Chamber
Meeting of the Parliament 18 April 2012
18 Apr 2012 · S4 · Meeting of the Parliament
Item of business
Project Transmit
As other members have said, the Ofgem consultation—project transmit—has been widely welcomed, as in its current form the transmission network’s use of system charging arrangements places a higher cost on Scottish renewable energy generators when they connect to the electricity network than on generators in other parts of Great Britain.
Project transmit is designed to provide a fairer and more equitable system so that we can bring people out of fuel poverty and encourage investment in renewable energy sources. The main problem with the current system is that it was designed for an era in which the vast majority of our electricity was generated by power stations rather than renewable sources. Many of those old sources of electricity generation developed next to population bases, so electricity could be transported cheaply to the areas that used the largest percentage of power.
The problem arises when we consider the fact that many renewable energy developments are not built next to centres of high population, because areas that are ideal for wind, wave or tidal projects, such as the Scottish islands, are often remote. That could affect investment in those resources, as the cost of transmitting the electricity to populated areas that need it could well be far too high. Therefore, any changes that would lower transmission charges would help to encourage investment in Scotland’s renewables sector.
We need to ensure that the new pricing regime is right for Scotland and that nowhere is placed at a disadvantage. Project transmit is our chance to get the pricing structure right for future generations and to ensure that investment in the renewables sector is not stunted by a pricing regime that hampers the islands. The current pricing structure treats Orkney, Shetland and the Western Isles differently from the mainland, which means that onshore generators on the islands are charged more than onshore generators on the mainland. If that practice continues, it could lead to wind farm developments being built offshore at a higher cost, which would ultimately be passed on to the consumer through higher bills. It could also serve to discourage investment in onshore renewables and community-based projects, which would be a devastating blow to the development of Scottish renewables, as some disadvantaged areas are in the best locations for renewable energy.
We hope that Ofgem will listen to our suggestions and develop a solution to that problem. Our amendment urges the Scottish Government to take action, should Ofgem fail to alter the pricing regime, leaving the islands at a disadvantage compared with other areas. As others have mentioned, that could be done through the current review of ROCs—the islands could be allocated additional ROCs, the money from which could be invested in renewables and used to encourage community developments.
Ideally, we need to ensure that we get the pricing structure right now. This is our chance to encourage more investment in renewables and to promote community-based projects. If that is done right, it could promote employment and reduce fuel poverty by helping to keep consumers’ bills down. If Ofgem does not take steps to amend its proposals, the Scottish Government should do its duty and use its powers to take action.
15:02
Project transmit is designed to provide a fairer and more equitable system so that we can bring people out of fuel poverty and encourage investment in renewable energy sources. The main problem with the current system is that it was designed for an era in which the vast majority of our electricity was generated by power stations rather than renewable sources. Many of those old sources of electricity generation developed next to population bases, so electricity could be transported cheaply to the areas that used the largest percentage of power.
The problem arises when we consider the fact that many renewable energy developments are not built next to centres of high population, because areas that are ideal for wind, wave or tidal projects, such as the Scottish islands, are often remote. That could affect investment in those resources, as the cost of transmitting the electricity to populated areas that need it could well be far too high. Therefore, any changes that would lower transmission charges would help to encourage investment in Scotland’s renewables sector.
We need to ensure that the new pricing regime is right for Scotland and that nowhere is placed at a disadvantage. Project transmit is our chance to get the pricing structure right for future generations and to ensure that investment in the renewables sector is not stunted by a pricing regime that hampers the islands. The current pricing structure treats Orkney, Shetland and the Western Isles differently from the mainland, which means that onshore generators on the islands are charged more than onshore generators on the mainland. If that practice continues, it could lead to wind farm developments being built offshore at a higher cost, which would ultimately be passed on to the consumer through higher bills. It could also serve to discourage investment in onshore renewables and community-based projects, which would be a devastating blow to the development of Scottish renewables, as some disadvantaged areas are in the best locations for renewable energy.
We hope that Ofgem will listen to our suggestions and develop a solution to that problem. Our amendment urges the Scottish Government to take action, should Ofgem fail to alter the pricing regime, leaving the islands at a disadvantage compared with other areas. As others have mentioned, that could be done through the current review of ROCs—the islands could be allocated additional ROCs, the money from which could be invested in renewables and used to encourage community developments.
Ideally, we need to ensure that we get the pricing structure right now. This is our chance to encourage more investment in renewables and to promote community-based projects. If that is done right, it could promote employment and reduce fuel poverty by helping to keep consumers’ bills down. If Ofgem does not take steps to amend its proposals, the Scottish Government should do its duty and use its powers to take action.
15:02
In the same item of business
The Presiding Officer (Tricia Marwick)
NPA
The next item of business is a debate on motion S4M-02623, in the name of Fergus Ewing, on project transmit. Members who wish to take part in the debate shou...
