CALL FOR LEVEL PLAYING FIELD ON ELECTRICITY CONNECTION CHARGES

Writing on behalf of Orkney and Shetland Islands Councils and Highlands and Islands Enterprise, Cllr Archie Campbell, Comhairle nan Eilean Siar’s Chairman of Sustainable Development Committee, has called upon the Minister for Energy, Mr. Stephen Timms MP, to find a way of to ensure that the islands are not placed at a competitive disadvantage by the levying of excessive connection charges on island renewable generators.

Cllr. Campbell said:
The Energy Bill is of great significance to the economy of the Highlands and especially the Islands. We have at our disposal in the Highlands and Islands a sizeable potential for wind, wave and tidal based renewable energy technologies. We see, therefore, a unique opportunity for the economy of the Highlands and Islands to undergo a significant step change. At the same time there is also the potential for the area to make a parallel positive contribution to the achievement of both Scottish and UK targets in the energy field in order to counter global warming and related climate change.

In general we welcome the provisions of the Energy Bill. However, we are concerned that there is a significant threat to the further development of the renewables industry in the Highlands and Islands because of the proposed “cost reflective” mechanism for connecting renewable generation to the grid. This would impact particularly on generation in the islands, which paradoxically have the best energy potential and the most fragile economies and which would therefore in turn stand to gain most from renewable activity.

As we understand it, the cost of interconnectors from Orkney/Shetland and the Western Isles, together with the associated network upgrades, would be recouped by Transmissions Use of System Changes levied on the generators. Indicative prices of up to £21.70/kw per annum have been published by NGT for connections on GB mainland in Northern Scotland. As yet no figures have been published for island connections as there is no existing transmission infrastructure. A fully cost-reflective equivalent connection charge for a 300 MW project in the islands has been estimated as over three times the cost to a mainland Northern Scotland generator. The use of such figures in an economic model for renewable developments in the Highlands and Islands has demonstrated that such a charge would render most proposals unviable. This has also been confirmed by recent discussions with major developers.

It is acknowledged that the Energy Bill contains a provision to adjust transmission charges (S 177). However, the use of this clause would be at the discretion of the Secretary of State and it is not clear on what basis a “cap” would be calculated. Furthermore, the clause contains a “sunset“ provision at sub-sections 11 and 12 which would only allow an order, if made, to last for 10 years. All of which uncertainty would deprive potential renewable developers on the islands of the necessary comfort for investment.”

Nigel Scott
Communications Officer
Comhairle nan Eilean Siar

Tel: 01851 709389 (Work)
Tel: 07884 236103 (Mobile)
email: nscott@cne-siar.gov.uk