The Scottish Government

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5. Renewable Electricity

Objective: to facilitate the development of renewable electricity so as to reduce carbon emissions and promote economic growth as well as to enable greater exploitation of the renewable energy resource and drive down costs.

• In meeting our 2011 interim target of 31% of gross electricity consumption from renewable sources we expect the vast bulk of new capacity to be delivered by additional onshore wind power stations. Smaller scale developments - wind and hydro - are valued for their contribution to energy supply and community benefit and we wish to encourage the development of these.
• Onshore wind will continue to increase beyond 2011 playing a strong part in meeting our 2020 target, but we also expect offshore wind, marine and tidal and biomass to make significant contributions in the next decade. The Scottish Government wishes to support the development of emerging technologies so as to achieve a balanced mix of renewable generation.
• The Scottish Government supports powers in the UK Energy Bill which will allow the provision of varying levels of support for different technologies under the Renewable Obligation Scotland ( ROS) mechanism, thus driving the development of less mature technologies.
• To achieve our objectives significant increases in grid capacity will be required, both onshore and offshore. The Scottish Government is in dialogue with BERR and Ofgem to ensure that regulatory mechanisms are aligned fully with the need to exploit renewable resources - which are found predominantly in Scotland.
• A major study on grid security concludes that the Scottish transmission network could cope with 8 GW of installed renewables capacity in 2020 without the need for significant investment, other than that which has already been approved by Ofgem, and without adversely impacting upon grid system stability or system security.
• We are looking forward to the growth of offshore wind and marine energy and considering potential for export. We are working with European partners to look at how current grid regimes might develop in the future and specifically the feasibility of offshore grids ("supergrids"), which will be essential as we move beyond 2020 towards large scale exports of renewable electricity.

5.1. Introduction

5.1.1. Development of new generating capacity is led by the private sector acting within a regulated market. In making investment decisions, developers will take into account any financial benefits which may result from renewable energy as compared with other options for investment and will take into account any real or perceived barriers to the realisation of their project proposals.

5.1.2. The Scottish Government therefore recognises the need to provide a policy context which will encourage investment, while at the same time balancing energy objectives with other objectives such as protection of the natural environment.

5.1.3. This chapter looks first at how our target of meeting 50% of gross electricity consumption from renewable generation in Scotland by 2020 might be achieved, and at what contribution we might reasonably expect from different technologies. The subsequent sections set out how the Scottish Government is taking action to facilitate investment and remove barriers, whether by:

• acting directly itself;
• seeking to influence UK and EU policy;
• supporting industry in its individual and collective actions.

5.2. Generation Structure

5.2.1. Scotland's electricity is currently produced by a small number of large coal, gas and nuclear generating stations, together with a larger number of smaller renewable plant. (mainly established hydro and onshore wind). This is illustrated in the chart below.

Amount of Electricity Generated, By Energy Source (2006)

We wish to move to a much greater proportion of renewable energy, together with cleaner generation from coal and gas. Scotland's potential renewable electricity capacity, as illustrated in the chart below, has been estimated by previous studies to be around 60 GW - sufficient to meet peak demand for power around ten times over. The scale of the resource dictates that there is potential for substantial exports to the rest of the United Kingdom and neighbouring countries in Northern Europe. In developing the resource(s), both regulators and developers need to take into account environmental and other constraints and ensure that carbon benefits are considered as well as financial costs. With this in mind, however, renewable electricity represents a major economic opportunity for Scotland which needs to be pursued over time, including the necessary investment in marine and tidal technology in particular and in the subsea grids which will be needed to transport the electricity to market. As such, progress towards 2020 needs to be seen as a stepping stone towards more substantial exports in the next decade and beyond, rather than an end in itself.

Renewable Electricity Potential

5.2.2. The Scottish Government is on track to meet its renewable electricity targets of 31% of gross electricity consumption by 2011 and 50% by 2020. This is not a cap, but a step on the way to our longer term vision, and we will look at going further than this if it is possible and practical to do so. We believe that precise targets for the contribution of different technologies are not appropriate. This will be a matter determined largely by the market and by consenting decisions, albeit influenced to a significant extent by policy mechanisms such as the Renewables Obligation. However, we have examined different scenarios in order to be satisfied that targets can be met and to identify actions necessary to achieve these.

