OFGEM charging policy means ‘no new power stations will be built north of Watford’

Longannet; No more?
Longannet; No more?

SNP MSP Stewart Stevenson has written to the UK Energy Minister to urge a re-think on the UK Government’s ‘unfair’ transmission charges and to demand a ‘level playing field’ for power stations in Scotland.

Stevenson – whose constituency includes Peterhead power station – was prompted to write to Amber Rudd in the aftermath of evidence given to the Parliament’s Economy, Energy and Tourism Committee by Professor Karen Turner from the Centre for Energy Policy at Strathclyde University.

Professor Turner’s evidence made clear that the current transmission charging regime is “the main obstacle in terms of securing energy supply” in Scotland – and is one of the reasons behind the premature closure of the Longannet power station.  

Professor Turner also pointed out that Peterhead power station is currently operating under capacity because “it’s not economical for it to operate at full capacity”.

Stevenson said: “It’s abundantly clear that the UK Government’s unfair transmission charging regime is causing real damage to our energy sector – threatening security of supply, holding back the potential of our power stations and putting jobs at risk.

“It is simply not right that a power station in Scotland can face crippling transmission charges when an identical power station in the south of England would actually be subsidised – and experts like Professor Turner have made clear the serious impact this is having in Scotland.

“The security of our future electricity supply and the jobs of the many hard-working people in the sector must not be put at risk by the continuation of this unfair, indefensible practice.

“It is time for the UK Government to take real action to level the playing field – and the SNP will continue to make the strong case for a fairer energy market which allows Scotland’s power generators to flourish.”

Professor Turner said:

 “I think the main obstacle at the moment is the network pricing, you know, where generators are charged based on their distance from the population centres that they’re serving so I think in the extreme there could be the argument that there aren’t going to be any power stations built above the Watford gap based on this policy.  

“And if we think on the wider point, if we think about a single European market, there’s only three countries in Europe that use this kind of transmission pricing so if we started to operate in a wider European market, Britain along with Ireland and Sweden could be at a disadvantage in terms of attracting investment in plant on site so we end up, you know, the import situation, our next generation starts to fall and fall.  So I think that’s been the main obstacle in terms of securing energy supply.

“In terms of capacity, we have Peterhead which is, you know, gas is lower carbon, but also Peterhead is part of the Carbon Capture and Storage project which would make it even lower.  But it’s operating under capacity because it’s not economical for it to operate at full capacity.  

“So when we’re talking about security of supply in Scotland we’re not using our full capacity but it’s not just because of excess capacity issues, it’s because of the actual economics of Scottish power stations feeding in.”

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed