has the effect of encouraging investment in power generation close to London. The further from London, the more a company must pay in grid access charges. The highest costs are borne by electricity generation in the north and west of Scotland, where the country’s immense renewable energy capacity is primarily located.
Project TransmiT is an independent review of the charging arrangements for gas and electricity transmission networks being carried out under the auspices of Ofgem. The study will examine whether all or part of the transmission charging regime should be changed, and aims to identify what changes can be made to facilitate the timely connection of low carbon generation.
The study is believed to be examining the impact of a flat-rate access charge to the grid across the UK. This would dramatically slash costs in the Scottish renewable sector and boost investment and development in the industry.
The current charging regime is heavily biased towards encouraging investment in nuclear power generation in the south of England. Estimates show that under the present system there will be around £13.2bn of investment in nuclear power generation in the south of England, with a further £4.2bn in the north of England and Wales. These figures are expected to increase sharply after 2020.
However should the flat-rate charge model be implemented, the incentive to build nuclear energy would be cancelled out entirely. The BBC reported that minutes from a recent meeting of the Project TransmiT review group show that the authors of the study are coming under government pressure to “re-work” their findings.
The Scottish government has previously made an issue of the ‘discriminatory’ grid access charges which it maintains are damaging the development of Scottish renewable energy. The report will give support to the Scottish government and critics of the nuclear industry.
The SNP’s Westminster Energy spokesperson Mike Weir MP welcomed the initial findings saying:
“This is very encouraging news from Ofgem. It is time that we said enough is enough to the current discriminatory regime that works against the development of clean, renewable energy in Scotland by forcing generators to pay millions of pounds more to use the grid.
“It is also right that we remove the unfair financial incentives to build new nuclear power plants. Currently, the UK Government’s nuclear obsession is undermining moves towards a greener economy.
“Scotland has overwhelming energy potential but our future wealth is being sabotaged by these unfair charges which discriminate against Scotland.
“The transmission charging regime has already cost the country dear by slowing up renewable energy projects and Ofgem must act on the findings of this study to bring forward reforms.”
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