Three offshore wind developers have raised concerns that the current UK transmission charging system poses a significant threat to the viability of offshore wind projects in northern Scotland.
Ocean Winds, Northland Power, and the West of Orkney Windfarm consortium said the industry faces a “significant and immediate risk” under the existing regime, which links grid charges to a project’s distance from major electricity demand centres.
New research commissioned by the developers and conducted by Aurora Energy Research suggests that reforming the system could save UK electricity consumers up to £16.2 billion between 2028 and 2050.
“The magnitude and volatility of transmission charges are harming existing Scottish projects and undermining investments which will be vital for Clean Power and Net Zero ambitions,” said Adam Morrison, UK country manager at Ocean Winds.
Under the current structure, renewable generators in remote areas such as northern Scotland face some of the highest transmission costs in Europe. The study warns that these charges could double in the next five years, potentially putting the UK Government’s Clean Power 2030 targets at risk.
Aurora’s modelling shows that a 1GW offshore wind project in northern Scotland would face lifetime costs around £1 billion higher than an equivalent scheme in southern England, largely due to transmission fees.
CMP444 WACM 1, a proposed reform of the transmission charging regime, is set to be reviewed by Ofgem in the coming weeks. The proposal would cut Scottish transmission charges by an estimated 59% and reduce subsidy costs within the Contracts for Difference (CfD) framework.
Claire Mack, chief executive of industry body Scottish Renewables, said: “These charges are both volatile and unpredictable, unfairly penalising Scottish projects by tens of millions of pounds every year. Quite simply, the UK Government will not meet the targets set out in its Clean Power 2030 Action Plan without the abundance of wind power generated around Scotland.”
Emanuele Dentis, commercial manager at Northland Power, added: “Ofgem has greenlit billions of pounds of transmission investment works in Northern Scotland, without recognising that – without reform – these works are too expensive for generators to pay back.”
He said a fairer system would be better aligned with national decarbonisation goals and support a more balanced distribution of transmission costs.
The developers warned that failure to act risks distorting the UK’s renewable energy market, particularly the CfD mechanism, where projects with higher grid costs require higher strike prices while others benefit from uniform support despite lower expenses.
The combined capacity of the three developers’ projects could supply electricity to more than one-third of UK households.
