Britain risks ending up a net importer of renewable energy in the decades ahead – despite its world-leading wind power resource – due to a national regulatory system that tips the price scales in favour of the EU countries’ electricity exports, according to a new report.
New analysis by consultancy the Renewable Infrastructure Development Group (RIDG) for advocacy body RenewableUK points to the impact of “stark anomalies” in electricity generators’ access the [UK] market, with operators in Germany, France and the Netherlands able to export at “significantly cheaper” rates because of very low or non-existent transmission charges.
“The UK has the best wind resource in Europe, and we should be making the most of the clean electricity we’re producing for UK consumers at the lowest cost and ensuring we can export the massive amount of power we’re generating when there’s a surplus,” said RenewableUK’s director of future electricity systems Barnaby Wharton.
“The current approach to transmission grid charging is not sustainable if we want global Britain to become a bigger player in the international power market.
“If [UK grid regulator] Ofgem is serious about supporting UK’s net zero emissions target, it should change its approach to ensure we can take advantage of the bountiful natural resources we have.
“Ofgem needs to have a specific net zero remit to ensure we maximise our zero carbon generation as a matter of urgency - and this should be addressed by ministers alongside the government’s forthcoming strategy and policy statement for Ofgem,” said Wharton.
Power stations in the northern half of the UK can pay 16 times more for using the transmission system compared to the European average, according to the RIDG analysis, "putting Scottish generators at a significant disadvantage compared to sites in France, Netherlands, Belgium, Germany, Denmark or Norway”.
The ongoing evolution of the renewables sector toward merchant markets will lead to “this distortion likely playing a significant role in determining where renewable energy projects get built”, said report author Marc Smeed.
“Of 36 countries in the European transmission network, 20 do not charge generators at all and only five levy charges based on location. Compare this to Scottish offshore wind projects, which our analysis forecasts will pay £10/MWh – around a quarter of a project’s revenue – to access the grid in the years ahead,” he said
“Addressing this imbalance would help unlock the best wind energy resources in Europe, bringing billions of pounds of investment and jobs to some of the most remote and disadvantaged parts of the UK.”
Calculations for the report found that, on average, EU generators pay £0.46/MWh ($0.65/MWh) in transmission system charges, while in Scotland the average this year is £6.42/MWh, while in still more northerly regions the price shoots up to £7.36/MWh.
“Although the [UK] Prime Minister [Boris Johnson] is focussed on levelling up economic opportunities for all parts of the country in a Green Industrial Revolution, this analysis shows how Ofgem is overseeing a system which favours investment… in the EU,” said, adding. “with the right regulations in place, [UK wind power could] be used to drive export-led growth”.