Scottish islands left in the cold by Ofgem

But Scottish islands will still face significant charges, which could hold back 1GW of wind.

Ofgem's review is considering whether its formula for setting charges is fair, given the large amount of new low-carbon generation that needs to be connected to the electricity networks. Currently, an element of its charge varies according to how far the generator is from areas of high electricity demand. This has made charges for Scottish wind farms higher than elsewhere in the UK.

Ofgem's preferred option is to retain location-based charging and introduce volume-based charging, which would take into account how often the generator is using the network to transmit power. This would be fairer for variable sources such as wind.

The proposals will see grid charges cut by about 60% for new wind developments in the north of the country, saving a large wind farm around £1.5 million (EUR1.8 million) a year.

Grid charges for developments on Orkney, Shetland and the Western Isles will drop by around 30%. But charges will still be substantial because volume-based charging is not being extended to the islands. A wind farm on the Western Isles would pay £77,000/MW (EUR92,700/MW), compared with £2,000/MW in south-west England.

Gavin McKay, senior development manager of energy at economic development agency Highlands and Islands Enterprise, said there is just over 1GW of wind consented, awaiting a permit or in scoping that is dependent on the outcome of Ofgem's proposals. Work has progressed on these projects on the assumption that a solution to high grid charges will be found.

"Until we have an enduring solution to transmission for the islands, those projects aren't going anywhere," he said.