Consumers will be saddled with the cost of green energy infrastructure for at least 20 years under agreements that ensure profitability for Offshore Transmission Owners (OFTOs), according to research presented at the Royal Geographical Society (with IBG) international conference in London.
The current regulation of offshore wind energy transmission, as well as increasing costs of green energy, will disproportionately affect consumers already living in fuel poverty, Ralitsa Hiteva of the University of Manchester told the conference.
Offshore Transmission Owners, who are responsible for transmitting electricity from the offshore wind farms to the shore, have 90% of their income guaranteed regardless of how much energy they transmit.
Ofgem is the first energy regulator worldwide to issue offshore transmission licences, which are designed to attract cheap capital. In making offshore transmission contracts attractive to investors – which include pension funds with no previous experience in electricity transmission – but Ofgem is at odds with its mandate of representing consumer rights, Ms Hiteva says.
“Consumers ultimately pay for the costs of transmission infrastructure, but their interests are overshadowed by Ofgem’s desire to make the offshore transmission regime work.”
She adds: “If green energy is to grow rapidly and fuel poverty is to be alleviated, consumers must be better represented throughout the whole electricity supply chain, not just at the point of consumption.”
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