The Scottish Affairs Committee has called on Ofgem to change how transmission charges are distributed, to help strengthen the Scottish renewables sector.
Currently, Scottish renewable energy projects must pay to connect to the grid, whereas those in England and Wales are paid to connect. As such, they have a competitive advantage that impacts the development of renewables in Scotland, affecting confidence in investment, job creation and the delivery of a net zero transition.
Additionally, with transmission charges subject to annual review they vary from year to year, and this can impact the business case of renewable installations, instilling little confidence in long-term investment decisions the Committee said.
A new report titled ‘Renewable Energy in Scotland’ outlines these concerns around how the transmission charges impact renewable development and call for an internal review.
“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,” said Scottish Affairs Committee chair, Pete Wishart MP.
“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 report calls on Ofgem to complete a review of the grid in Scotland as a matter of urgency and no later than 2022 to ensure changes can be implemented in good time for the country’s net zero target of 2045. Reinforcement should be prioritised in the country, to ensure the potential of a high renewable energy yield.
As part of the review, the Committee has urged Ofgem to consider the financial burden of transmission charges on Scotland and consider the long-term impacts of net zero.
Similarly within the upcoming Contracts for Difference (CfD) round, a long-term strategy should be taken that prioritises not just the lowest cost renewables but those that will help reach net zero.
More financial support should be provided through this mechanism for tidal energy, as Scotland has the potential to champion its production. In previous CfD rounds it has been prevented from taking part in the scheme, and the Committee welcomed its new inclusion.
“The bold net zero commitments by both the Scottish and UK governments are welcome, but delivery is essential,” added Wishart. “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.”
The Scottish Affairs Committee report follows similar calls from Scottish and Southern Electricity Networks in May, when it released analysis that showed 93% of its engaged stakeholders supported reform of the current transmission charging regime.