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Speech: Liam McArthur to Scottish Parliament on Project TransmiT

April 18, 2012 1:55 PM
Originally published by Scottish Liberal Democrats

I am pleased to have an opportunity to speak in this brief debate and delighted that a delegation representing the Council and renewables sector in Orkney is present in the gallery today.

While time constraints allow me only to touch very briefly on some of the key issues, I welcome the Minister's agreement to meet with delegations from each of the island groups later this afternoon - hopefully enabling a more detailed discussion of the next steps in pressing for change - change that is urgently needed.

But let me acknowledge first the progress that has been made to date. As we move to a low carbon economy, and address the need to de-carbonise our energy system, fundamental reform of our energy markets is needed, including devising a more appropriate method of charging for transmission.

I support the government's motion today, but it risks portraying the current arrangements as 'anti-Scottish'. This may be politically expedient, but is untrue. They reflect historic realities and requirements.

What is certainly true is that if Orkney and the other island groups are to play their full role in helping Scotland and the UK achieve their renewables ambitions, a revised transmission charging regime is needed, amongst other reforms.

I think the Minister's motion also perhaps overplays the significance of this Parliament's vote in April 2010, while underplaying the significance of the arrival at Westminster of a Coalition government committed to the fundamental review, currently being undertaken through Project TransmiT.

In particular, the personal efforts of my Liberal Democrat colleague, Chris Huhne are worthy of recognition: something, to be fair, the Minister and his predecessor have been happy to put on record.

I think the Minister also very reasonably acknowledges the strengths of the TransmiT process and the progress made through the emerging proposals, which should make more viable developments in the north and west Highlands, for example.

However, Scottish Renewables in their briefing are right to highlight the risk of a potential discrepancy between indicative and actual TNUoS tariffs. This seems to arise due to a lack of high load factor plants in Scottish charging zones with which low load factor plants can be balanced.

Scottish Renewables have sought assurances from Ofgem on this issue, but it is one on which we will all must remain vigilant.

Ofgem also point to proposed changes to user commitment charges, cited as a real barrier to entry by some smaller developers. These again seem to be moving in the right direction, although I am aware that the liabilities for those looking to connect in remoter locations are still significant.

But whatever progress has been made to date, there is still much to do, and this is critically important for the economic future of the islands I represent, as well as Shetland and the Western Isles.

Ironically, as the situation has improved for mainland developers in the Highlands, the competitive position of counterparts in the islands has arguably deteriorated. Orkney is only 6 miles from the Scottish Mainland, yet our transmission charges would be 6 times higher than those of mainland developers.

The recent example of Fairwind Statkraft demonstrates that this disparity in cost is having an effect on whether or not companies are prepared to take forward potential developments in the islands.

And the risk is that this diminishes our ability to play to our strengths. As Andrew Scott of Pelamis Wave Power observed: "The projects we now see under development off Orkney's coast using Pelamis technology represent a route to commercialisation and the grounding of our supply chain here in the UK. Ensuring we can export electricity from these projects at sensible costs via stronger grid connections to the UK network is a fundamental pre-requisite to achieving this success."

It has been suggested to me that the current lack of grid, securities and the charging issues we are discussing this afternoon all have the potential to dent our international reputation as the world's leading location for marine renewables.

So I applaud the work led by Scottish Renewables and HIE, supported by developers, local Councils, Scottish Government and others, in identifying possible solutions to the current impasse.

Their proposals are reasonable, practical and avoid setting unhelpful precedents for the future. They recognise the need to resolve the outstanding issues facing the isles through the transmission charging regime, rather than through ROCs.

I can't, therefore, support either the Labour or Tory amendment.

But I welcome today's debate and look forward to further, detailed discussion with the Minister and island delegations later this afternoon about how we unlock the potential for our islands to be the powerhouse behind our renewables revolution.