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Section 185 of the Energy Act 2004, as amended by Section 25 of the Climate Change and Sustainable Energy Act 2006, gives the Government the power to discount renewable generators' electricity transmission charges in a specified area of Great Britain in the period up to October 2024. The power was taken to ensure that transmission charges did not prevent renewable development in the north of Scotland where there is significant potential for renewable development.
Before making a scheme, the Government must be satisfied that the scheme is likely to result in an increase in renewable generation on the Scottish Islands. In 2007 Government commissioned a study to provide an understanding of the difference in the economic position of developing wind farms in the Scottish Islands relative to alternative locations in the North of Scotland, and how any scheme may affect the relative economics of island wind farm projects. The analysis suggested potential returns to investors on Shetland and Orkney much greater than comparable areas such as the North of Scotland where development of similar projects is already underway. This suggests that a section 185 scheme will not be required to make these projects viable. While the economics of projects situated on the Western Isles was less favourable, the case for a section 185 scheme was still only marginal. The report is available below:
A second report was commissioned to verify these findings. The second consultant’s opinion was that the original findings were reasonable. The report is available below:
A statement outlining the approach the Government is minded to take was published on 26 June 2008. This called for views both on the Government’s proposed approach and on the evidence base in the two reports. The deadline for views is 26 September 2008. The statement is available below:
In March 2005 the Government launched the Adjusting transmission charges for renewable generators in the north of Scotland consultation which sought views on whether such a scheme should extend to any part of mainland Scotland and the level of the discount on transmission charges. The outcome of the consultation on the former point was that there was no reason to extend the scheme to the mainland. Because of a lack of clarity about the way forward on the latter, a formal Government response was not published. A summary of the responses received to the 2005 consultation was also published on 26 June 2008 and can be found below:
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