DTI and Ofgem consult on regulation of offshore transmission markets
Regulations governing the charges levied on companies who transmit electricity from renewable offshore generation sites to the National Grid took another step towards completion on Wednesday. The Department of Trade and Industry (DTI) has launched a public consultation document - Adjusting Transmission Charges for Renewable Generators in the North of Scotland – which proposes that renewable developers on the Scottish islands of Shetland, Orkney and the Western Isles be given a discount on the charges they will have to pay to use the high voltage transmission grid.
Speaking on Wednesday at the opening ceremony of Scottish and Southern Energy’s 20MW wind farm project at Artfield Fell in Dumfries and Galloway, Scotland, Energy Minister Malcolm Wicks said: “Limiting the charges paid to the National Grid by renewable generators on the Scottish islands is vital if their vast potential is to be realised.”
The UK government has set itself a target of generating 10% of the UK’s electricity through green renewable energy sources, including wind farms, wave and tidal power projects, under the Energy White Paper.
At present, the offshore power projects in Scotland are not connected to the transmission network.
Under The Energy Act 2004, the Secretary of State for Trade and Industry is responsible for compiling regulations to oversee the offshore electricity transmission market. Once the regulations are finalised Ofgem will be responsible for administering, and if necessary modifying, the regulations so that they remain fit for purpose.
Remote offshore renewable projects run by energy companies, including Scottish Power and Scottish and Southern Energy, assert that the transmission charging regime under the current British Electricity Trading and Transmission Arrangements (BETTA) is unfair, with Scottish generators forced to pay up to £18/kW while a generator in Somerset could receive £5/kW under existing guidelines.
In April 2004, Scottish Power launched a legal challenge to the fees charged to offshore power generators, because the company felt the arrangements were ‘fundamentally unfair on Scottish Generators” and “acted to discourage investment in renewables.”
Also launched on Wednesday, was a joint Department of Trade and Industry (DTI) and Office of the Gas and Electricity Markets (Ofgem) consultation document, named Regulation of Offshore Electricity Transmission: A Joint DTI/Ofgem Consultation, setting out options for regulating the charges levied.
Conservative Shadow Energy Minister, Bernard Jenkin, said of the consultation paper: “This is yet another example of Labour’s haphazard and piecemeal approach to UK energy policy. It’s another short-term fix without any sense of an overall strategy.”
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