5.2.3. Our targets relate to meeting gross electricity consumption - which is measured and expressed in GigaWatt hours ( GWh), i.e. in terms of actual output rather than installed capacity. Installed capacity will not run at full potential all of the time, and will be influenced by such factors as weather conditions, down time for repairs etc. Wind, for example, is categorised as "variable" or "intermittent" energy with onshore wind delivering from 25-45% of theoretical potential, depending on the site in question. Hydro can operate at levels of 40-% plus, while thermal plants (gas, coal and biomass) operate at 85% of capacity. This variability has to be taken into account when estimating the amount of installed capacity that might be required to meet our targets.

5.2.4. On the assumption that renewable sources will operate at 30% of theoretical potential, we estimate that we will require 5 GW to achieve the 2011 target and 8.3-8.4 GW to achieve 50% by 2020. Current installed renewables capacity is around 2.8 GW. There is a further 1.7 GW of capacity approved under the Electricity Act ( i.e. above 50 MW) under construction, and approximately 2.5 GW of capacity of Section 36 applications in the system, with more (smaller projects) being approved and considered by councils. We have offered pre-application opinions on a further 2 GW of potential developments. We expect many further applications which will feed into 2020 capacity. However, allowing time for the application process and construction, projects which will contribute in 2020 will probably have to be in the planning system by 2017. Prior to that data gathering is required and, in the case of emerging technologies, testing and refining of devices. It will also be important to extend the lifetime of the Renewable Obligation beyond 2017.

5.2.5. Some 1.6 GW of current capacity is in the form of hydro electricity, with the remainder coming from onshore wind and a small amount of biomass and offshore wind. For 2011 we expect the vast bulk of new capacity to be delivered by additional onshore wind power stations. Onshore wind will continue to increase beyond 2011, but we also expect offshore wind, wave and tidal and biomass to make a significant contribution in the next decade, as set out in the next chapter. It is too early to make detailed predictions of the balance in technology while details of the way the Renewables Obligation will work are being finalised, but by way of illustration, the breakdown might be on the following lines:

5.2.6. These estimates assume that appropriate financial incentives are in place, that technology research and development is successful, that grid access and availability improves and that projects move with reasonable speed through the planning system to determination. These issues are discussed further below. Further details are also given of how we are working to develop individual renewable technologies.

5.3. Financial support

5.3.1. Renewable electricity is currently more expensive to generate than from fossil fuel but that has the disadvantage of high carbon emissions associated with generation, which in turn has significant wider costs to the economy and environment. Carbon capture and storage is expected to make a significant reduction in time but this will have its own costs. In addition fossil fuels are finite while renewable energy has advantages for security of supply. Governments across Europe and wider have therefore taken steps to support generation from renewable sources.

5.3.2. While some countries in Europe have adopted a feed in tariff to support renewable electricity, in the UK market it is supported by the Renewable Obligation ( RO). The RO legislation obliges licensed electricity suppliers to secure increasing amounts of their supply to customers from eligible renewable sources. The wider powers enabling the creation of an obligation on suppliers are reserved to the UK Government, but the Scottish Government has devolved powers which enable it to deliver the RO in Scotland. Compliance is demonstrated by the provision to Ofgem of Renewables Obligation Certificates ( ROCs), which suppliers can buy from renewable generators. A supplier has the option of paying a buy-out payment rather than producing ROCs if it wishes (or using some combination of the two methods). Buy-out monies are paid by suppliers into a fund, and are redistributed by Ofgem to ROC holders in the form of recycling payments in proportion to each supplier's share of the total number of ROCs redeemed in an obligation year. The obligation levels are currently well ahead of demand, i.e. there are not enough ROCs for all suppliers to meet their obligations in full. This means that there is more money in the buy-out fund being recycled to suppliers who redeem ROCs, and thus making the ROCs themselves more valuable. This ensures that the prices being paid to renewable generators are sufficiently high. The cost to consumers of the Renewable Obligation is capped by the buyout price, set at £30 per unit of electricity in 2002 and linked to inflation, and the level of the Obligation in a given period.

