Ofgem’s “mantra” about driving down costs “must be challenged”, the head of the Orkney Islands world-leading marine energy R&D centre has urged.
At a meeting of the House of Commons Scottish Affairs Committee, held in the Orkneys yesterday (28 June), European Marine Energy Centre managing director Neil Kermode added his voice to the growing criticism of the regulator’s transmission connection charging regime.
Under the existing transmission charging system, projects located close to large centres of demand face smaller connection costs than those in more peripheral areas, like the north of Scotland and its abundant renewable generation resources.
Kermode said the 3.5MW of tidal and wave projects developed so far with EMEC had “barely scratched the surface” of the Orkney’s marine energy resources.
Socialising the transmission connection costs for remote locations would remove a key barrier to investment in such projects, he said: “I don’t think the transmission process works for the new world. It’s not appropriate anymore if we are trying to reshape the electricity network.
“If we just seek to drive to the lowest cost, we will probably end up with something cheap and probably nasty. The lowest cost mantra needs to be challenged to make sure we recognise there are values other than simply the price you pay for electricity.”
Kermode also warned that the stiff connection costs means that UK-based marine energy developers are focusing their attention on other countries, like Canada, which are prepared to offer more support.
He said the UK must not lose the opportunity to develop its marine energy industry, pointing out that while the Danish wind industry had been a similar size to Great Britain’s in the 1980s, it now generates bigger export earnings for the country than the arms industry does for the much more populous UK.
“I’m very concerned that we will see this industry slip through our fingers, which would be a travesty because we know we have the resources here.
“If we blow it, we have only ourselves to blame.”
Kermode was backed up by Dr Gareth Davies, managing director of Orkney-based environmental consultancy Aquatera.
Davies, who is a member of the Scottish Government’s Marine Energy Group, estimated that the connections costs for projects on the Orkney Islands are around four times greater than those on the north Scottish mainland.
“People are resistant to radical change but it’s not surprising that the regulatory system needs radical change, when faced with a climate emergency.”