ScottishPower abandons power plant plans because of transmission tax

• 8 years ago (2015-08-24)
• David Flin

Europe 1061

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ScottishPower, owned by the Spanish utility Iberdrola, has announced that it has abandoned plans to replace a coal-fired power station in East Lothian with a gas-fired alternative, saying that the key reason for this decision was a tax “for being in Scotland.” The company said that heavy transmission charges imposed by the National Grid, under which the further north in Britain that a power plant is, the higher the transmission charge, was a key reason for it abandoning plans for Cockenzie and was the catalyst for the closure of the coal-fired Longannet power station next year.

ScottishPower said that the combination of high transmission charges and high carbon taxes make it no longer economic to generate electricity from coal or gas in Scotland.

The Cockenzie power plant was closed in 2013, because it did not meet modern environmental standards. ScottishPower had planned to convert the plant to burn gas rather than coal, but work on the new 1000 MW plant was delayed, and will now not be continued. ScottishPower complained about what it described as a “disproportionate transmission charging system”, which resulted in it paying £40 million a year in penalties. It said that to continue operating until 2018, Longannet would need to pay £120 million in fees. However, if it were in the London area, it would instead receive a fee of £4 million a year to stay connected.

The National Grid said that while Scottish generators produce about 12 per cent of UK generation, they account for over 40 per cent of the transmission costs. The National Grid defended the charging system, saying that it was set up by the energy regulator Ofgem, and that it actually provided savings for Scottish consumers. A spokesman said: “It is a locational arrangement, which means the further you are away from demand for electricity, which is the south of England, the more you have to contribute to the cost of getting your electricity to the market. It has the effect, actually, of reducing the bills for Scottish consumers because there is in Scotland enough electricity to meet their needs, to they end up with £11 per year less on their bill because of the arrangement.”

Longannet, the UK’s second largest coal-fired power station, while now close in March 2016, marking the end of its 46 years of power production in Scotland.