5.3.3. The Scottish Government wishes to see a balanced mix of renewable technologies and therefore supports UK plans to amend the RO to allow varying levels of support to different technologies and thus drive the development of less mature technologies. This is fully consistent with changes already made to the RO in Scotland to deliver additional support for wave and tidal generation (the Marine Supply Obligation). The precise nature of any further changes to the RO in Scotland will depend on full consultation, which is currently underway, ¹¹ and the subsequent agreement of the Scottish Parliament.

5.3.4. Emerging technologies are currently being supported with Scottish Government grants for capital expenditure, e.g. the development of wave and tidal capacity, where we have a technological lead and a huge potential resource, the development of hydrogen fuel cell technology and the deployment of biomass energy which is underdeveloped in Scotland and the UK more generally. The need for further capital grants will be considered in the light of other support available, including banded ROCs, generic support for innovation and investment and UK wide schemes for specific technologies.

5.4. The role of different technologies

5.4.1. This section looks in more detail at the potential of different sources of renewable electricity, what does or will influence their exploitation and the role of the public sector in facilitating private sector investment. It focuses on larger scale generation. Micro-generation is considered in a later section.

Mature technologies

Hydro

5.4.2. Scotland is already home to a significant amount of hydro power (almost 1.4 GW, some half of current installed renewable capacity). Several large scale run of river and storage schemes were built during the course of the twentieth century, most of which are located in the Highlands, and more recently the Glendoe scheme has been built. Hydro power is proven and reliable, although the output from such stations is dependent on the amount of rainfall during a given year. Storage and pumped storage schemes can also be used to help manage the grid system and meet peaks in demand. The potential impact of large scale hydro power on the environment means that there is limited scope for any further large projects. However, there continues to be interest in small scale run of river schemes. Three applications have been determined by Ministers over the last 15 months and new applications continue to be received.

Glendoe Hydro Scheme

The Glendoe hydro scheme, near Loch Ness, is the first large-scale hydropower station to be built in Scotland for almost 50 years. The project is being developed by Scottish and Southern Energy and is the largest civil engineering project currently underway in Scotland, bringing with it employment and economic benefits. The 100 MW plant will be largely complete by winter 2008 and, from its quiet and inconspicuous location in the mountainside, will ultimately be capable of generating enough electricity to power every home in a city the size of Glasgow. Hydro currently provides most of Scotland's renewable energy generation and the construction of the Glendoe plant illustrates how this success story will continue.

5.4.3. The Forum for Renewable Energy Development in Scotland ( FREDS) has recently examined the potential for small scale schemes with research funded by the Scottish Government. This illustrates that significant potential remains for hydro development and provides the sector with an indication of where the resource may lie. The Scottish Hydropower Resource Study is available from http://www.scotland.gov.uk/Topics/Business-Industry/Energy/19185/FREDSHydroResStudy

SCOTTISH HYDROPOWER RESOURCE STUDY

The study was commissioned by the Scottish Government on behalf of the FREDS Hydro Sub-group which was set up in early 2007 to look at opportunities and barriers to the further development of hydropower in Scotland. The Sub-group decided that its main task was to identify the potential for further viable hydro power, based on topography and other environmental factors, and taking into account constraints such as land designations. The study, undertaken by a consortium of partners from the Scottish Institute of Sustainable Technology ( SISTech), Nick Forrest Associates, and Black & Veatch Ltd, was published in September 2008. It shows that there is 657 MW of economically viable hydropower potential as yet untapped in Scotland. This would represent roughly a 50% increase in installed hydro capacity from current levels. Most of the potential 1000+ new schemes posited are between 100 kW and 1 MW in size, with a considerable quantity also in the 1-5 MW scale. The study will be used by the FREDS Hydro Sub-group to inform its wider strategic thinking on the future of the sector in Scotland. The sub-group will develop its own report to FREDS over the remainder of 2008.
http://www.scotland.gov.uk/Topics/Business-Industry/Energy/19185/FREDSHydroResStudy

