The Scottish Government

(This consultation is also available in a printable pdf format.)

EXEMPTING THE EUROPEAN MARINE ENERGY CENTRE FROM SECTION 36 OF THE ELECTRICITY ACT 1989 - A CONSULTATION

Responding to this consultation paper

We are inviting written responses to this consultation paper by 16 October 2006. A Regulatory Impact Assessment is being undertaken by the Executive and will be published on the Scottish Executive website at http://www.scotland.gov.uk/consultations before the end of the consultation period. Responses to the consultation paper should be sent to:

james.simpson@scotland.gsi.gov.uk

or

James Simpson
Scottish Executive
Enterprise, Transport and Lifelong Learning Department
Second Floor
Meridian Court
Glasgow
G2 6AT

If you have any queries contact James Simpson on 0141 242 5471.

We would be grateful if you could clearly indicate in your response which questions or parts of the consultation paper you are responding to (using the consultation questionnaire if appropriate) as this will aid our analysis of the responses received.

This consultation, and all other Scottish Executive consultation exercises, can be viewed online at http://www.scotland.gov.uk/consultations. You can telephone Freephone 0800 77 1234 to find out where your nearest public internet access point is.

The Scottish Executive now has an email alert system for SE consultations ( SEconsult). This system allows stakeholder individuals and organisations to register and receive a weekly email containing details of all new SE consultations (including web links). SEconsult complements, but in no way replaces SE distribution lists, and is designed to allow stakeholders to keep up to date with all SE consultations activity, and therefore be alerted at the earliest opportunity to those of most interest. We would encourage you to register.

RESPONDENT INFORMATION FORM: EXEMPTING THE EUROPEAN MARINE ENERGY CENTRE FROM SECTION 36 OF THE ELECTRICITY ACT 1989 - A CONSULTATION

Please complete the details below and attach it with your response. This will help ensure we handle your response appropriately:

Name:

Postal Address:

1. Are you responding as: (please tick one box)

(a) an individual  (go to 2a/b)

(b) on behalf of a group/organisation  (go to 3)

INDIVIDUALS

2a. Do you agree to your response being made available to the public (in SE library and/or on SE website)?

Yes (go to 2b below) 

No, not at all  We will treat your response as confidential

2b. Where confidentiality is not requested, we will make your response available to the public on the following basis ( please tick one of the following boxes)

Yes, make my response, name and address all available 

Yes, make my response available, but not my name or address 

Yes, make my response and name available, but not my address 

ON BEHALF OF GROUPS OR ORGANISATIONS

3. The name and address of your organisation will be made available to the public (in the Scottish Executive library and/or on the Scottish Executive website). Are you also content for your response to be made available?

Yes 

No  We will treat your response as confidential

SHARING RESPONSES/FUTURE ENGAGEMENT

4. We will share your response internally with other SE policy teams who may be addressing the issues you discuss. They may wish to contact you again in the future, but we require your permission to do so. Are you content for the Scottish Executive to contact you again in the future in relation to this consultation response?

Yes 

No 

THE SCOTTISH EXECUTIVE CONSULTATION PROCESS

Consultation is an essential and important aspect of Scottish Executive working methods. Given the wide-ranging areas of work of the Scottish Executive, there are many varied types of consultation. However, in general Scottish Executive consultation exercises aim to provide opportunities for all those who wish to express their opinions on a proposed area of work to do so in ways which will inform and enhance that work.

While details of particular circumstances described in a response to a consultation exercise may usefully inform the policy process, consultation exercises cannot address individual concerns and comments, which should be directed to the relevant public body. Consultation exercises may involve seeking views in a number of different ways, such as public meetings, focus groups or questionnaire exercises.

Typically, Scottish Executive consultations involve a written paper inviting answers to specific questions or more general views about the material presented. Written papers are distributed to organisations and individuals with an interest in the area of consultation, and they are also placed on the Scottish Executive web site enabling a wider audience to access the paper and submit their responses. Copies of all the responses received to consultation exercises (except those where the individual or organisation requested confidentiality) are placed in the Scottish Executive library at Saughton House, Edinburgh (K Spur, Saughton House, Broomhouse Drive, Edinburgh, EH11 3XD, telephone 0131 244 4552).

All Scottish Executive consultation papers and related publications (eg, analysis of response reports) can be accessed at: Scottish Executive consultations ( http://wwwscotland.gov.uk/consultations).

The views and suggestions detailed in consultation responses are analysed and used as part of the decision making process. Depending on the nature of the consultation exercise the responses received may:

· indicate the need for policy development or review

· inform the development of a particular policy

· help decisions to be made between alternative policy proposals

· be used to finalise legislation before it is implemented

Final decisions on the issues under consideration will also take account of a range of other factors, including other available information and research evidence.

While details of particular circumstances described in a response to a consultation exercise may usefully inform the policy process, consultation exercises cannot address individual concerns and comments, which should be directed to the relevant public body.

