In the comments following “For Peat’s Sake” I expressed reservations regarding the planning process, and particularly the concept of “planning gain”, whereby in return for being granted a planning consent developers enter into a formal planning agreement in which they promise to provide benefits to the local community. In principle, this seems like one of those much-vaunted “win-win” situations. The developer obtains a valuable planning consent, and the local community enjoys net benefits at the end of the process.

The situation seems to me to be straightforward when the planning application is one where consent is obviously appropriate, with issues around the fringes, and the only real question being how much it is reasonable to expect the developer to provide to the community in return for the profits the developer stands to make.

It strikes me as being much more contentious when – as, for instance in the context of the Viking Wind Farm on Shetland – the application concerns a development of huge scale and significance, and is one which bitterly divides the community in question. In that case, although perfectly legal and proper under the current system, annual payments to the community from the developer going forward start to look suspiciously like a bribe in return for the planning consent. Asking whether the payment is big enough to compensate for the harm caused by the development is arguably asking the wrong question. The correct question, to my mind, is whether there is any place for such a system at all in a modern democracy. Given that in Shetland the local authority is in favour of – indeed is pushing – the concept of wind energy, there must be the perception (whether or not it is the reality) of a huge conflict of interest when the local authority also sits in judgment on the planning application (and negotiates the size of the “planning gain” payments too). As it happens, the Viking Wind Farm was granted planning consent by the Scottish Government. Had the Council objected it would have triggered a public inquiry, but by not doing so the Council in effect gave tacit approval. In addition, the Council (via the Busta estate) is the landowner of part of the wind farm site and will presumably receive payments from the developer for that. There have also been a number of supplementary planning applications concerning the wind farm that the Council has determined. It is strongly arguable that there is a real conflict of interest and there is certainly the appearance of conflict. This does not inspire confidence in the planning system in respect of grand projects of this type.

Speaking of asking the wrong question…

New Lords committee launches Call for Evidence on Ofgem and net zero

On 23rd June 2021 the House of Lords Industry and Regulators Committee announced the launch of its first inquiry, into the role of Ofgem, the UK’s energy market regulator. The link to the Committee’s call for evidence can be found here:

https://www.parliament.uk/business/lords/media-centre/house-of-lords-media-notices/2021/june-2021/new-lords-committee-launches-call-for-evidence-on-ofgem-and-net-zero/

Given that it is written into statute (albeit the latest “net zero” version was sneaked through by statutory instrument*, not Act of Parliament) I suppose it was too much to expect the Committee to consider the crucial question, namely the appropriateness of “net zero” in the context of the UK’s wider energy system and Ofgem’s supervisory role.

And indeed, the Committee is not interested in such a question – how could it be, given this statement?

Having initially focused on protecting the interests of consumers, Ofgem has increasingly been given responsibilities in relation to other areas, particularly the security of the UK’s energy supply and decarbonisation. In the Energy White Paper, the Government committed to including a requirement for Ofgem to carry out its regulatory functions in a manner consistent with securing the Government’s policy outcomes, including “delivering a net zero energy system while ensuring secure supplies at lowest cost for consumers”, in its proposed Strategy and Policy Statement for Ofgem.”

It seems that Ofgem’s priorities are being changed. The interests of consumers now seem to be of less importance than “delivering a net zero energy system”. In the course of this change, big questions are being asked, not least by the House of Lords Industry and Regulators Committee.

The Committee invites evidence on a number of issues including:

Ofgem’s role in the wider energy system

Ofgem’s statutory objectives, duties and powers

Ofgem’s relationship with Government and Parliament

The impact of Ofgem’s environmental objectives on the cost of energy, particularly for consumers

The security of the UK’s energy supply during the net zero transition

I would urge anyone interested and with sufficient knowledge of the subject-matter to offer their thoughts to the Committee, however much its deliberations may be a foregone conclusion. Guidance on how to make submissions can be found here:

https://committees.parliament.uk/call-for-evidence/512/ofgem-and-net-zero/

Ofgem – a Shetland Case Study

The Committee is seeking evidence on ten specific questions. It’s worth analysing these questions in turn against the recent Ofgem treatment of the application by SSE for approval of a subsea cable link from Shetland to the Scottish mainland. Not least since suspicions abound in Shetland that far from operating as an independent regulator supervising developments in an objective way, protecting the interests of everyone involved in, or affected by the Viking Wind Farm development in an even-handed manner, Ofgem has instead been working hand-in-glove with SSE. Perhaps, given its revised remit, it had little choice.

