The Scottish Affairs Committee has today called for transmission
charges and grid investment to be equally shared across the UK to
help strengthen the Scottish renewables sector.
This follows concerns, outlined in the Committee’s report
‘Renewable Energy in Scotland’, that some renewable projects in
England and Wales have a competitive advantage as they are paid
to connect to the grid, whereas Scottish projects must pay to
connect to the grid. This impacts the development of renewable
projects in Scotland as it affects confidence in investment,
which can create jobs and deliver a just transition.
Further, the short-term nature of transmission charges – being
subject to annual review and the charges varying year on year –
impacts business cases and does little to instil confidence for
long-term investment decisions. The Committee looks forward to
Ofgem’s internal review of transmission charges, and hopes it
considers the long-term challenge of net zero needing to underpin
renewable energy progress for years to come.
The Committee heard during the inquiry that if the development of
the grid continues at the current pace net zero will be
challenging to meet. This is due to increasing demands such as
electric vehicle charging and home energy. Therefore, a review of
the grid in Scotland is urgently needed to identify changes by
the end of 2022 if it is to meet the Scottish Government’s target
to be net zero by 2045.
Scotland has the potential to champion tidal energy production,
offering an exportable product for the UK. However, limitations
in previous rounds of the Contracts for Difference scheme
prevented tidal projects benefiting from Government investment.
The Committee therefore welcomes the Government’s recent
announcement that tidal energy is included in the fourth round of
the Contracts for Difference scheme. The Committee argues the
right level of investment is needed and sustained which will
permit tidal projects to apply.
Scottish Affairs Committee Chair, MP, said:
“In 2019, over 97% of electricity consumed in Scotland
was from renewable energy sources. It is a great success, but
more can be done to decarbonise the grid.
“In our Committee’s latest report, we have identified the
need to ensure Scotland is not left behind in the renewables race
and nowhere is this more apparent than within the current
transmission charging regime.. We therefore strongly recommend
that Ofgem must now address the issues around transmission
charges in Scotland and help us meet net zero. We found this is
not justly shared across the UK as it currently stands. Scottish
developers must be incentivised not disadvantaged.
“The bold net zero commitments by both the Scottish and
UK Governments are welcome, but delivery is essential. To meet
net zero, the Scottish and UK Government must work together to
champion the opportunities Scotland offers, and to work with
Ofgem and industry to modernise the grid for our low carbon
aspirations and tackle climate change.”
Recommendations
The Committee’s recommendations are:
- Ofgem must complete a review of the grid in Scotland as a
matter of urgency, and at the latest by the end of 2022 to
implement changes in good time for the 2045 target. Ofgem should
prioritise reinforcement of the grid where there is potential for
a high renewable energy yield.
- The UK Government must specify that, as part of its internal
review, Ofgem must consider the financial burden of transmission
charges in Scotland. Ofgem should consider the long-term impacts
on net zero targets, and ensure renewable energy projects can
flourish over the next 30 years, rather than pushing for a
short-term, lowest cost view. Ofgem should publish the result of
their internal transmission charges review within six months.
- The UK Government must amend Ofgem’s statutory duties to
consider net zero targets in all its decision making.
- The next Contracts for Difference round should prioritise
renewable energy systems, not just at the lowest cost, but with a
long-term view that focuses heavily on net zero targets and best
value for money, up to 2050.
- More financial support should be guaranteed by the UK
Government for development of tidal energy through the CfD
mechanism. This will be able to bring tidal energy generation to
market to maximise the potential of renewable energy in the UK,
give confidence to investors, and increase exports of tidal
technology.
- The UK Government should use part of the £12 billion outlined
in the Ten Point Plan to invest in a pipeline of renewable energy
projects in Scotland.