Comments and complaints

If you have any comments about how this consultation exercise has been conducted, please send them to:

James Simpson
Scottish Executive
Enterprise, Transport and Lifelong Learning Department
Second Floor
Meridian Court
Glasgow
G2 6AT

Or email: james.simpson@scotland.gsi.gov.uk

Telephone: 0141 242 5471

QUESTION

EXEMPTING THE EUROPEAN MARINE ENERGY CENTRE FROM SECTION 36 OF THE ELECTRICITY ACT 1989 - A CONSULTATION

Acknowledgements

All responses will be acknowledged either in writing or electronically. However, please note that it will not be possible for the Panel to respond individually to comments received.

Deadline for Responses

The deadline for responses is 16 October 2006.

Q1. Do you agree that The Electricity Act 1989 (Requirement of Consent for Offshore Generating Stations) (Scotland) Order 2002 should be amended to exempt wave and tidal devices with a generating capacity greater than 1 MW, and being tested at the European Marine Energy Centre in Orkney, from requiring the consent of Scottish Ministers?

YesNo

Insert any comments on question 1 below.

Q2. If you answered "Yes" to question 1, do you agree with the wording in the draft Statutory Scottish Instrument, attached at Annex B?

Yes No

Insert any comments on question 2 below.

EXEMPTING THE EUROPEAN MARINE ENERGY CENTRE FROM SECTION 36 OF THE ELECTRICITY ACT 1989 - A CONSULTATION

Introduction

1. This paper outlines the Scottish Executive's plans to exempt the European Marine Energy Centre (EMEC) from the requirement to gain consent under section 36 of the Electricity Act 1989 (Requirement of Consent for Offshore Generating Stations) (Scotland) Amendment 2002. This will allow developers wishing to test wave and tidal generation devices above 1 MW in installed capacity at EMEC to install and run these devices without seeking consent from Scottish Ministers. Our aim is to create a procedure which allows marine devices to be tested at EMEC without undergoing a possibly lengthy consents procedure.

2. To ensure that potential environmental impacts are still fully considered before installation, EMEC have created Environmental Impact Assessment guidelines which developers must adhere to before a licence to operate is granted. Further details can be found at Annex A.

The European Marine Energy Test Centre (EMEC)

3. EMEC was established by Highlands and Island Enterprise, the Scottish Executive and other funding partners, at a cost of around £6 million. It provides developers of wave and tidal devices with a purpose-built performance testing centre. The Centre is based off the coast of Stromness, Orkney. This location was chosen due to the proximity of an excellent oceanic wave regime, strong tidal currents, grid connection, sheltered harbour facilities and a "centre of excellence" for renewable energy and environmental issues that exists within the local community.

4. The Centre has two dedicated test areas - a wave test site and a tidal test site. The wave facilities consist of four berths situated along the 50 metre water depth contour off Billia Croo on the Orkney mainland, while the five tidal berths are situated at the Fall of Warness. In both cases, moored cables link each berth to a substation onshore. These are, in turn, linked to an 11 kV transmission cable connected to the national grid and to a data centre located in nearby Stromness.

5. EMEC is already proving beneficial to marine developers. In 2005, the Centre was officially ratified by the United Kingdom Accreditation Service, meaning that developers can use EMEC's facilities to gain an internationally recognised verification of the performance of their marine devices. The tidal facilities, due for completion shortly, are already attracting significant developer interest.

Section 36 of the Electricity Act 1989

6. Under section 36, the consent of Scottish Ministers is required for the construction, operation or extension of power stations with an installed capacity in excess of 50 Megawatts (MW), or in the case of hydro and marine developments 1 MW. To date, Section 36 has no been required for wave and tidal developers as test devices have not been capable of producing greater capacity than 1 MW.

7. Following an application for Section 36 consent to construct and operate a generating station, the Scottish Executive is required to consult a wide range of bodies for their views on whether the proposal is acceptable and what changes might be needed. Ministers are required to take into account all the relevant considerations in reaching a decision, including the environmental impact, the effect on cultural heritage and the wider policy objectives.

8. The next generation of marine devices are likely to exceed the 1 MW threshold, thus some prototypes to be tested at EMEC would have to go through the consents process before testing could commence. Going through this lengthy process would heavily delay the testing of devices at EMEC. Given that these devices will typically spend only 1-2 years being tested, the consents process could potentially deter developers from testing in Scotland and therefore risk becoming a barrier to growth in the sector.

The Proposed Changes

9. EMEC provides a custom-built facility in which wave and tidal energy devices can be tested and monitored in ocean conditions. This involves devices being installed on site in order to generate electricity, which would be fed into the public electricity network, whilst being monitored. We propose to exempt developers from making a consent application under section 36 of the Electricity Act 1989 when testing devices greater than 1MW at EMEC. In essence, EMEC will be exempted from the conditions of Section 36 legislation.

We are doing this for the following reasons:

• Having to go through a potentially lengthy consents process will deter developers from testing at EMEC;
• Delays caused by the consents process would have a negative impact on EMEC's development as a leading marine energy testing centre;
• There would be wider implications for Scotland's position as a nation at the forefront of marine energy technology.

