Modelling work carried out by consultancy Nera for the energy company revealed that the proposed changes could cost consumers £16 billion to 2030, or £12 a year for a typical household.
It said they would incentivise investment in remote parts of the country, and “substantially increase” generation and transmission costs overall. The analysis challenges National Grid predictions there will be a net benefit of between £1.6 billion and £4.7 billion over the period.
National Grid has proposed changes that would shift the balance of costs on generators from north to south. Those with mainly thermal generation in England and Wales, like RWE Npower, would take a hit while Scottish renewables would benefit. Tom Glover, commercial head of RWE’s supply and trading arm, called for greater transparency over the impact. “It is a hidden subsidy to Scottish renewables,” he said.
SSE hit back, calling the old regime “outdated”. A spokesman said: “Renewables need to be located in remote locations; nuclear has only a few siting options, therefore the extreme costs for remote and northern plant are simply a cost burden for the necessary location of electricity generation plant.”
A spokesman for National Grid said the proposed methodology “will provide efficient signals to users of the system that will provide an overall benefit to consumers”.
Ofgem is due to publish a wider impact assessment for consultation this summer.