Green infrastructure at risk as regulators favour EU energy imports

26th May 2021

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Harriet Cooper

The UK's energy regulators are putting billions of pounds of green infrastructure investment at risk by overseeing a market which favours EU energy imports at the expense of home-grown schemes.

Electricity generators in the UK pay transmission charges for the cost of building and maintaining the network, set by the regulator Ofgem and ultimately paid by consumers as part of their bills.

Latest analysis by the Renewable Infrastructure Development Group (RIDG), highlights what it calls “stark anomalies” in how electricity generators access the British market – with operators in Germany, France and the Netherlands able to export energy significantly cheaper than projects in the UK, because they pay very low transmission charges, or none at all.

As a result, the UK risks becoming a net importer of renewable energy in the decades ahead, despite having the best wind energy resource in Europe.

It said Ofgem is overseeing a system which favours investment in the south of England and the EU despite assurances by prime minister Boris Johnson of levelling up economic opportunities for all parts of the country in a Green Industrial Revolution.

The analysis shows that on average, EU generators pay £0.46 per megawatt hour (MWh) in transmission system charges, while in Scotland the average is £6.42/MWh. In the north of Scotland, the price spikes to £7.36/MWh, with prices forecast to rise further still.

“The UK has the best wind resource in Europe, and we should be making the most of the clean electricity we’re producing for UK consumers at the lowest cost and ensuring we can export the massive amount of power we’re generating when there’s a surplus,” said RenewableUK’s director of future electricity systems Barnaby Wharton.

“The current approach to transmission grid charging is not sustainable if we want global Britain to become a bigger player in the international power market. If Ofgem is serious about supporting UK’s net zero emissions target, it should change its approach to ensure we can take advantage of the bountiful natural resources we have.

Wharton called for Ofgem to have a specific net-zero remit as a matter of urgency and this should be addressed by ministers alongside the government’s forthcoming Strategy and Policy Statement for Ofgem.

RIDG associate director Marc Smeed, who wrote the report, said of 36 countries in the European transmission network, 20 do not charge generators and only five levy charges based on location.

“Compare this to Scottish offshore wind projects, which our analysis forecasts will pay £10/MWh – around a quarter of a project’s revenue – to access the grid in the years ahead.

“Addressing this imbalance would help unlock the best wind energy resources in Europe, bringing billions of pounds of investment and jobs to some of the most remote and disadvantaged parts of the UK.”

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