Renewable Energy

Trade and Industry written question – answered on 7th December 2004.

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Photo of Mr David Stewart Mr David Stewart PPS (Rt Hon Alistair Darling, Secretary of State), Department for Transport

To ask the Secretary of State for Trade and Industry what steps she is taking in respect of charges for connecting major wind farm projects to the national grid; and if she will make a statement.

Photo of Mike O'Brien Mike O'Brien Minister of State (Energy & e-Commerce), Department of Trade and Industry

holding answer 2 December 2004

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. Ofgem considered NGC's proposals last month, and concluded that further work was required in respect of use of system charges. It did, however, approve 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.

NGC's proposal for the use of system charges will be revised and resubmitted to Ofgem for approval in February 2005. The transmission charging methodology is planned to take effect when BETTA is implemented.

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.

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.

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.

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