Why does Scotland pay more for electricity?

(Last Updated On: 15th December 2014)

It will probably come as no surprise that here in Scotland we have to pay more for our electricity than our cousins in England. Meanwhile the electricity companies who provide us with this electricity make heavy profits. Does this seem fair? No I don’t think so although you may have a different opinion. But how does this come to pass? Why do we pay more and how much more?

Well the following picture illustrates the cost of electricity bought from SSE/Scottish Hydro for a property in Aberdeenshire:

Electricity Costs Aberdeenshire

Electricity Costs Aberdeenshire

So you can see that the Tariff Comparison Rate (TCR) is 17.29 pence per unit (kWh). So for a property which uses 4000 units per annum the cost would be £691.60. So what about our cousins down south? Well the following table illustrates the costs of electricity bought from SSE/Scottish Hydro for a property in Southampton:

Electricity Costs Dingwall

Electricity Costs Southampton

As you can see the TCR for this property is 15.73 pence per unit which is 1.56 pence less than the Aberdeenshire property. So for our 4000 kWh user the bill would be £629.20 per annum. Which means that our Southampton property would pay £62.40 less than our Aberdeenshire property for their annual electricity. So our Aberdeenshire property pays almost 10% more than our Southampton property.

Here in Scotland we are having a renewable energy boom, which is mostly driven by Government subsidies, but it is to be welcomed none the less. Renewable energy has exceeded our demand for electricity on a few occasions recently and our carbon emissions have been drastically cut. Most of this boom in renewable energy is being driven by wind turbines, but we also have some biomass and solar in the mix too. In order to get the energy being generated to a customer the generator needs to be connected to the electricity grid, but this costs money as you would expect. But how much? The following table shows how much it costs to connect a generator to the grid across the UK:

Generator Connection Charges UK

Generator Connection Charges UK

As you can see, if you want to connect a generator to the grid in Scotland you will pay much more than you would if you were located in England or Wales. In some areas of England they will pay you to connect your generator to the grid. Here is another picture which illustrates the difference in generator connection charges:

Generator Connection Charges UK

Generator Connection Charges UK

The reasons given for these discrepancies are “a combination of a locational element that reflects the cost of providing incremental capacity to generation on an area of the main integrated onshore transmission system, and a non-locational residual element which ensures that the appropriate amount of transmission revenue is recovered from generators.” In other words it costs more to get the power from remote areas to the main users in built up areas.

The reality is that we in Scotland subsidise the rest of the UK, we pay more for the electricity we use and we pay more for the getting the power that we produce onto the grid. These extra costs are holding back our renewable energy sector and punishing the people with higher electricity charges.

So what can be done? We could re-nationalise the electricity grid. Then we could ensure that the transmission charges are the same no matter where you live or generate and then I could be paying the same for my electricity as someone in Southampton. Are there any bold politicians out there who would make this their policy?

3 thoughts on “Why does Scotland pay more for electricity?

  1. AvatarRos

    Interesting article. It doesn’t explain why Cornwall and Devon get a subsidy bigger than Central London, Essex, Kent and so on. And where does the money for these subsidies come from? I hope it’s not from the surcharges we’re paying in Scotland

    Reply
  2. AvatarDavid Milligan Lvss

    I would go further and set up a nationalised utility company in Scotland right next door to the “big 6” and compete them out of business, first in Scotland, then continue by advertising in England, Wales and the whole of Ireland, north and south.

    With no shareholders to lavish the profits on, the cost per unit would be much less than the “big 6” could afford to compete with. No more cartels working against their customers.

    The staff that would lose their jobs from the big 6 would be taken on by an expanding nationalised industry. Everybody gains. Industry would get a shot in the arm through much lower energy costs and the homeowner gains and has a stake in an industry that could go so much further with regard to bridging into power generation and renewables.

    This idea grows arms and legs if you continue thinking about it.

    Kindest regards,

    David Milligan

    Reply
  3. AvatarErnst Blowfelt

    I worked on software to trade electricity on the uk power market years ago as I remember the grid is incredibly inefficient at transmitting electricity so you would want to produce the power as close to demand as you can

    Reply

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