The UK energy market regulator OFGEM has told MPs on Holyrood’s Energy Committee that it is ‘not our job’ to promote economic development in the Western Isles by supporting infrastructure investment to connect the islands with the UK mainland National Grid.
This frank admission was made by OFGEM chief executive Dermot Nolan in a letter published yesterday by Murdo Fraser, MSP, Chairman of the Scottish Parliament energy committee.
Nolan explained: “We can only approve consumer funding of a project after we have assessed it through the needs case process and concluded that it will deliver value for money for existing and future consumers. Scottish Hydro Electric Transmission’s role is to plan the development of the transmission network and identify and when new investment should be made. They then put these cases to us for approval.
“We strongly support economic investment in Britain’s energy infrastructure as it can bring significant benefits to GB consumers but it is not our role to decide on policies to promote economic development in specific industries and regions.”
Noland also told Holyrood MPs: “The requirement for the transmission link for the Western Isles depends critically on the potential generation capacity, which in turn depends on allocation of CfDs for 2019 and their value. Without clarity on this, it will not be possible to demonstrate the need for the transmission link.
“However, we are already working with SHE Transmission to address and explore issues that will be relevant to the needs case and to address the problems highlighted in our June 2013 letter on the previous needs case.
“We have also recently met with generation developers on the islands including EdF and Uisenis Power.
“These meetings have been useful in aiding our and SHE Transmission’s understanding of the key issues for their investment decisions eg sensitivity to changes in factors such as CfDs.
“This will allow us to gain a much better understanding of the likely level of generation in advance of the needs case being submitted and will enable us to reach a decision on the needs case as quickly as possible.
“The Scottish Islands Delivery Forum will be updated on these and future actions at the meeting.