Here, then, are the Committee’s questions:

1. What role should Ofgem play in the transition to net zero? What changes, if any, should be made to its remit, responsibilities and resources?

Given the Shetland experience, Ofgem should play no role in the transition to net zero, since for it to take sides on that issue means it inevitably has to favour “renewables” developers over those putting forward other alternatives. The gas fired power station proposal for Shetland was a case in point, much less polluting than the existing set-up and cheaper, but it did not fit with Ofgem’s objectives. The gas alternative would have cost around £100 million, less than a tenth of the cost of Viking Wind Farm and the inter-connector.

2. How well does Ofgem balance environmental objectives against its responsibilities in relation to affordability for consumers?

What does the Committee mean by Ofgem’s “environmental objectives”? These days, environmentalism seems to have nothing to do with being custodians of Britain’s wild places, and everything to do with “net zero”. In the context of this Inquiry, I strongly suspect that the Committee isn’t remotely interested in whether Ofgem is offering sufficient protection for Shetland’s whimbrel, merlin and red throated diver population, or its peat, and is concerned only with how well it’s achieving the “net zero” obligation. The words “net zero” or “zero” appear four times in the list of questions, while only one question relates to “affordability for consumers” and only one to “security of supply” (see below).

3. How well does Ofgem fulfil its obligations to consumers? Does Ofgem take consumer views into account sufficiently, particularly those of vulnerable consumers?

The latest statics show 31 per cent of Shetland households are in fuel poverty with 22 per cent living in extreme fuel poverty. Approving very costly “green” energy schemes, requiring extensive grid upgrades, can only add to consumers’ bills.

4. What implications will the transition to net zero have for the security of the UK’s energy supply? How does Ofgem currently manage issues relating to security of supply?

Cable reliability has not been adequately researched by Ofgem. An inquiry into repeated failure of the Western Link has been ongoing for the last 18 months with nothing published to date.**

On 29th September 2020, a new 6MW engine was delivered to Lerwick Power Station. Within the transmission link consultation no mention was made as to how security of supply to Shetland was to be achieved. An upgrade of the existing Lerwick Power Station has recently been confirmed. At least this demonstrates a concern to ensure that lights stay on in Shetland, but how does this fit in with “net zero” and Viking Wind Farm? Nationally, last year’s outages, much discussed at CliScep and elsewhere, should cause eyebrows to be raised.

5. Is Ofgem’s current system of price controls appropriate? Does it provide sufficient incentives to invest in the context of the transition to net zero?

This is almost certainly too big an issue for this article, leading as it does in to, inter alia, the question of constraints payments. Viking Energy will almost certainly receive substantial sums from constraints payments in due course. Perhaps I’ll talk about this issue in a subsequent article.

6. Is the current system of governance for the UK energy market appropriate to secure the transition to zero? What improvements could be made and what role should Ofgem play?

I would submit that Ofgem’s role as regulator should be first and foremost to ensure security of supply and (a very close second) to look after the interests of consumers, particularly with regard to cost. It is self-evident (see below) that these vital tasks conflict fundamentally with the race to “net zero”.

7. Are Ofgem’s duties and powers appropriate and sufficiently clearly defined? Do Ofgem’s objectives conflict and, if so, how should any conflicts be managed?

Do Ofgem’s objectives conflict? Most certainly they do – “delivering a net zero energy system while ensuring secure supplies at lowest cost for consumers” is a triangle that can’t be squared!

8. Is Ofgem’s relationship to Government and Parliament appropriate? Are there issues related to the split of responsibilities, transparency or accountability?

So far as concerns transparency and responsibility, in March 2019 Ofgem issued a “minded to approve” statement about a transmission link to Shetland subject to Viking Energy making a winning bid in the upcoming Contracts for Difference (CfD) auction. However, as Viking Energy was unsuccessful in the auction, local residents expected plans for the Viking Windfarm to be put on hold. And yet, from summer 2019 it was apparent that SSE were progressing with their plans for the Viking Windfarm, which would be built only if a subsea cable to Shetland was available.

