Scotland is home to some of the best offshore wind prospects and supply chain in the world. Its potential can be measured not just in transforming the UK’s energy system, but in delivering long-term job opportunities as we shift from oil and gas.
Decisions will be made in the coming months on the UK’s existing electricity market which have extremely high stakes for Scottish offshore wind. Put simply, the wrong call could embed huge value erosion in existing projects, and put many of those planned for Scottish waters in doubt. That not only risks the government’s Clean Power 2030 ambition, but jeopardises the energy transition to renewables, particularly in the North-east of Scotland.
Although the options for a reformed electricity market, and the option of zonal pricing, have a high profile, I am referring to upcoming decisions by Ofgem on the future of charging for use of the transmission system.
These tariffs are designed as a locational signal to new generation and disproportionately hits regions like northern Scotland because they’re further away from major demand hubs, despite being home to the UK’s greatest offshore wind potential.
Today, transmission charging is simply not fit-for-purpose as we seek to build the generation to deliver green energy at scale and kick start the country’s green industrialisation.
Increasingly volatile, transmission tariffs have risen much faster than predicted, stripping value from existing wind farms that cannot move in response, eroding investor confidence and piling on a projected £7.9bn of additional costs to consumers.
Transmission charging must be reformed to remove locational signals that run counter to the stated aims of both governments. Policy and regulation should align to ensure construction in Scotland is investable. Offshore wind represents the greatest industrial opportunity since the discovery of North Sea oil. Creating the conditions to realise it is critical.
Adam Morrison is UK Country Manager, Ocean Winds