The Minister for Energy, Enterprise and Tourism (Fergus Ewing)
SNP
This is a very important debate. Charging for access to the electricity transmission network is an area of energy policy that is rarely spoken about, but whi...
The Presiding Officer
NPA
Mr Scott, you do not have your card in your console.I will give you more time in compensation, minister.
Tavish Scott (Shetland Islands) (LD)
LD
Does the minister recognise that one of the deep concerns is that large renewables businesses in other parts of the United Kingdom are arguing against any re...
Fergus Ewing
SNP
Different companies will be affected in different ways. Today, with the support of Tavish Scott and all the other parties, I hope to argue that when the Ofge...
Mary Scanlon (Highlands and Islands) (Con)
Con
Does the minister acknowledge that the proposals that will be announced on 4 May are just proposals? They will go out for further consultation and the consum...
Fergus Ewing
SNP
This is not the end of the process; that is Mary Scanlon’s point. Incidentally, I have deliberately not mentioned, nor have I addressed my remarks to, the Un...
Mary Scanlon
Con
I notice that the minister favours the flat-rate charge. I am shocked by that, because Ofgem’s briefing points out that such a measure would cost consumers i...
Fergus Ewing
SNP
I am not sure that I entirely understand that point. I apologise for that. The point that I was trying to make was that the Government has compromised. We th...
Ken Macintosh (Eastwood) (Lab)
Lab
I thank the Scottish Government for securing today’s debate on project transmit and the minister for his opening remarks. It is fair to say that my colleague...
Mary Scanlon (Highlands and Islands) (Con)
Con
I declare an interest in the debate, as my son works in the renewable energy business.The Conservatives welcome the debate on project transmit as part of the...
Fergus Ewing
SNP
To address the point that Mary Scanlon makes, I say to her that we do not accept that the costings that Ofgem gave to justify the refusal to accept the posta...
Mary Scanlon
Con
As a Highlands and Islands MSP, I certainly will not be uniting to support putting an extra £30 on the bills of people in the north of Scotland but nothing e...
Chic Brodie (South Scotland) (SNP)
SNP
Will the member take an intervention?
Mary Scanlon
Con
No. I have taken a long intervention already.Project transmit ended its consultation in February. The responses have been considered, modelling analysis has ...
The Deputy Presiding Officer (John Scott)
Con
We move to the open debate, with speeches of four minutes.14:28
Rob Gibson (Caithness, Sutherland and Ross) (SNP)
SNP
The problem that we have is that Scotland is caught in the trap of an organisation called Ofgem, which was created in circumstances that do not reflect the n...
John Pentland (Motherwell and Wishaw) (Lab)
Lab
I do not think that this debate will generate many headlines in tomorrow’s papers, although it should, because it is a high-voltage debate. Over £2 billion i...
Maureen Watt (Aberdeen South and North Kincardine) (SNP)
SNP
Almost two years ago to the day, the Parliament backed a motion that highlighted the threat that locational transmission charging poses to developing greater...
Liam McArthur (Orkney Islands) (LD)
LD
I am pleased to have an opportunity to speak in this brief but welcome debate and I am delighted that a delegation from Orkney Islands Council and the renewa...
Chic Brodie (South Scotland) (SNP)
SNP
I hope that, at its meeting tomorrow, the Gas and Electricity Markets Authority—GEMA—which is the board of Ofgem, will make decisions or at least provide mor...
Mary Scanlon
Con
Will the member take an intervention?
Chic Brodie
SNP
No. I do not have enough time.I have the greatest respect and admiration for the Ofgem team in Scotland—oh that it were independent—but the notion that exist...
Anne McTaggart (Glasgow) (Lab)
Lab
I welcome the debate. I think that my fellow members will agree that the existing charging regimes are neither compatible with the needs and desires of ordin...
Stuart McMillan (West Scotland) (SNP)
SNP
We have heard how important energy transmission is and will continue to be for Scotland’s economy. It is clear that energy generation is an integral part of ...
Margaret McDougall (West Scotland) (Lab)
Lab
As other members have said, the Ofgem consultation—project transmit—has been widely welcomed, as in its current form the transmission network’s use of system...
Mike MacKenzie (Highlands and Islands) (SNP)
SNP
I recently visited the European Marine Energy Centre in Orkney, which enabled me to gain a first-hand insight into the remarkable progress that it is making ...
Mary Scanlon
Con
Does the member acknowledge that the project transmit consultation ended at the end of February; that a decision will be made on 4 May; that that decision ha...
Mike MacKenzie
SNP
Sure, and I remain optimistic. I point out, however, that it is truly lamentable that it has taken this length of time to get anywhere near approaching the r...
Mary Scanlon
Con
Will the member give way?