On 23rd April 2020, a statement from Ofgem gave conditional approval for the cable, subject to Ofgem being convinced that Viking Windfarm would proceed to construction. A consultation was announced about the cable approval but within the documents released, important cost benefit analysis figures were heavily redacted. Several Freedom of Information requests were submitted by local residents in connection with the redacted figures but these were not revealed until after the cable approval had been finalised, creating the suspicion in some minds that delaying tactics had been employed.

On 18th June 2020 the Consultation was closed. On 16th July 2020 Ofgem gave approval for the transmission link to/from Shetland, subject to confirmation of an investment decision by SSE regarding the Viking Windfarm. On 17th July 2020 the award of the contract to supply and install the transmission cable was announced. This led some local residents to conclude that this had been put in place well before the cable approval announcement by Ofgem.

On 30th July 2020, responses to the consultation were finally published and showed that a majority of responses had opposed the approval of the transmission link. Ofgem’s reasons for approval emphasised that Shetland should be provided with the facility to export power. On 3rd August 2020 further announcements about contracts for various parts of the Viking Wind Farm and cable works were made. Would these complex contract negotiations have been undertaken if there were serious doubts about the cable approval being forthcoming from Ofgem?

The timetable of events concerns local residents with regard to the issue of transparency, to the extent that Ofgem’s handling of this matter was the subject of formal complaints.

9. How does Ofgem compare to similar bodies internationally? What lessons can be drawn from the experience of other countries or jurisdictions?

Suggestion – don’t copy New York or California if you want to guarantee security of supply…

10. Are there any other aspects of Ofgem’s work that the Committee should consider?

The National HVDC Centre might be a good idea, given the road that politicians are sending us down, but Ofgem’s role in it does lead, yet again, to questions regarding conflicts of interest and the suitability of Ofgem being required to have a variety of conflicting roles:

An Ofgem funded state-of-the-art simulation and training facility established to support all HVDC schemes connecting to the GB grid.

The Centre works with Transmission Operators, System Operators, Offshore Transmission Operators, Interconnector projects and Manufacturers to de-risk projects and ensure the integrity and security of the grid network.

Was the funder of such a project ever likely to reject the application for an inter-connector between Shetland and the Scottish mainland?

Other worryingly cosy relationships exist, not just between Ofgem and developers, but between developers and the UK government. For instance:

SSE NAMED AS MAJOR PARTNER FOR COP26”***

SSE has today been confirmed as a major partner for COP26 as it gears up for a year of climate action ahead of the flagship summit in Glasgow, where world leaders will be seeking a more ambitious climate change agreement.

The business is among the first Principal Partners to the UK Government and will work with government and other stakeholders to support the delivery of a successful and impactful COP next November.

The news comes as SSE continues to deliver its £7.5bn investment programme, leading the way in developing the low-carbon assets and infrastructure required for the UK to reach its target of net zero emissions by 2050.

Today SSE has also confirmed ambitious plans, alongside fellow sponsors National Grid and Scottish Power, to develop a multi-billion pound underwater super-highway that will see the North Sea become the hidden power house of Europe, supporting the UK supply chain and delivering hundreds of green jobs throughout construction and operation.”

When power companies/developers are Government partners, and when Ofgem funds a centre for developing the projects desired by power companies and on which Ofgem sits in judgment, what confidence can consumers and locals have that the Government is interested in putting in place an objective and transparent system of oversight, and what confidence can local objectors to “renewables” schemes have that Ofgem will consider them impartially?

*The Climate Change Act 2008 (2050 Target Amendment) Order 2019

**https://scotlandagainstspin.org/2020/01/the-western-link-a-new-failure-highlights-the-overbuild-of-scottish-wind-and-raises-new-questions-renewable-energy-foundation/

***https://www.sse.com/news-and-views/2020/11/sse-named-as-major-partner-for-cop26/

7 Comments

  1. Mark, congratulations. According to reports this is Cliscep’s 1000th article.

    My own view about the three aims of our energy system – that it must be cheap, reliable, and green – is that you can have two out the three, but you can’t have all three. I would ditch the “green”, air quotes because I have no doubt at all that nuclear power is in reality greener than e.g. wind farms. Nuclear, of course, was opposed by the very forces that first killed coal, and are now insistent on killing gas.

    Liked by 2 people

  2. Jit

    Many thanks for the heads-up. I feel bad about it. I assumed it was going to be 999, but Tony pipped me at the post. Had I been a bit quicker, Tony could have had the glorious 1,000th article. Sorry Tony!

