Salmond Welcomes Energy Changes, But Renews Grid Charge Reform Call

>> 10 August 2010

Gordon MSP Alex Salmond has welcomed news that the Westminster Government is to lift a ban which prevents local authorities from selling surplus energy to the National Grid.

The rules, introduced by the Department of Energy and Climate Change (DECC) which come into force from 18 August 2010, mean that Local Authorities will no longer be restricted from selling renewable electricity. It paves the way for Aberdeenshire Council to install renewable projects on their land and buildings, and to sell any surplus back to the grid.

However, in welcoming the development, the First Minister also renewed his call for the immediate reform of what he described as the ‘discriminatory’ connection charging regime which sees Scottish generators paying to connect to the grid, while generators in the south of England are subsidised.

The current system of locational charging levies higher costs on generators furthest from the main centres of demand for connection and use of the electricity grid. This favours generation in the southern part of the UK and presents an inbuilt bias in the UK transmission regulatory system against Scottish based generation.

The charging regime means that, for example, Peterhead Power Station has to pay £20 per kW/h for a grid connection while a London-based energy provider would be subsidised by £3 per kW/h. As a result, Scottish generators produce 12 per cent of UK generation, but account for 40 per cent of the transmission costs, or about £100 million per year more than their fair share.

Commenting, Mr Salmond said:

“Lifting this restriction on local authorities is a step in the right direction in reducing energy bills and carbon footprints. However, to get maximum benefit from this reform, what is really crucial is ending the discriminatory connection charging regime which works against the development of clean, renewable energy in Scotland by forcing generators to pay millions of pounds more to use the grid.

“Scotland has overwhelming energy potential but our future wealth is being sabotaged by these unfair charges. For example, Peterhead Power Station has been forced to pay £29 million a year for the right to produce power while an identical generator in London would be paid £3 million to set up shop. This ridiculous position must be changed.

“Liberal Democrat Minister Chris Huhne needs to address this anti-Scottish bias. His announcement that local authorities will be able to sell surplus energy must be matched by action to reform the connection charging regime.”

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