Expert: Energy market is rigged and ignores Scotland for London

On Tuesday, Scottish Power cited high charges for transmitting energy onto the National Grid as a key factor in its decision to close Longannet power station in Fife.

The Spanish-owned firm gave the same reason for abandoning plans for a gas fired plant at Cockenzie in East Lothian.

Yesterday Professor Paul Younger of Glasgow University branded the UK energy system unfit for purpose and claimed the current set-up ignores Scottish interests as it concentrates on London.

The energy engineering expert is a Fellow of the Royal Academy of Engineering and has written more than 350 publications, and claims privatisation under Thatcher led to a one-sided system in which progress has stalled.

He told The National: “What we have got in the UK in this National Grid system is a real dog’s breakfast.

“The Thatcher government’s desire was to privatise everything that moved. That was in a different era. In that different era climate change wasn’t being taken seriously and security of supply didn’t seem like a big issue.

“The world has totally changed since then and we have got big issues with affordability, security of supply, and climate change issues but we have still got this bizarre system.

“They rigged the market in such a way that the only big conurbation they recognise as being worth servicing is London.

“The massive conurbation of the central belt of Scotland, in their algorithm, doesn’t matter. Well, it does matter.”

Under the current system, energy generators face increasing charges for feeding their electricity into the National Grid, dependent on their location.

The cost is also determined by the amount of power to be transferred.

ScottishPower had called for a reduction in the £40 million extra transmission charges faced by Longannet to be reduced and, announcing the closure, said the high costs made running a thermal plant in Scotland “uneconomic”.

Prof Younger said the country now risks being unable to meet demand at peak times, such as during severe winter weather.

He said: “Scotland at a stroke is going to lose about 25 per cent of its power generation and crucially the power generation that is available when it’s not windy enough.

“The UK this next winter is only going to have capacity of 1.3 per cent excess over peak demand.

The previous rule used to be 20 per cent but since about 1995 it has just reduced and reduced and reduced because of the privatised interests.

“We take Longannet out, that 1.3 per cent is practically going to vanish.

“It would only take some pretty severe weather and a few disruptions to generation, let alone disruptions to transmission and distribution, and we are for the high jump this coming winter.”

Prof Younger called the decision to walk away from developing a gas-fired plant at Cockenzie a “disaster”, stating: “The progressive thing to do is to switch off your coal fired power stations but replace them with gas.

“ScottishPower and SSE say ‘you are right, we should be building gas fired power stations, but we are not getting the right signals from the market’.

“They are not getting signals from the market because the market is rigged. The only incentive to build dispatchable power is in close proximity to London.

“This isn’t free market economics, this is the economics of the madhouse.”

ScottishPower last night confirmed it has no plans to pursue other thermal projects in Scotland.

A source told The National: “No energy company has got proposals in for a thermal energy facility in Scotland and it’s because of the transmission charges.

“Where you are sited determines whether there is a charge levelled against you and if you are in the south of England you can actually get paid for the sum you generate for the National Grid.”

National Grid, an international electricity and gas company based in the UK and US, says it is “proud” that its work and people “underpin the prosperity and wellbeing” of communities.

However, the Unite union called the Longannet closure a “disaster” for the local community in Fife, with Prospect union branding it a “body blow” for the 240 workers.

LAST night Energy minister Fergus Ewing said: “ScottishPower has set out the reasons why Longannet is having to close, and they did so very clearly, stating that essentially it has to close because of the very high costs, the carbon tax and also the transmission charging.

“And it made it absolutely clear that in the case of the transmission charges, that the power station in Scotland pays around £40 million extra – £40 million more than it would were it located down south in England.”

However, National Grid said transmission charging is regulated by Ofgem and denied the policy is “rigged”.

A spokesperson said: “It is based on location and designed to incentivise generation to be built nearer to demand, so there is less need for more transmission network and therefore, less costs added to consumer bills.

“This charging system means a better deal for consumers in Scotland who pay less given the relatively short distances the electricity has to travel.

“Based on an average home using 3.8MWh per year, an average Scottish consumer pays around £11 less per year compared to consumers in the south of England for the use of the transmission network.”

The firm said Scottish generators would receive a “significant reduction” in transmission charging next April, following an Ofgem review, and denied a risk of power cuts.