    Like

  3. Nice article. It can be demonstrated that the deployment of Renewables (solar and wind turbines) across many nations conforms to cultural attitudes, and is not a function of the climate or climate exposure of nations, climate science, technical issues, or indeed anything physical or rational. https://judithcurry.com/2020/11/19/cultural-motivations-for-wind-and-solar-renewables-deployment/

    Subsidies, compensations, unaddressed conflicts of interest, elite interests, blindness to downsides, etc are all part of how cultural belief rides rough-shod over reality at scale in society. And all critical to document, expose. But while the cultural ‘spell’ holds, there’ll be precious little impartiality.

    Liked by 1 person

  4. Perhaps this is as good a place as anywhere to post this piece of information, since I criticise the planning process in the article:

    https://petitions.parliament.scot/petitions/PE1864

    “Under consideration
    PE1864: Increase the ability of communities to influence planning decisions for onshore windfarms
    Calling on the Scottish Parliament to urge the Scottish Government to increase the ability of communities to influence planning decisions for onshore windfarms by—

    adopting English planning legislation for the determination of onshore wind farm developments;

    empowering local authorities to ensure local communities are given sufficient professional help to engage in the planning process; and

    appointing an independent advocate to ensure that local participants are not bullied and intimidated during public inquiries.”

    Perhaps asking the SNP Government to adopt English planning legislation wasn’t the best choice of words (red rag to a bull?), but it’s an important development, and IMO it’s worth looking at the whole petition to understand much more about the background in Scotland, and why (perhaps – it’s my perception, anyway) windfarm applications seem to make easy headway in Scotland. I found this section particularly illuminating:

    “Larger wind farms exceeding 50MW are determined at the outset by Scottish Ministers under the Electricity Act 1989, section 36 (s.36) rather than by the LPA. However, the LPA remains a statutory consultee for each s.36 planning application submitted to the Scottish Government’s Energy Consents & Deployment Unit. Should an LPA formally object to a s.36 application, a Public Inquiry is automatically triggered. This results in significant expense to the LPA, in order for them to defend their objections. In the majority of cases, the objections of these LPAs and the Community Councils are overruled by the Scottish Ministers, acting on Reporters’ recommendations.

    In contrast, wind energy schemes in England are determined by the LPA, irrespective of size. LPAs are directed to only grant planning permission if:

    the development site is in an area identified as suitable for wind energy development in a local or neighbourhood plan; and

    following consultation, it can be demonstrated that the planning impacts identified by affected local communities have been satisfactorily addressed and therefore the proposal has community backing.

    Whether a proposal has the backing of the affected local community is “a planning judgement for the local planning authority.”

    If an LPA rejects a planning application, then a developer has a right to appeal to the Secretary of State via the Planning Inspectorate.

    This difference in legislation makes it significantly more difficult to obtain planning permission in England, and has led to an influx of developers seeking sites in Scotland, because they believe that the Scottish Government will overrule local decision making and grant consent for planning applications for onshore windfarms.”

    Liked by 1 person

  5. On the call for evidence to the  House of Lords Industry and Regulators Committee, the members of the committee are:

    The Lord Hollick (Labour) (Chair)
     The Lord Allen of Kensington CBE (Labour)
    The Lord Blackwell (Conservative)
    The Baroness Bowles of Berkhamsted (Liberal Democrat)
    The Lord Burns GCB (Crossbench)
    The Lord Curry of Kirkharle CBE (Crossbench)
    The Baroness Donaghy CBE FRSA (Labour)
    The Lord Eatwell (Labour)
    The Lord Grade of Yarmouth CBE (Conservative)
    The Baroness Noakes DBE (Conservative)
    The Lord Reay (Conservative)
    The Lord Sharkey (Liberal Democrat)

    Anyone know anything about them?

    The Lord Reay is the only hereditary member. His personal profile on the committee web site states that he has no experience outside parliament, no focus areas, and that he has spoken four times in the House.

    His registered interests include one directorship (a financial advisory consultancy) four paid employments and four companies in which he has significant control, including Highland estates and investment in Africa; plus shareholdings, including in Rio Tinto and other mining companies. So he stands to win big from the plastering of the Highlands with windmills and the plundering of Africa for rare metals for batteries and solar panels. And with four paid jobs outside parliament, he won’t have much time to listen to our arguments.