5.4.4. The FREDS planning and hydro sub groups have also considered whether it would be helpful to lift the MW level at which applications come to Ministers for determination rather than local authorities. Local authorities, like Ministers, would need to consider the views of relevant statutory bodies and of the public. With improvements to the Electricity Act application process now in place, it is not clear that this would speed up processing more than by a marginal degree. However, this could still be valuable and views are welcome on this issue. But it should be noted that, as the Act is drafted at present, a single MW limit for determination by Ministers applies for marine (wave and tidal) as well as hydro developments. The Scottish Government considers that, given the early stage of development of wave and tidal energy, the current 1 MW limit should remain for wave and tidal projects in order to ensure that impacts are fully considered and expertise is built up in a central location.

Onshore Wind

5.4.5. Development of onshore wind farms commenced in Scotland during the 1990s, supported under the old Scottish Renewables Obligation scheme. The technology has progressed and improved since then, with turbine sizes increasing significantly. Installed onshore wind capacity in Scotland is now 1240 MW with further projects consented and under construction and more various stages of the planning process. Developments range considerably in size. Those under 50 MW capacity require planning permission from planning authorities while larger developments require consent from Ministers under section 36 of the Electricity Act. Given its proven status, as well as known and anticipated levels of applications for consent to develop onshore wind, this technology is expected to play a major role in meeting our interim and 2020 renewable electricity targets.

5.4.6. As for all technologies, the planning and consenting systems seek, against the context of the Scottish Government's policy support for renewable electricity, to consider whether onshore developments are acceptable against a range of considerations including visual impact and impact on communities, impact on habitats and impact on aviation radar. Onshore wind developments have sometimes given rise to a considerable volume of public objections, largely relating to visual impact. These will continue to be properly taken into account but it is interesting to note that recent research has found that wind developments do not have a detrimental impact on tourism while developers find considerable public interest in wind farms once they have been constructed. The effectiveness of the planning and consents system, particularly in relation to speed of processing, is considered further in section 10 below.

5.4.7. The Scottish Government is aware that further investment in onshore wind will depend crucially not just on developers identifying appropriate sites and an efficient planning and consents regime but also on suitable transmission access and charging regimes (see section 5.7 below) and on a stable financial incentive mechanism. Another established technology is landfill gas. Under EU obligations, gas from landfill sites must be collected and either used for energy or flared. The increased capture of landfill gas has helped to decrease greenhouse gas emissions from waste management. Renewable Obligation support is available for landfill gas. In the longer term landfill is not a sustainable option for waste management (although it may still be used for a limited amount of waste) and so landfill gas is likely to decrease in significance.

Developing technologies (to 2050)

Biomass

5.4.8. Forestry material, or material from other biological sources (such as animal waste and by-products, or other biodegradable wastes, such as post consumer woody material from both indigenous and imported sources) can power boilers and provide useful quantities of predictable, baseload electricity and/or heat generation. This sets biomass electricity apart from variable forms of renewable generation, such as wind, and increases its value and attractiveness. At present, much of this fuel is combusted in electricity generation rather than intrinsic energy being captured. It is renewable in the sense that it can either be replaced on a relatively short lifecycle (of trees as opposed to, for example, coal production), is part of a repeating cycle (animal waste) or would otherwise bio-degrade on a longer timescale.

5.4.9. Use of biomass in Scotland is far less developed than in many European countries where it is used in rural areas particularly for combined heat and power plants, often in district heating schemes. This is therefore a proven technology but one which is not yet extensively used in Scotland or the UK more generally. In order to encourage deployment, Scottish renewables legislation already supports biomass electricity generation (the most visible example of which is a 45 MW wood fuelled plant in Dumfries and Galloway). The Scottish Government has also funded a large number of projects under its Scottish Biomass Support Scheme and several with regional selective assistance support. The aim was to stimulate the wood and pellet supply chain, the installation of boilers and development of relevant skills.

