Renewable forms facing hefty bills for Ofgem delays

Green energy producers face a financial hit, according to Alex Salmond. Picture: TSPL

The First Minister is now seeking talks with Ofgem after the energy regulator last week announced it would defer a decision on a proposed new charging structure.

A meeting of Scottish Energy Advisory board, comprising industry and academic experts, was chaired by Mr Salmond and energy minister Fergus Ewing today to assess the impact of the delay.

Ofgem’s Project TransmiT proposals aim to ensure the charging regime promotes greener energy while also keeping transmission costs under control.

The First Minister said: “Today’s discussion was very helpful in assessing the impact of this unwarranted delay in crucial decision-making. There was broad consensus that the review of transmission charging over the last three and a half years has undoubtedly demonstrated the case for change – and the urgent need for clarity on the way forward.

“Wide agreement exists across industry and political circles in Scotland on the changes needed to facilitate the move to a low carbon energy mix. Following today’s meeting, I will look to meet with the Chair and new Chief Executive of Ofgem in the coming weeks to further press Scotland’s case.”

The current charging set-up means higher bills for more remote generators, which includes windfarms in remote parts of Scotland. Generators near major urban areas are charged less because the power doesn’t have as far to travel to homess - but these are often coal-fired or nuclear powers stations.

Ofgem has said now undertake a further round of consultation with industry and other stakeholders before making a decision on whether to implement a new charging regime for from April 2016 – two years behind the date originally proposed.

Mr Ewing said: “The impact of two years delay in implementation of a new system of charges equates to around £90 million of extra transmission charges for Scottish generation. The delay could also put back the long-term benefits to consumers that Ofgem highlighted as part of its proposals in August 2013.

“Scottish generators account for around 12 per cent of capacity connected to Britain’s high-voltage electricity network but pay around 35 per cent of the charges. Ofgem’s proposals have the potential to lessen this discrimination by reducing Scotland’s share to 25 per cent. This would still be double our share of generation capacity installed across Great Britain, but would be a welcome reduction nonetheless.”