Moulton snubs Scots wind over high grid costs

Published on Thursday 12 May 2011 16:03

VENTURE capitalist Jon Moulton has delivered a blow to Scotland's green energy plans, saying he will not invest any of a £200m infrastructure fund in this country because of high grid connection costs.

Moulton, whose fund will target energy transmission, said he would invest in the US rather than Scotland or the rest of the UK because of lower costs across the Atlantic.

"The grid (here] is a really big problem. Connection costs are really pretty high," Moulton said. "I have a windfarm on Lewis. I am familiar with the problems of the grid."

Niall Stuart, chief executive of industry body Scottish Renewables, said the high cost of transmitting energy to the grid in this country "actively discouraged" investment in the infrastructure necessary to fulfil Scotland's potential in renewables.

Illustrating the problem, he said that Whitlee windfarm near Glasgow pays about 4.5m a year to transmit energy to the grid whereas Langage, a gas-fired plant in Devon, pays nothing because it is subsidised.

Regulator Ofgem is reviewing charges but the problem has already led Scottish & Southern Energy to put on hold plans for an energy interconnector between Lewis and the mainland.

"His (Moulton's] comments reinforce the need for the reform to the transmission charging framework if we are to attract levels of capital necessary to hit the targets," said Stuart.

"There is a wide-ranging review ongoing at the moment. What we want out of that is a more equitable framework that doesn't actively discourage investment.

"The time has come for wholesale change to the framework to incentivise investment in generation."

Martin McAdam, chief executive of Edinburgh-based marine energy firm Aquamarine Power, said he was "surprised" by Moulton's comments. He warned that investment in connections to the grid was necessary if Scotland is to supply 100 per cent of its electricity requirements from renewables by 2020.

"We have to get the grid sorted before we can meet all the targets," said McAdam. "I support Alex Salmond's ambition and think it is achievable. But it is not about having the technology to do it - it is about having the infrastructure to support it, which means grid and a planning system that allow us to build and execute the plans in a reasonable time frame."

Moulton's fund, Greensphere Capital, was announced in March and it is awaiting regulatory approval from the Financial Services Authority. Moulton said the fund was focused on "energy-related infrastructure. We describe it as a sort of pale green as opposed to a violent green (which will target] things like electricity transmission, small hydro, things like that."