Scottish Renewables has criticised Ofgem’s decision to reject a proposed temporary cap-and-floor model for transmission charges, warning the move could hinder investment and development in Scotland’s offshore wind sector.
The energy trade body said the regulator’s decision not to support CMP444 — a code modification proposed by the National Energy System Operator (NESO) to limit the volatility of Transmission Network Use of System (TNUoS) charges — was a “clear misstep” that could threaten future projects north of the border.
Under the current TNUoS charging structure, generators pay higher transmission fees the further they are located from major demand centres. The system has been widely criticised for penalising remote renewable energy projects, particularly those in Scotland, and for producing unpredictable cost fluctuations.
“The UK government rightly recognised this summer that reforming volatile and outdated transmission charging is fundamental to securing a clean energy system,” said Stephen McKellar, head of grid and networks at Scottish Renewables. “Scottish projects have long been penalised under the current system, which is actively undermining their competitiveness. Rejecting CMP444 is a clear misstep with the need to balance long-term reform with short-term certainty.”
McKellar added that creating stable conditions would be crucial to sustaining Scotland’s renewable energy growth. “To build on the progress already made across Scotland’s pipeline and supply chain we must create the best possible conditions for the next Contracts for Difference auction,” he said.
Ofgem confirmed its position on Oct. 23, maintaining the “minded-to” decision it issued in July. The regulator said that placing upper and lower limits on transmission charges would not “better facilitate achievement of the Applicable Charging Objectives” compared with the current framework.
The watchdog also noted that the UK government will set out a detailed timeline later this year outlining key milestones for a full TNUoS reform, expected to be completed by 2029.
“As we await a final decision on CMP432, we need immediate assurance of how Ofgem will work with industry, government and NESO to prevent even greater risk being added to the investment and deployment necessary for our shared objectives,” McKellar said.