5.4.10. The RO will continue to provide support for biomass electricity but, in order to achieve the maximum impact from use of biomass, increased focus will in future be placed on combined heat and power, and outwith the electricity obligation, on biomass for heat. (As discussed in section 6/8 below, biomass has a particularly important role in reducing dependence on oil for heating.) The recent consultation on the RO in Scotland therefore proposed increasing that support above its current level (particularly for projects which include Combined Heat and Power, or CHP). Action to develop the supply chain and skills is discussed further in section 12 below. The Government's overall policy in relation to energy from waste is outlined at 6.2.iv below. The Government is also supporting the development of Anaerobic Digestion, which can generate energy as well as produce material which can be used to improve Scotland's soils. For example, the Waste and Resources Action Programme is making up to £6 million available over three years to support infrastructure which can treat organic waste, particularly food waste. Similarly there are opportunities to develop schemes using agricultural waste.

Offshore Wind

5.4.11. Offshore wind is establishing itself gradually around the shores of the UK. Most initial developments are in shallower waters which are to be found to a greater extent off the coast of England and Wales. However, there is a project under construction in the Solway Firth and the Scottish Government has provided grant funding towards a demonstrator project in deep waters in the Moray Firth. The latter draws on technology and skills from the oil and gas industry: this wider infrastructure which gives Scotland a competitive advantage in driving forward projects. As discussed in section 12 below, Scottish Development International is actively seeking to attract developers and manufacturers to Scotland who can benefit from facilities such as those of, for example, Fife and Nigg, in taking forward their projects.

5.4.12. Initial thinking was that, taking into account technology and environmental constraints, the opportunities for offshore wind development within Scottish territorial waters ( i.e. within 12 miles of the coast) might be limited. The Crown Estate recently sought expressions of interest from developers in Scottish territorial waters, in relation to its role of providing leases for use of the seabed. The extent of current and practical interest in this area will be more apparent in the autumn, once more detailed information from potential applicants is submitted. The Scottish Government stands ready to deal speedily with applications for consent to generate electricity although applicants are encouraged to seek a scoping opinion before proceeding to a full application. It will be important for the Scottish Government, Fisheries Research Services, industry and other bodies to work closely with the Crown Estate to ensure that all aspects of the process work hand in hand. The proposed introduction of banding under the Renewables Obligation will provide an additional financial incentive (in the form of higher ROC multiples) for offshore wind generation.

5.4.13. We believe that there may be considerable and greater potential for offshore wind development in deeper waters off Scotland, although this will not be developed extensively until into the next decade. The Scottish Government is sponsoring a Strategic Environmental Assessment ( SEA) of Scottish renewable energy zone waters (beyond 12 miles) and this will help guide developers to areas more suitable for exploitation. The Crown Estate has recently sought expressions of interest but follow through to this will be informed by the results of the SEA.

5.4.14. As discussed in sections 5.5-7 below, development of the offshore resource will also require grid access and the Scottish Government is taking steps to ensure that this is put in place. Work will also be put in place to minimise waste from offshore installations.

Emerging technologies

Wave and Tidal Energy

5.4.15. Scotland's long and exposed coastlines, and the tidal channels between the islands and mainland, combine to create a potentially huge renewable power resource from waves and tides. The Scottish Government believes that our resource, coupled with Scots based innovators and our academic expertise, can make Scotland a world leader in developing and installing marine technologies. This ambition is supported by legislation which, even before the introduction of banding, offers greater support for wave and tidal power in Scottish waters than anywhere else in the UK. It is also supported by the existence of the unique wave and tidal test facilities at the £16 million European Marine Energy Centre ( EMEC) in Orkney.

EMEC Tidal Test Facility

The European Marine Energy Centre has been the heart beat of Scotland's fledgling wave and tidal sector since 2003 when it established the wave power testing facility. Since then the Orkney facility has seen some of the best European devices being put through its paces and is now establishing international standards for the marine industry. It recently added tidal power test births on Eday in Orkney and this development earned it the Best Renewable Innovation Award at last year's Scottish Renewables Green Energy Awards.

