Massive Grid Charges Threaten North Renewables

Pentland and Orkney wave and tidal grid charge estimates hit £100m

New figures from Scottish Renewables have shown that island communities in Scotland’s first Marine Energy Park are continuing to face massive costs to connect their marine energy projects to the grid.

The analysis, published at Tuesday’s (Sept 18th) Marine Energy Conference in Inverness, reveals charges in the Pentland Firth and Orkney Waters have continued to climb, despite an independent review by Ofgem to reform the charging regime known as TNUoS (Transmission Network Use of System).

Although the review has improved matters for generators on the mainland, charges on the islands are set to rocket, adding significant costs and threatening the economic viability of wave and tidal projects that are in their early stages of development.

Speaking ahead of the Marine Energy Conference, Niall Stuart, Chief Executive of Scottish Renewables, said: 
“Ofgem’s review was expected to bring down charges for renewable generation given its commitment to ‘facilitate the move to a low carbon energy sector’. However, we are seeing charges on the islands continue to increase, dwarfing those on the mainland.

“The level of charges for Orkney Waters is adding significant costs to wave and tidal projects and can only hold back investment in our world-leading marine energy sector.

“We have to remember that our islands are where some of our best natural resources are and if we are to meet important climate change and renewable energy targets we must find a way to ensure wind, wave and tidal projects can generate electricity for homes and businesses across Scotland.”

The new figures are estimated calculations based on annual grid charges for wave and tidal projects. Estimates of the projected annual connection charges for the Pentland Firth and Orkney Waters area have increased from £56m last year to £107m in 2020.  This contrasts with an annual subsidy of some £2m if these projects were to be built in the south west of England – the UK’s other Marine Energy Park.

While the mainland of Pentland Firth has seen a decrease of £4.6m in annual connection charges, the Orkney Waters area has seen a massive rise because electricity generators on the islands are required to pay for ‘local works’ which includes expensive undersea grid cabling from the Scottish mainland to the Orkney islands.

This year’s estimates are also based on a larger grid cable which will be required to transport the increasing capacity of renewable electricity due to be generated in the Orkney waters from wave and tidal devices.

Ofgem’s independent review, Project TransmiT, was launched in 2010 with the view to ensure that we move to a low carbon energy sector whilst continuing to provide value for money to existing and future consumers.

Mr Stuart added: “We would like to see the Secretary of State for Energy and Climate Change use his powers to adjust the transmission charges and ensure costs do not deter renewable energy generation in the north of Scotland, home of the world’s leading wave and tidal sector.”
The figures are published in Swimming Against the Tide? Update on Grid Charges for Wave and Tidal Generators in the Pentland Firth and Orkney Waters which is available from Scottish Renewables website.

Scottish Renewables will also publish a new report Marine Milestones 2011/2012 at the conference.

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