Tackling climate change is largely about reducing CO2 emissions and a significant target is decarbonising electricity. Scottish electricity is largely produced carbon free and some of the surplus is exported to England. Often too much electricity is generated than required or the cables can take, so an increasingly large portion is curtailed, or paid to be switched off.
Every half hour the GB price, at which all electricity is bought by the grid, is set centrally and then resold to suppliers of customers at that same price per kWh across GB. However, standing charges to pay for the network are added, including separately local connection charges. This results in Scottish consumers paying around £83 more than London per year whilst locally produced electricity is the cleanest and cheapest to generate. Will this change under Labour?
During the General Election campaign the Labour Party promised to lower average electricity bills across the UK by £300, and accelerate decarbonising the GB network from 2035 to 2030. Now in government, Labour have established a new publicly owned systems operator (NESO), set up a “Mission Control” expert group to co=ordinate the move to net zero and announced at COP29 a target of reducing CO2 emissions by 81% by 2035.
Decarbonising electricity throughout GB means replacing 95% of gas power produced in England with renewable electricity largely produced offshore in Scotland and northern England, and increasing the cable capacity to transport it south. There would still be some curtailment in Scotland however, that can be used locally.
NESO has produced a 2030 report which details what needs done, the chief obstacles, policy decisions required and the likely cost. The plan requires five times as much to be invested in the next five years than was over the last five years. More cables, more generation (particularly of offshore wind) and many more trained engineers and construction workers. If workers can be found, a suitable investment climate created and projects delivered on time, then given no major disruption such as wars, plagues etc, NESO state the targets can be met – just! It is essential a co-ordination group, involving the Scottish Government and other agencies produces a plan to maximise Scottish jobs.
Generation contracts are awarded in annual rounds. The next two rounds will be much larger, tripling offshore wind capacity from 2023, doubling onshore wind, tripling solar, increasing batteries fivefold. A minimum of £34 billion investment per year is required, around £170bn to 2030. The following five years will see a further doubling of generation capacity mainly of floating offshore wind around Scotland and the Irish Sea. This will decarbonise further industries and power for electric vehicles and homes, at least another £200bn in generation costs.
These prices assume that companies bid at the rates achieved last round and that the materials to build generation can be acquired and organised readily. Both the Scottish and UK governments have worked with the offshore industry to provide suitable materials and sites. The contracts terms have been altered to encourage say batteries co-location at wind farms to smooth power. The critical issue will be interest rates which may determine what bids are achieved.
A total of 80 new or upgraded network links need to be completed by 2030 to take electricity from Scotland and the North Sea to the south east. The routes of these have been largely agreed and many have started. The cost will be £70bn and under current arrangements will be paid for by all electricity consumers as a daily charge even before they are completed. Similarly local networks are being upgraded, however, these are paid by local customers only.
Why should Scottish consumers be charged the same as London consumers for the £70bn network upgrade which mainly benefits the south of England, and not be charged the same to connect to their local network?
In responding to consultations on how electricity should be charged, Common Weal supported changing to regional pricing (also known as zonal pricing) which would give cheaper electricity in areas which had surplus electricity and charge other areas more. This would encourage timeshifting of use and overall lower electricity costs. Scotland would get cheaper electricity more often than not.
A second change supported by Common Weal would roll some or all of the network costs onto per kWh charges. This would mean lower costs for frugal or poorer users. Combined with regional charging, Scottish consumers would pay less with no standing charges. We see no reason why transmission network and distribution network costs should not be paid equally across all customers. Both should be amalgamated into a single cost per kWh. The Government is due to respond to these proposals early next year.
Scotland has for 50 years powered GB from the North Sea from oil and gas. We are now powering GB from onshore and offshore wind and, not only that, are paying extra for the privilege. That extra cost must end. End standing charges and introduce regional pricing now
