Green energy infrastructure investment is being jeopardised by British regulations that favour EU electricity imports.

In new analysis put together by RIDG (Renewable Infrastructure Development Group), a member company of RenewableUK, the transmission charges set by the regulator Ofgem and paid by electricity generators in the country are criticised in comparison to competing European generators.

On average the report suggests EU generators pay £0.46/MWh in transmission system charges. However, in Scotland the average is £6.42/MWh as of 2021.

This difference is even starker in the windy north of Scotland where the price spikes to £7.36/MWh.

“The UK has the best wind resource in Europe, and we should be making the most of the clean electricity we’re producing for UK consumers at the lowest cost and ensuring we can export the massive amount of power we’re generating when there’s a surplus,” said RenewableUK’s director of future electricity systems Barnaby Wharton.

“The current approach to transmission grid charging is not sustainable if we want global Britain to become a bigger player in the international power market. If Ofgem is serious about supporting UK’s net zero emissions target, it should change its approach to ensure we can take advantage of the bountiful natural resources we have.

“Ofgem needs to have a specific net zero remit to ensure we maximise our zero carbon generation as a matter of urgency – and this should be addressed by Ministers alongside the government’s forthcoming Strategy and Policy Statement for Ofgem.”

Transmission charges are set to cover the cost of building and maintaining the network, and are ultimately paid by consumers as part of their bills.

At their current levels, the UK risks becoming a net importer of renewable energy from the EU in coming decades, as cheaper energy is favoured in comparison with that generated in the UK that is subject to the transmission charges.

“Of 36 countries in the European transmission network, 20 do not charge generators at all and only five levy charges based on location,” expanded associate director of RIDG Marc Smeed. “Compare this to Scottish offshore wind projects, which our analysis forecasts will pay £10/MWh – around a quarter of a project’s revenue – to access the grid in the years ahead.

“Addressing this imbalance would help unlock the best wind energy resources in Europe, bringing billions of pounds of investment and jobs to some of the most remote and disadvantaged parts of the UK.”

The report follows criticism from network operator Scottish and Southern Electricity Networks (SSEN) of the current Transmission Network Use of System (TNUoS) charging regime, which it has described as “unfair and volatile”. Similarly it highlighted that the current system makes wind generation in the north of Scotland particularly expensive.

Royal Dutch Shell Plc’s head expects clean energy to make up half of the company’s energy mix “somewhere in the next decade.”

“If we do not make that type of process by the middle of next decade, we have a problem not just as a company but as a society,” Chief Executive Officer Ben van Beurden said in an interview with AXIOS on HBO.

Like its European peers, the Anglo-Dutch major has set itself an “ambition” to become a net-zero emissions energy company by the middle of this century. The feat involves producing less oil, more gas and renewables, as well as using technologies still in their infancy like hydrogen and carbon sequestration. Not everyone is convinced, with the energy giant set to clash with some shareholders on the matter at its annual general meeting later this month.

“If you want to get rid of hydrocarbons in the mix, you have to do something about the use of it, not the production of it,” van Beurden said. Speaking on the challenges of the transition, the 63-year-old Dutchman also said that people want to see results straightaway, but “don’t expect that tomorrow we will stop selling diesel to trucks.”

While van Beurden welcomed the U.S. rejoining the Paris Climate Agreement, which seeks to limit global warming temperature increases to less than 2 degrees Celsius from pre-industrial levels, he questioned other policies. “What I also see is that the government is flirting with popular ideas that are clear, simple, and wrong, which is, ‘Let’s ban the production of oil and gas in our country.’”

Published late on Friday (7 May), the policy paper states that the UK will aim to capture and store 10 million tonnes of CO2 per year by 2030. Should this target be met, and progress continue accelerating between 2030 and 2050, the paper states, some 50,000 jobs could be supported.

The emerging CCUS sector is described in the report as a “great incubator of green jobs” as Ministers seek to get the UK on track to host two million such roles by the end of the decade. It is also described as a sector that can help deliver a “fair and equitable transition” for oil and gas workers who will likely need new roles in the coming years, given that many in the sector will have transferrable skills.

While the report describes itself as a ‘roadmap’, there is little detail on how the Government will support the skills, infrastructure and technologies needed to deliver on 2030 and 2050 targets. It states that a full map of opportunities and challenges, as well as Government supports, will be published later this year. This document will come alongside a ‘Fit for CCUS’ scheme for businesses, designed to help high emitters like oil and gas majors and heavy industrial sites to prepare to adopt the technology.

The document does state that BEIS will work more closely with bodies including the Treasury, the Department for National Trade, the British Business Bank and the National Infrastructure Bank (NIB) to develop the map. Ministers have faced multiple accusations in recent months of failing to work across departments to avoid net-zero loopholes. The NIB is notably entering operation this week, with questions still remaining about its climate remit.

It also reassures readers within the sector that BEIS remains open to supporting CCUS projects it is not currently aware of, through mechanisms such as the dedicated Infrastructure Fund. Announced late last year as part of the Ten Point Plan, the Fund’s remit was updated last week in line with the UK’s adoption of the Climate Change Committee’s (CCC) Sixth Carbon Budget recommendations last month. The paper also expresses the possibility of CCUS being included in future post-Brexit trade deals.

Existing projects, the policy paper states, should identify and advertise potential delivery contractors “as visibly and as early as possible”.

Clusters and dispersed sites

The paper comes after a report commissioned by BEIS, and published last year, concluded that the department is lacking a “comprehensive regulatory framework” to overcome challenges to “dispersed” sites that would be suitable for CCUS but that aren’t located in industrial clusters.

Indeed, the overarching target for CCUS to date has been for the UK to fully decarbonise at least one industrial cluster by 2040. Clusters are seen as less risky locations for deployment as, with dispersed sites, new transportation infrastructure will be needed.

The UK Government has increasingly focused on CCS since setting its legally binding net-zero target. Before then, the previous £1bn competition fund for CCS was actually scrapped by the now-defunct Department for Energy and Climate Change (DECC).

According to the CCC, CCUS is a “non-optional” component of the UK’s transition to net-zero. However, some green groups would like to see Ministers doing more to prioritise technologies that are already mature, alongside nature-based solutions for sequestering carbon, in the short to mid-term.