Wave of protest over tidal power charges

Energy regulator Ofgem’s bills have put the Pentland Firth wave farm scheme at risk
Mark Macaskill

Plans to build Europe’s biggest wave farm off the coast of Scotland are under threat after energy firms threatened to pull out over “unfair” charges to connect to the national grid, a lobby group has claimed.
The Scottish Council for Development and Industry (SCDI) said that some of the 20 firms involved in the project, in the Pentland Firth, have said that they may withdraw in protest at the charges imposed by Ofgem, the energy regulator.
Under the charging scheme, electricity generators are forced to pay more the farther away they are from the national grid and urban centres.
According to the council — an independent body that represents 1,200 businesses, trade unions and local authorities — Scottish generators pay about 40% of total UK transmission charges, but produce just 12% of the country’s renewable energy. It claims they pay £100m a year more than their “fair share”.
The threat of firms pulling out will be a blow to Alex Salmond, who has claimed that the farm could transform the Pentland Firth into “the Saudi Arabia of marine power”. The first minister used his new-year message to call for a cut in connection charges, which he claimed were preventing Scotland from becoming the “energy powerhouse of Europe”.
The SCDI has raised its concerns in a policy report for ministers that urges Ofgem to consider a flat-rate scheme, irrespective of location.
“Wave and tidal companies involved in the Pentland Firth process face higher generation costs than established technologies such as onshore wind,” the SCDI submission states. “They have emphasised that without projects remaining viable they will not proceed and the locational charging regime could destroy viability.”
Gareth Williams, the head of policy at the SCDI and author of the report, added: “We are concerned that higher charges are proposed for renewables projects in Scotland where there are the best resources. Onshore wind projects already face far higher transmission charges and members in the marine energy industry have warned that higher connection charges will become a disincentive for investment in developing offshore wind, wave and tidal projects in Scotland.”
Jim Mather, the energy minister, said attempts to encourage the growth of the renewable energy sector in Scotland were being hampered.
“Our aim is to ensure that Scotland has a transmission network that will allow the massive marine-energy potential to be harvested and transported to centres of demand and exported to the rest of the UK and Europe, creating jobs and helping transform Scotland to a low-carbon economy,” he said. “That is put at risk by a locational charging regime that discriminates against remoter areas.”
Although few have gone public, Statkraft UK, a wind-farm developer, said earlier this year that it had shelved plans for a farm on Orkney, blaming high transmission and connection costs.
The Pentland Firth, between the north of Scotland and Orkney, is considered a prime location for tidal power. The channel is up to 90m deep and flows into and out of the North Sea twice a day, with water flows of up to 3m tons per second.
It is the first stretch of water off the UK to be opened up for development of marine renewables, and will host hundreds of wave energy devices, such as tidal turbines. At least 700 megawatts of wave and tidal capacity could be installed by 2020, enough to power more than 500,000 British homes.
A spokesman for Ofgem said: “The location-based, transmission-charging methodology results in charges for generators that reflect the costs they impose on the electricity system. This is in the interests of consumers.”