5.4.16. EMEC recently played host to the UK's first grid connected tidal turbine (supported by a Scottish Government grant), mirroring its earlier achievement with the Pelamis wave energy converter. Having seen intensive research and early stage testing, the sector needs to prove that its technologies will work efficiently and effectively at scale for prolonged periods and in real sea conditions. The Scottish Government is providing grants to support the capital investment associated with such deployment.

5.4.17. While test at sea is a necessary requirement before commercial operation, there are a number of steps which the public sector is taking to help speed up development. While the objective is that EMEC becomes self-financing, the public sector continues to support EMEC in its early years. It will however be important that EMEC operates to a clear and commercially oriented business plan and can negotiate quickly and effectively with developers the legal and commercial underpinnings of a lease.

5.4.18. As developers look to deploy devices outside EMEC it will be important that they select locations which not only offer significant tidal or wave resource but which also will not suffer undue environmental impact from operation of devices. The Scottish Government has already carried out a Strategic Environmental Assessment which has identified what further work is needed in order to assess environmental issues. In order to assist the development of the industry, and in partnership with industry, the Scottish Government, working through its Marine Energy Spatial Planning Group ¹² and with stakeholders, will support this further work, such as sea bed mapping, with the end objective of providing high level strategic locational guidance for developers. Of course, operation of a device will require consent from Ministers (unless under 1 MW) and applicants will therefore require to complete an environmental assessment. But information to be collected on behalf of the Government will be of a public nature and should help avoid developments being proposed in sensitive areas with the time and investment that this can entail . Scottish Ministers are currently consulting on a Scottish Marine Bill that contains provisions for the creation of a marine planning system and streamlined marine consents. It is anticipated that Marine Scotland will oversee the planning system and as a minimum will operate as a front door for all marine consents.

5.4.19. In deploying devices the marine energy industry is engaging in an area of vast future potential but also of shorter term financial cost and risk. Following the innovative Marine Supply Obligation, the Scottish Government intends now to implement banding of its Renewables Obligation, and has proposed that marine energy, given its state of development, should benefit from a suitably high number of ROCs, broadly equivalent to the impact of the MSO.

5.4.20. In helping enable developers prove these devices, the Scottish Government is providing the foundations for a sector which could supply large quantities of predictable power and create significant economic benefits. The successful deployment of capacity from these emerging technologies could also prove vitally important in terms of progress towards meeting our domestic electricity and EU renewable energy targets. A longer term ambition for this sector is to develop significant levels of exports of renewable energy from Scotland, which will require investment in maritime transmission infrastructure as discussed in the previous section.

5.4.21. Given the importance of this sector, we will work through FREDS to develop a route map to present current and required actions, including work already underway on areas such as infrastructure, finance (grants, RO, Saltire) and the environment. It will also cover the role of the Marine Energy Spatial Planning Group ( MESPG) (see paragraph 5.4.18 above) and connections with related activity such as the development of offshore wind.

5.4.22. The Scottish Government is also supporting research and development in the area of hydrogen fuel cells. Hydrogen is an 'energy carrier' rather than a fuel source because it can only be produced using energy. It can be produced from fossil fuels such as natural gas or coal by the application of heat, but it can also be produced using renewable energy. Our £1.5 million Renewable Hydrogen & Fuel Cell Support Scheme has provided grants to seven projects seeking to deploy and demonstrate renewable hydrogen and fuel cell technology. The development of these technologies could play an important role over time in enhancing grid stability by accommodating off grid generation from intermittent renewable sources.

5.5. Grid Security

5.5.1 The operators of the electricity grid ensure supply on a day to day basis. Scotland is currently a net exporter of electricity to England and Northern Ireland, although the interconnector with England can import electricity to Scotland if needed. The Scottish Government has been considering how the current transmission grid would cope with increasing levels of variable generation from renewable sources, particularly wind, in Scotland.

