LEADING organisations from Scotland’s renewable energy industry are backing a leading politician’s campaign against an “obscenely unfair” charging structure amid warnings it could strangle the country’s green generation at birth.
SNP MEP Alyn Smith has commissioned legal advice to back up his view that the UK’s current electricity transmission regime, which discriminates heavily against Scottish renewables generators, breaches EU law.
Ultimately, the action could see the UK government end up in the European Court of Justice if the European Commission agrees.
The current system, which benefits companies in the south of England, is massively unfair and unbalanced.
Scotland has less than nine per cent of the UK’s population and currently generates about 12 per cent of its electricity. However, it pays about 40 per cent of the UK’s transmission charges
Latest forecasts show that companies with renewables projects off Orkney and the Western Isles may see charges as high as £100 a kilowatt to get their power to consumers while similar firms in Cornwall are actually subsidised to the tune of £6 a kilowatt.
One leading figure within the Scottish renewables sector last night warned: “This discriminatory and hugely inappropriate pricing regime will affect more than 90 per cent of the UK’s proposed wave energy projects and potentially stop this new industry before it has started.
“It is disadvantaging remote communities which want to see more renewable energy along with the economic benefits it brings.”
Niall Stuart, Chief Executive of the industry body Scottish Renewables, also said that the charges risked discouraging investment in areas with some of the best wind, wave and tidal resources in Europe.
He continued: “Harnessing the islands’ great renewables resources will help keep bills down for consumers across the UK, will cut carbon emissions and will create local jobs.
“We believe that the European Commission should now assess whether the charges for the islands are consistent with European law.
“But whatever the outcome, it is clear that it makes no sense for charges to be set at a level that holds back developments. The islands are key to the development of a commercial scale wave and tidal industry and potentially some of the most productive wind farms in the country.”
Marine energy developer Aquamarine Power, which is developing its revolutionary Oyster wave technology in Orkney, is also supporting Alyn’s action.
It believes that the charges being applied are contrary to a 2009 EU directive which bans discrimination against renewable energy produced in “peripheral regions” such as Scottish islands.
The company’s Chief Executive Officer, Martin McAdam, said: “With a quarter of the UK’s generating capacity shutting down over the next 10 years and domestic gas bills increasing 78 per cent since 2000, more than ever the UK needs a diverse renewable mix to secure future energy independence and to act as a hedge against fossil fuel price volatility.
“Wave energy can be a valuable part of that mix, but projects have to locate where the waves are - and 92 per cent of all UK wave energy projects will be subject to islands charging.”
A spokesperson for Orkney Islands Council described the current charging structure as “short sighted”, adding: “We have consistently lobbied to have a transmission charging structure that allows export of energy from our islands at a reasonable price.
“The structure as it stands emphatically does not do this and is a disincentive to commercial development of marine renewables - a new industry in which Orkney has established a hard earned lead.
“The energy resource around our islands is second to none, and it seems inevitable that it will at some point have to be harnessed to achieve government targets for green energy.”
Alyn, who is Scotland’s sole representative on the European Parliament’s influential energy committee, said: “I am delighted -though not surprised - that some of the major players within the Scottish renewables sector believe that Europe has a role to play in changing this obscenely unfair charging structure.
“They are, of course, absolutely right to say that the current regime threatens the viability of many renewables projects in Scotland’s most fragile communities before they have even begun to produce commercial power.
“Jobs, investment, meeting ambitious renewables targets and Scotland’s reputation as a world leader in cutting edge scientific research and innovation are all at risk if Ofgem continues with this disastrous strategy.”
Alyn’s formal complaint to the European Commission asks it to consider so-called infraction proceedings against the UK regulator. He added: “The current pricing model is unsuitable, outdated and I believe illegal under EU law. That’s why I want the commission to take action.
“Scotland’s renewables sector has achieved remarkable success in developing models to allow commercial generation of clean, green electricity from remote locations. It has the potential to lead the world, but is currently being throttled by a series of London-made barriers and hurdles.
“I’ve been working with industry stakeholders for some time now and will present a dossier to the European Commission very soon. It will have hard facts and statistics showing how the current pricing regime discriminates against our industry and remote communities.”
He continued: “The legal advice I’ve commissioned will be pivotal in demonstrating that. I want to take action to give the Scottish renewables sector a level playing field.”