New plans for a fairer, simpler and more transparent transmission charging regime for Scotland’s power companies were announced by the Scottish Government today.

Energy Minister Jim Mather presented the “unanswerable case” for reform to Ofgem and the National Grid to stop the current system of charging generators in Scotland millions of pound more than generators in the south of England to transmit electricity.

Enterprise Minister Jim Mather outlined the Scottish Government’s plans for reform when he addressed delegates at the OFGEM Sustainability and Energy Networks event in Edinburgh today.

The current regime works against the sustainable development of the vast renewable and clean energy potential in Scotland.

The new model proposes a uniform charge for each unit of energy that enters the system, regardless of location or capacity of the generating facility. The amount paid is directly related to the amount produced.

Energy Minister Jim Mather said:

“Scotland’s vast array of potentially cheap, renewable and low-carbon energy sources is there to be harnessed - onshore and offshore wind, wave, tidal and biomass. We are a country rich in natural resources and we must take full advantage of our ability to become a leader in clean, green energy.

“And that is exactly what we are doing. Adding the consented renewable projects to those already operating we will exceed our target for 31 per cent of electricity to come from renewables by 2011. That backs up the wave of recent activity which has seen around £1 billion being invested in renewables in Scotland, including consent for the massive Clyde windfarm. But we can do so much more. It is only common sense to have a fair, simple charging regime to promote renewable energy, ending the current discrimination and giving developers certainty for investment decisions. 

“This currently is not the case. The present transmission charging regime actively works against the development of these resources with a power station in central Scotland forced to pay £25 million more for transmission than a similar facility in Yorkshire, and even more than in London. The charging system encourages generation near large centres of population and takes no account of where energy resources are located. No other country in Europe uses this system – it has to end.

“When we met Ofgem in April we were pleased by their positive response to many of the points raised. I have now written to both Ofgem and the National Grid to propose this new model, which has the backing of Scottish Power, Scottish and Southern Energy and the Scottish Renewables Forum. This is an unanswerable case for reform. We need a level playing field - and we will not rest until we have a fair system that helps Scotland take its rightful place as the green energy capital of Europe.”

The new model proposes that the method of charging generators should be changed from paying for the maximum entry capacity (MW) to paying for the use of the system (MWh). Currently, the charge would be around £1 per MWh.

John Campbell, Director of Energy Wholesale at ScottishPower, said:

“The current system of high and volatile transmission costs unfairly penalises Northern Generators and hinders the development of renewable energy resources. In addition, the cost also makes it very difficult to justify badly needed investment in thermal generation, particularly in areas remote from the UK’s population centres.

“We look forward to working constructively with all interested parties in this debate and are confident that a solution that offers a level playing field to all power generators can be realised.”

Media Information: Simon McMillan, Scottish Power: 0141 566 4875