In 1992, the UK’s energy system was a very different place.
Coal generation provided the overwhelming majority of the country’s power, with the first combined cycle gas turbine plant commissioned the previous November in Cumbria.
The UK’s first commercial onshore wind farm, at Delabole in Cornwall, was just a month old, with Scotland’s first, at Hagshaw Hill in Lanarkshire, still three years away.
In Denmark, the world’s first offshore wind farm, Vindeby, had been energised a year before.
Almost 30 years on, much has changed – but one thing has stayed the same.
In 1992 civil servants at National Grid, as the UK’s electricity system operator, were drafting a review of charging arrangements in light of the organisation’s statutory duties under the Electricity Act 1989, setting out a model of how the UK’s electricity network would be paid for.
In 2021 our industry – at the heart of the economy and with a vital role in meeting net zero – is hamstrung by that very model.
Now called the Transmission Network Use of System (TNUoS) charge, it penalises Scottish renewable energy projects to the tune of tens of millions of pounds every year.
These charges are volatile and unpredictable, and even mean renewable energy projects built in the south of England are rewarded for putting electrons into the national grid.
Worse than that, international developers now face a situation where these costs are not levied on their projects in Europe – projects which can make use of interconnectors to import low-carbon power to the UK rather than face the costs and risks associated with TNUoS to develop projects here.
The potential consequences of TNUoS for Scotland’s future as a renewables powerhouse are stark.
Current policy is simply out of step with the UK’s future ambition and objectives.
The existing charging mechanism is introducing uncertainty at a time when acceleration of deployment, and the associated investment required to enable that, needs greater rather than less certainty.
It is also clear that those uncertainties are falling disproportionately on offshore wind: the very technology that can bring the largest volume of low-carbon electricity on to our system, and one that already bears a significant risk profile.
Quite simply, TNUoS methodology is broken.
It was devised for a different time, and a different electricity system. Then, thermal plant was built near centres of population – think Longannet and Cockenzie near Edinburgh and, further back, Braehead and Yoker in Glasgow.
Fuel was transported to those power stations where it was burnt, with electricity transported just a few miles to consumers.
The average UK fossil-fuel power station is now more than 30 years old. They must be replaced to ensure we have enough electricity in future and to reduce the carbon emissions which are causing climate change.
Our electricity transmission system, built more than half a century ago, requires upgrades in order to cope with new ways of generating and using power – but it isn’t just the cables, towers and substations which require a refresh. The way we regulate and pay for that system must change, too.
The model we have now, with TNUoS at its heart, harks back to 1992 – the days of fossil fuel generation. It doesn’t recognise the shift in focus of both the UK and Scottish governments to not just set ambitions to meet net zero, but also to put in place legislation to ensure we do so.
Transmission charges as they stand reflect neither the need for complementary technologies as part of the new low-carbon energy system, nor the additional wider socio-economic benefits which that development brings.
Those benefits include the creation of jobs from developments across the whole of the UK, rather than the very tightly-defined areas where generation has happened in the past.
It’s now time for the policies and regulations which underpin electricity transmission to consider not just the location of consumers of energy but also the location of the very best renewable resources in order to build out the projects that will take us further and faster towards net-zero.
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