Regulator hits at subsidies for remote wind farms

Published: February 14 2004 4:00

Ofgem, the energy regulator, has attacked government plans to subsidise transmission costs for wind farms in remote areas as "unnecessary and misguided". It is unusual for regulators to criticise proposed legislation so openly.

Sir John Mogg, Ofgem chairman, was responding to plans to amend the energy bill to assist renewable energy producers facing high transmission costs in outlying areas such as in Scotland where wind resources are among the best in the world.

Sir John said: "To amend the energy bill in this way is unnecessary and misguided. It would mean that renewable generators will pay less to transmit their electricity than traditional generators. A great deal is already being done to encourage renewable generation.

"There is no evidence that further investment in renewable sources of electricity would result from a further subsidy of this sort. Indeed, as aresult, some Scottish renewables would receive a subsidy that other renewable generators - even in Scotland and elsewhere in the UK - would not. The government's ideas sit uncomfortably with the new European electricity directive which aims to promote competitive energy markets."

The government requires 10 per cent of electricity to be generated from renewable energy sources by 2010. It is concerned that schemes may not be developed if operators in remote regions have to pay high transmission costs.

Lord Davies of Oldham, responsible for taking the bill through the House of Lords for the government, said on Thursday: "It is for that reason that we are agreeing to consider the principle of taking a power to give renewables in specified areas some dispensation to protect them from the high transmission charges."

Ofgem said that renewable energy generators already received substantial assistance through the government's renewable energy obligation scheme worth "at least £485m this year alone".

Sir John said: "Competitive markets have brought great benefits to consumers and will continue to ensure that environmental goals are achieved in the most efficient way possible.

"For competition to flourish companies need a stable regulatory environment without government interference . . . "

* Scottish Power has been given planning permission to develop Britain's biggest onshore wind farm. The 143MW Black Law scheme will be built on the site of a former open-cast coal mine near Edinburgh and will cost £130m.