8. Grid Connection Charges
The issue of how to charge for connecting major wind farm projects to the national grid has still
not been fully resolved, but in response to a Parliamentary Question
last Dec, Energy Minister Mike O'Brien commented : ‘The
Energy Act 2004 laid the foundation for the creation of a single GB
market for wholesale electricity trading and transmission. Charges
to connect to and use the GB transmission system, and therefore access
the GB market, are still being developed by National Grid.’
But he added that Ofgem
had approved National Grid’s proposed connection charges, i.e. the
charges that relate to the specific assets provided at each site to
connect to the network.
He added ‘Ofgem also recently announced that, following approval of
a use of system charging methodology, it is minded to implement a
discount against transmission charges of approximately £4 per kilowatt
for smaller generators connected to the transmission system at 132KV.
This is expected to encompass a number of larger wind-farm developments,
particularly in the north of Scotland.’
He went on ‘Further, the Government took a legislative
power in the Energy Act 2004 to allow the Secretary of State for Trade
and Industry to introduce a dispensation regime in order to limit
the transmission charges to renewable generators in a specified area
of Great Britain, if the transmission charges would otherwise materially
hinder renewable development in that area. DTI recently commissioned
an independent study to examine the likely impact of GB transmission
charges on renewable development, in particular Scotland.’
He concluded ‘The
establishment of the GB market will also remove charges for using
the Anglo-Scottish interconnector currently
paid by Scottish generators including windfarms,
exporting to England and Wales. It will also give Scottish generators,
including renewables access, to the GB market as a whole rather than
their development being constrained by the limited size of the electricity
market in Scotland.’
The price is right
OFGEM,
the electricity regulator, says the increase in embedded renewables
and CHP capacity is adding to the burden of distribution companies,
so it will allow them to raise prices by 1.3% after inflation for
the next two years, and by the rate of inflation for the following
four years. Ofgem says this will provide
about £500 m to help integrate renewables into distribution networks.
But it puts the total cost of rewiring the UK
to connect in renewables
at £1bn.