5.5.2 One of the keys to longer term system security, and efficiency is to develop more effective ways of storing electricity. Achieving this will include avoiding developing even more capacity just to meet peak demand. We need to look at more innovative ways as well as economic ways to store production; here the development and deployment of electric cars will make a big difference to storage potential. A further priority is to use grid capacity in a more innovative way, with the model of regional grid management being implemented in Orkney and providing a more efficient way to matching capacity to demand being capable of implementation in other areas. Indeed, the expected investment over the next 20 years in re-equipping the transmission and distribution grid systems offers a real opportunity to develop the "smart grids" which will allow us to be much more energy efficient in the use of electricity and to maximise the potential of the renewable resource. This is one of the areas where research cooperation with UK and European partners will provide real benefit ( see section 10).

5.6. Grid development: onshore and offshore

5.6.1. If Scotland's 60 GW potential renewable electricity resource is to be exploited as fully as possible, significant increases in grid capacity will be required, both onshore and offshore. Reinforcements to grid infrastructure are recognised as strategic national development in the National Planning Framework 2 ( NPF2- see section 10). Investment in some of these reinforcements has already been authorised by Ofgem. Other reinforcements are proposed in NPF2 in order to continue to exploit renewable resources. If Parliament confirms the proposed strategic developments this will establish need and leave applications for consent to be assessed on the basis of local impact. Scotland is in the forefront in the UK in this approach to strategic developments. As future needs become clearer these can be included in future versions of the NPF which will be periodically updated. Future needs are likely to include sub sea connections both to other parts of the UK mainland and to other countries. The establishment of an offshore grid to collect electricity generated by offshore marine devices and wind turbines would enable this power to be connected to a robust point on the grid, either in Scotland or preferably in England or Europe, lessening the need for upgrades to the land based transmission network in Scotland. The costs of this would be very substantial, but technologies such as HVDC are maturing and becoming more cost effective.

5.6.2. Sub sea connections offer the potential for export of renewable electricity. The Scottish Government is planning now for this given the time needed for investigation, investment approval and construction. In order to make the case for commercial investment, work to assess the feasibility of developing offshore grids is currently being developed in partnership with the Irish Republic, Northern Ireland, the UK, the Netherlands and Germany. Following a pre-scoping study, the European Union has awarded funding for a full feasibility study of an offshore grid between Scotland, Northern Ireland and Ireland. An application for funding for a similar North Sea study will be made once the current pre-scoping study is finalised.

5.6.3. In relation to investment in grid infrastructure, the Scottish Government welcomes the approach proposed in the UK Renewable Energy Strategy that the transmission operators should be able to invest in an anticipatory manner and not have to await firm development proposals before seeking such agreement from Ofgem. Furthermore, while understanding that the new regime for investment in offshore connections follows a substantial period of consultation, the Scottish Government considers that, in the future, we need to move away from approval of point to point connections to a more anticipatory approach and one which envisages a network grid of connected installations. This is in keeping with the feasibility studies mentioned above.

5.7. Transmission Access and Charging

5.7.1. The Scottish Government meets with industry partners to explore grid transmission issues. Membership includes Scottish Power, Scottish & Southern Energy and the Scottish Renewables Forum. We are liaising closely with the UK Government ( BERR), Ofgem, National Grid, and other EU member states and regions to secure reforms to the regulatory framework which will facilitate the development of renewable energy (and investment in clean thermal based generation.).

5.7.2. The Scottish Government believes that the current 'first-come-first-served' access arrangements operated by National Grid and Ofgem for prioritising the connection of new renewable generation are not defensible. The queue for connection includes a large number of speculative projects. We concur with the interim report of the Transmission Access review (led by BERR and Ofgem) which repeats a previous requirement on National Grid to 'make sure that available capacity is allocated to projects currently in the connection queue that are able to use it. In practice, this means prioritising projects with consents and financing in place'. The Scottish Government also supports calls for a "connect and manage" approach to grid connections. At the moment, connection offers are only given where the grid can accommodate full generating capacity. However many projects do not run at full capacity and thus more projects could be accommodated. The final report of the Access report was published in the summer of 2008 and while we agree with many of the proposals contained within it, such as the principle to shorten queues and improve grid management along with further work on increasing incentives for infrastructure development, we are aware that concerns remain about the detail and deliverability of some of these proposals in practice. We will look forward to further development on these as the consultation proceeds.