    Liked by 1 person

  6. Here’s an interesting development:

    “National Grid to lose Great Britain electricity role to independent operator
    New controller will be part of overhaul to make the energy system ‘fit for the future’”

    https://www.theguardian.com/business/2021/jul/20/national-grid-to-lose-great-britain-electricity-role-to-independent-operator

    “The government plans to strip National Grid of its role keeping Great Britain’s lights on as part of a proposed “revolution’” in the electricity network driven by smart digital technologies.

    The FTSE 100 company has played a role in managing the energy system of England, Scotland and Wales for more than 30 years (Northern Ireland has its own network). It is the electricity system operator, balancing supply and demand to ensure the electricity supply. But it will lose its place at the heart of the industry after government officials put forward plans to replace it with an independent “future system operator”.

    The new system controller would help steer the country towards its climate targets, at the lowest cost to energy bill payers, by providing impartial data and advice after an overhaul of the rules governing the energy system to make it “fit for the future”.

    The plans are part of a string of new proposals to help connect millions of electric cars, smart appliances and other green technologies to the energy system, which government officials believe could help to save £10bn a year by 2050, and create up to up to 10,000 jobs for electricians, data scientists and engineers.

    The new regulations aim to make it easier for electric cars to export electricity from their batteries back on to the power grid or to homes when needed. They could also help large-scale and long-duration batteries play a role in storing renewable energy, so that it is available when solar and wind power generation levels are low.

    Anne-Marie Trevelyan, the energy and climate change minister, said the rules would allow households to “take control of their energy use and save money” while helping to make sure there is clean electricity available “when and where it’s needed”.

    She added: “We need to ensure our energy system can cope with the demands of the future. Smart technologies will help us to tackle climate change while making sure that the lights stay on and bills stay low.”

    The energy regulator, Ofgem, raised concerns earlier this year that National Grid would face a “conflict of interest” in providing advice on the future electricity system because it also owns energy networks that stand to benefit financially from future investment plans. It called for a new independent operator to take its place.

    Jonathan Brearley, Ofgem’s chief executive, said the UK requires a “revolution” in how and when it uses electricity to help meet its climate targets and added that the government’s plans for a new digital energy system were “essential” to meeting this goal “while keeping energy bills affordable for everyone”.”

    A bit of an irony in Ofgem accusing the National Grid of a conflict of interest!

    Like

  7. Special pleading? Maybe, but it doesn’t reflect well on Ofgem and the regulatory framework around the energy system in the UK:

    “Britain’s energy supply is in crisis, and I can tell you why
    Years of regulatory tinkering left my company vulnerable. When gas shortages hit, its end was inevitable
    Andy Harris is a former chief information officer at Utility Point”

    https://www.theguardian.com/commentisfree/2021/oct/20/blame-ofgem-energy-company-collapse-utility-point-gas

    “I take no pleasure in saying to Ofgem, “I told you so.” Thanks to a perfect storm in the energy sector, many suppliers have been failing. But with all storms, you can see the clouds building first. Utility Point, the business I helped set up and build to one with more than 220,000 customers, was a victim of the regulators’ inaction.

    What began in late spring 2021 as a search for strategic partnerships and investment to help us grow, quickly became, as the market deteriorated, a quest for funds to see us through a difficult winter. It wasn’t long before it became apparent that we were fighting for Utility Point’s survival….

    …I do not hesitate in pointing the finger of blame at Ofgem for what happened. For years now, the government and Ofgem have tinkered with regulation – from the poorly designed and calculated price cap, to passing more obligations on to suppliers, and new initiatives for supporting vulnerable customers without provisions to recover costs. All this made it harder for suppliers to operate, and created an environment in which it felt inevitable that small operators would fail. When gas prices surged this autumn, lightning struck, and many of these smaller providers found themselves exposed.

    Customers are no better off. The price cap was put in place to prevent suppliers from penalising their customers who remained on standard variable tariffs after their fixed-rate term had ended, and to ensure everyone paid a fair price. This mechanism was not designed to protect customers from the price rises we are now seeing. Based on current average wholesale prices, I would not be surprised to see the price cap increase in April 2022 by more than 20%. This is not protecting people from higher prices, it is merely facilitating a delay in costs being passed on.

    When suppliers fail, their costs – such as customers’ credit balances – will be passed on to the remaining suppliers and also included in the price cap. Every supplier failure will increase the cap, further pushing up customer costs….”.

    Like

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