Coastal grid ‘needs cash injection’

The Sunday Times
June 7, 2009

Ian Fraser

Offshore energy projects around Scotland’s coast risk being strangled at birth unless the Scottish and UK governments invest £2.5 billion to
£5 billion in an offshore energy grid, according to one of the sector’s leading executives.
“All the evidence suggests that there is a huge untapped energy resource off Scotland’s coast,” said William Law, the chairman of the Glasgow-based tidal power group Lunar Energy. “However, without appropriate public spending on an offshore energy grid, we’re not going to be able to meet the ambitious targets that the government has laid down.”
He added: “It is essential that the government proceeds with an offshore energy grid. It would give investors who are considering investing in offshore energy technologies much greater confidence.”

The existing grid links between the north of Scotland and south of England are too weak to cope with the output from planned onshore and offshore renewables projects in Scotland. A £5 billion offshore energy grid connecting Orkney to Norfolk has been proposed and the government intends to put this out to tender this month. However, renewables experts argue the government will need to commit public funds for the project to succeed.
The EU has already committed more than £200m towards the project, on condition it connects to the continent.
However, Law said: “There’s a lack of political will in Westminster to say we will underwrite this.
“The UK government needs to step in and underwrite this until such time as we and other offshore energy companies are ready to start producing energy and paying the transmission charges.”
The grid extension is needed so offshore projects, including those being trialled at the European Marine Energy Centre in the Pentland Firth and several proposed offshore wind arrays round the Scottish coast, can transmit their output from Scotland to large population centres in the south of England.
The proposed grid could add 60GW to the UK’s energy supply, almost double the current total of domestic consumption (33GW). The proposed Beauly-Denny transmission cable upgrade, mired in planning inquiries since 2005, would be insufficient to carry this.
Tom Murley, head of the renewables at private equity group Hg Capital, said the project’s cost could be met through a levy on electricity bills. He said: “I would recommend that all necessary grid upgrades be socialised through a charge on all electric bills levied just for grid extension. This is what Germany is doing to build an offshore grid.”