I beg to move,
That leave be given to bring in a Bill to require the Government and Ofgem to conduct and act on a review of the electricity transmission grid and associated charges, to include consideration of abolishing charge differentials based on geographic location, incentivising renewable energy generation to maximise energy output, and minimising the passing on of charge fluctuation risk to consumers in the form of higher prices; and for connected purposes.
The driver behind this Bill is that Scotland currently has the highest grid charges in Europe. The Tory Government shrug their shoulders and say, “It’s nothing to do with us—it’s a matter for Ofgem.” However, they are the ones who set the rules for Ofgem to implement. What is the point of the Government bragging about a net zero target for 2050 and a plan to decarbonise the electricity grid by 2035 when they do not seem capable of seeing the bigger picture? While they probably do not care about Scotland having the highest grid charges—it fits their perception that Scotland is remote, so additional cost makes sense, and that anyway it is just us Scots whingeing again—the reality is that continuing as is jeopardises their own net zero plans as well as Scotland’s own targets. It makes a mockery of their levelling up agenda—which is, in reality, just about targeting the red wall seats of north England and the midlands. That agenda was confirmed last week by the disgraceful decision to class the Scottish carbon capture and storage cluster as a reserve.
The current grid charges system was introduced in 1992 following privatisation of the electricity market. Back then, it was based on the concept that electricity is generated from coal, gas, oil or large nuclear stations. With this embedded concept, the charging system is now still geared at incentivising power generation sites close to the centres of population—or, more accurately, the closer to London the better. It is utterly absurd that the UK Government have taken the welcome step to phase out coal-fired electricity generation but are retaining a grid charges system that is based on where to build coal-fired power stations. It is completely bonkers. The obvious strategy would be to consider what a future grid will look like, where are the best locations for the generation of clean renewable energy and what grid upgrades will be required to facilitate that, and then analyse the long-term costs of the grid upgrades and devise a fair system of charging to facilitate that. That is exactly what this Bill seeks to do.
Let us be clear: having the highest geographical charges in Europe creates an uneven playing field when looking for investment. The majority of the countries in Europe do not have locational charges. The ones that do charge way less than is imposed in Scotland. If a developer built a grid-connected turbine in each of these countries—Finland, Denmark, Sweden, Norway, Austria, France, Slovakia, Romania and Belgium—the combined locational charges for those nine turbines across nine countries would be less than the charge imposed on a single turbine in the north of Scotland. That illustrates the investor competition for Scotland, let alone the fact that so many other countries, such as the Netherlands and Germany, do not impose geographical charges. Worse, the UK Government are building interconnectors that allow electricity imports that are exempt from these grid charges. I am supportive of an interconnected energy market, but the system incentivises international investors to invest in other countries.