Viking welcomes EU intervention over renewables transmission costs

The UK Government has been asked to justify the system that means renewable energy projects in remote parts of the country are charged much more to transmit power to large areas of population than those close by.

According to figures from Highlands and Islands Enterprise, generators located near areas of high demand in the south of England are subsidised by around £7 per kilowatt hour while similar projects in the Highlands pay around £22 per kilowatt hour to use the transmission system. Projects like those planned by Viking Energy for Shetland have been quoted figures of around £96 per kilowatt hour by operators National Grid.

Now the European Commission has intervened to seek information pending a possible investigation into whether peripheral areas are discriminated against in contravention of a recent EU directive following questions from SNP MEP Alyn Smith.

The development has been welcomed by Viking Energy. Project manager Aaron Priest said: “The European Commission’s interest in this is a significant development. A low carbon future and Europe’s energy security depend, in large part, on developing its best renewable energy resources.

“Shetland has these in abundance. Anything which moves us towards a transparent, fair, predictable and non-discriminatory transmission charging regime is particularly welcome.

“National Grid will shortly consult on transmission charges for Scotland’s islands to provide us with greater transmission charging certainty. It’ll be interesting to see how these initiatives at the highest European level impact on that process.”

In August Highlands and Islands Enterprise, acting in concert with local authorities in the area including Shetland Islands Council, wrote to the European Commissioner for Energy, Andris Piebalgs, arguing that the charging methodology was discriminatory.

“The Highlands and Islands, with less than one per cent of the UK’s population, hosts the vast majority of the UK’s hydro power schemes, and has latterly been a hot spot for the development of wind, wave and tidal energy schemes. The pace of renewable energy development is expected to continue if not accelerate in view of the fact that the region is home to some of Europe’s strongest sustained wind regimes along with world class wave and tidal regimes …

“Critical to ensuring that energy extraction occurs in areas of best resource is the provision of a fair, transparent and predictable charging regime in line with EU Directive 2009/28/EC on the promotion of the use of energy from renewable sources which states that ‘Member States shall ensure that the charging of transmission and distribution tariffs does not discriminate against electricity from renewable energy sources, including in particular energy from renewable energy sources produced in peripheral regions, such as island regions, and in regions of low population density’.”

The letter suggested that the UK regime was at odds with the directive on cost and predictability grounds: renewables in the area account for two per cent of UK capacity but 16 per cent of transmission charges, and charges are “impossible to predict more than two years in advance”.

Earlier this year Lerwick Community Council resolved to press for a fairer charging system on the grounds that it would make it easier for Viking to construct a much smaller windfarm which would still yield strong financial returns for the community.

A commisson spokesman said: “The commission is writing to the UK Government to ask for clarification of the UK system of electricity transmission charges.”