5.7.3. The Scottish Government is also keen that small generators should not face unnecessarily high costs or administrative burdens in applying for or obtaining connection to distribution networks. Thresholds determining whether or not applicants in particular areas should face higher costs or delays should be set sensibly by the grid operators and regulator, and with this policy of support for small generators firmly in mind. SPP6 states that planning authorities may consider steering developments to areas where existing and approved grid capacity can be maximised and wind farm developments are likely to be able to be accommodated. This is intended to facilitate early achievement of the Government's 2020 target. However, planning authorities should also recognise that upgrade of the grid is essential if Scotland is to realise fully its renewable energy ambitions. Grid constraints should not, therefore, be used to exclude the identification or safeguarding of appropriate broad areas of search where renewable energy potential exists and there is likely to be developer interest in bringing forward proposals.

5.7.4. The current transmission charging regime substantially limits Scotland's capacity to exploit its renewable energy potential. The regime fails to take adequate account of the need to tackle climate change, or of government targets to promote renewable energy. The charging system encourages generation near large centres of population. It does not aim to promote sustainable development. The existing system for charging for access to the grid contains a strong geographic element with producers further from the main source of demand in the South East of England being charged more for access than those who are geographically closer. This is a particular problem for renewable generation given that much of the potential resource is far from the "centre of gravity" of the UK charging system.

5.7.5. The Scottish Government has submitted a detailed paper to Ofgem setting out why it believes that the current charging arrangements adversely impact on the exploitation of Scotland's renewable resources and further retrospectively penalise investment decisions taken in the past on power station location with consequences for their current competitiveness. For example a 2000 MW coal or gas station operating in Northern Scotland will pay in 2008/09 transmission charges of £44.5 million pounds - if based in London, the same sized station will receive £11.3 million. For a 100 MW wind farm in Northern Scotland the charge will be £2.2 million; in London they would receive £0.6m. We will continue to work to ensure that the impacts of UK wide decisions on transmission charges do not adversely effect Scotland and the UK's ambitions for renewable energy, and that those decisions are fair to consumers and producers where ever they live or operate. Changes are urgently required on the method used by National Grid for calculating charges by geographical area and in relation to the current volatility of charges.

5.7.6. The First Minister, accompanied by Scottish Power, Scottish & Southern Energy and the Scottish Renewables Forum, met Ofgem on 9 April to press the "unanswerable case" that the Electricity Transmission Charging Regime as it stands works against the development of renewable and clean energy in Scotland. Ofgem gave a positive response to many of our detailed points. A separate meeting was also held with National Grid to discuss this issue. We will continue, in conjunction with generators, to work to develop an alternative charging methodology to present to Ofgem and National Grid to encourage a reformed approach to transmission charging which acts to support progress towards these strengthened renewable targets.

5.8. Conclusion

5.8.1. The Scottish Government is supporting an increase in generation of electricity from renewable sources by:

• proposing banding of the Renewables Obligation in a manner which will promote mature and emerging technologies;
• making the case for investment in grid infrastructure on and offshore;
• pressing for change to transmission access and charging regimes;
• streamlining the process for applications for consent to generate electricity and supporting local authorities in work to implement SPP6 ( see section 10)

5.8.2. The Scottish Government sees an important role for a range of different technologies of renewable electricity. These are at varying stages of maturity, but the successful development of emerging technologies will allow us to export power and to use electricity for heat and transport. Moreover, a spread of technologies will assist in taking forward developments in keeping with other environmental objectives such as protecting habitats and landscape. Of course, financial support, whether from the taxpayer or the consumer must take into account both the need for support in order to be commercially viable and the relative benefits in respect of the objective of reducing carbon emissions - we will continue to focus on these issues.

Questions for debate

• Are the expectations for each technology reasonable?
• Have the main constraints to development been identified?
• Bearing in mind the need for costs to be taken into account, are there further actions which need to be taken by relevant parties in order to release renewables potential?

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