Ofgem announce plan for lower island transmission charges

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Ofgem have announced it is minded to approve a change in methodology for calculating what generators pay to use the electricity transmission network - a move which would see island charges lowered.

In a statement the energy regulator said: “Industry looked in detail at the effect of the changes for the development of prospective island links (e.g. transmission links to the Scottish Islands).

“These tend to be far from demand and will impose higher investment costs and transmission charges for generators using these links to transmit power to where demand is located.

“The proposed methodology change would factor in recovery of costs of the proposed sub-sea links, which once built, would enable the transmission of electricity from the islands to the mainland.

“Overall, the changes would mean that transmission charges would be lower for the

Scottish Islands than may have been expected if the methodology was not changed, but still remain higher than the mainland due to the cost of building and running the sub-sea links.”

It contiued: “This proposal will narrow the difference in generation tariffs between the north and south of Britain.

“Tariffs in the north will decrease whilst tariffs in the south will increase relative to the status quo. For example, indicative industry modelling suggests that in 2014 wind generators in the north of Scotland may pay on average £13/kW less than under the current methodology for access to the main transmission network and those in south west of England may pay £5/kW more.”

Western Isles MSP, Alasdair Allan, has welcomed “encouraging” news which follows extensive lobbying of the UK authorities by the Scottish Government on this issue.

Alasdair Allan commented: “The news goes some way to tackling the discrimination which energy producers in Scotland’s islands face. Unfortunately Ofgem still seem to be maintaining the principal that those furthest from London should pay the most, something which I don’t accept as reasonable given that the potential for renewable energy which the north of Scotland contains.

“However, the changes which Ofgem have in mind seem likely to reduce that inequality significantly from 2014 and will make many projects in Scotland more viable.”

He added: “I hope that the news will also act to speed on the progress towards an interconnector for the Western Isles. The Scottish Government has argued very hard for a fairer deal from the UK for Scotland’s islands on this issue and I look forward to seeing further details of what these changes will mean in practise.”