Comment: Ofgem must shed light on energy charges

The energy regulator Ofgem announced its plan to bash heads together in an effort to sort out the high cost of pumping renewable energy into the UK transmission network back in 2010. This week, it is to start discussing the 28 or so plans put forward by the committee gathered together by the National Grid called Project TransmiT.

The vexing question will be who is going to pay for making the grid green energy friendly. Back in 2010 Ofgem put its finger in the air and came up with an eye watering figure of £200 billion. In the meantime, renewable energy producers have been paying over the odds to have their wind and wave power used while CO2-belching coal-powered stations have been paying peanuts.

The issue of high charges from the margins of the country is a legacy of the grid’s development. Power stations were built next to centres of population or, in the case of nuclear, near to vast amounts of cooling water. It made sense then but if we are to get offshore wind and wave power from Orkney or the Hebrides connected, it has to be done in a way that these nascent energy producers aren’t coshed by the cost of transmitting their energy.

According to Martin McAdam, chief executive of wave power start-up Aquamarine Power, the “desire to develop a low-carbon economy is being thwarted by an outdated grid charging mechanism”. In a blog post, he has called on Ofgem to get a move on, and “end discrimination of energy source based on location”.

The future of investment in wind and wave, he argues, depends on it. Earlier this month, his firm, which has been testing its clam-shaped wave device at the European Marine Energy Centre (EMEC) off Orkney, won planning permission for its 40 MW wave farm off the north-west coast of Lewis.

The technology is working – and seemingly less invasive and dangerous to wildlife than wind turbines – yet the connection to the grid remains a major stumbling block.

But Aquamarine Power has some heft behind it. One of its major backers is energy giant SSE, which last year confirmed it has invested £30 million into the “Oyster” wave technology machine inventor.

It is also SSE which, as a “distribution network operator” for the National Grid, is responsible for building the link – a 450MW interconnector between Lewis and Beauly. Last year, the energy giant estimated costs of linking the region to the grid had soared to £700m. If it is to get a return on this investment it must be through transmission charges. Or subsidies. Or both. The danger is that unless Ofgem comes up with a viable solution, the goose that lays the green egg, so to speak, could be choked before it can deliver.

Don’t bank on defining reckless behaviour

GEORGE OSBORNE yesterday backed some of the suggestions made by the Parliamentary Commission on Banking Standards, particularly the headline grabbing one – slamming reckless bankers into a jail cell. The Chancellor lauded the changes he endorsed as a way of creating a “stronger and safer banking system”. But, as the knotty problem of what constitutes reckless behaviour and how to prove it in a criminal court is yet to be addressed, his endorsement seems no more substantial than slogans shouted in an effort to pacify a baying mob.