A draft Regulatory Impact Assessment can be found at Annex C.

Question 1: Do you agree with the proposed changes which would exempt devices being tested at EMEC from the requirements of section 36 of the Electricity Act 1989?

10. The draft regulations at Annex B aim to make the legislative changes as clear as possible. EMEC has been defined by its unique company number, designated by Companies House. Exemption from Section 36 will only apply when a wave or tidal device has a contractual agreement to use EMEC for the purpose of testing.

Question 2: Do you agree with the wording of the draft Scottish Statutory Instrument at Annex B?

Environmental Impact Assessment (EIA) Guidance

11. At present, as a consequence of applying for section 36 consent, developers must fulfil environmental obligations under The Electricity Works (Environmental Impact Assessment) (Scotland) Regulations 2000. The removal of the section 36 obligation would also remove the liability under the EIA Regulations.

12. To ensure that environmental concerns are fully taken into account, EMEC have created separate EIA guidelines for developers to follow. Contracts signed between EMEC and developers will include a stipulation that these guidelines are followed and an EIA be produced.

13. At the very least, developers must submit the following:

• Non-technical summary;
• Environmental description;
• Basis for design (environmental and other factors that have been taken into account in the design specifications);
• Device description (including consideration of logistics and support requirements);
• Summary of the EIA process and justification of impacts considered potentially significant; and
• List of all commitments made by the developer to ensure negative environmental impacts are minimised and possible benefits optimised.
• Evidence of baseline studies, monitoring and any other measurements referred to in the EIA.
• Prior to deployment, developers must also meet legislative requirements of the Coast Protection Act and the Food and Environment Protection Act.

The Scottish Executive is satisfied that these contract stipulations will ensure proper environmental protection is taken before any machine starts testing. Further details can be found at Annex A. A full copy of EMEC's guidelines are available on request from:

Dr Jenny Norris
Research Manager
European Marine Energy Centre

Tel: 01856 852065

Seeking Your Views

14. Scottish Ministers would welcome your comments and suggestions about any future exemption of EMEC from section 36 of the Electricity Act. Questions on the matter are attached. Your views will help inform future policy-making decisions.

ANNEX A

ENVIRONMENTAL IMPACT ASSESSMENT GUIDELINES

1. EMEC have developed guidelines to ensure that marine developers follow and establish good environmental stewardship practice. The approach is based upon the production of a concise Environmental Statement (ES) which demonstrates consideration of all potential impacts of the device. Developers are advised to supply the ES to EMEC three to six months prior to device deployment.

2. As a minimum the ES document should contain the following:

• Non-technical summary;
• Environmental description;
• Basis for design (environmental and other factors that have been taken into account in the design specifications);
• Device description (including consideration of logistics and support requirements);
• Summary of the EIA process and justification of impacts considered potentially significant; and
• List of all commitments made by the developer to ensure negative environmental impacts are minimised and possible benefits optimised.

Developers are also required to produce evidence of baseline studies, monitoring and other measurements which have been taken in the ES. Environmental monitoring plans for the device will be developed in partnership with EMEC to ensure consistency is maintained in the centre and the effects of differing devices can be compared.

3. A requirement to produce an ES will be stipulated in the contract signed between developers and EMEC. Scottish Executive solicitors have indicated they are content that this stipulation is compelling enough to ensure environmental impacts are fully considered before deployment. They are also satisfied that this compensates for the absence of a formal EIA statement submission to the Consents Branch, which would normally be submitted to the Executive's Consents Branch under section 36.

4. Following the production of an ES, developers will have to meet further legislative and consents requirements prior to deploying a device in the water. These are:

• The Coast Protection Act 1949 - to ensure the safety of boat navigation.
• The Food and Environment Protection Act 1985 Part II (Deposits to Sea) - licence for deposits placed in the sea; and
• Seabed lease from the Crown Estate

EMEC have indicated that they can, and would prefer to, approach the appropriate authorities and submit applications for these licenses on behalf of developers. Once these licenses are granted the developer is free to install their device. The Coast Protection Act and Food and Environment Protection Act are outlined below.

The Coast Protection Act 1949 - Section 34

5. Developers must seek consent under Section 34 of the Coast Protection Act (CPA) if:

• constructing, altering or improving any works on, under or over any part of the seashore lying below the level of Mean High Water Springs;
• depositing any object or materials below the level of Mean High Water Springs; or
• removing any object or materials from the seashore below the level of Mean Low Water Springs.

Under Section 34 of the CPA, Scottish Ministers must determine whether marine works will be detrimental to the safety of ship and boat navigation.

The Food and Environment Protection Act 1985

6. Under the Food and Environment Protection Act (FEPA), a license is required from Scottish Ministers to undertake the following works:

• the placing of materials in the marine environment during construction, and related actions;
• the disposal of waste at sea; and
• the introduction of tracers and biocides and certain other activities in the marine environment.

FEPA's objective is to protect the marine ecosystem and human health and minimise nuisance to other users of the sea. In deciding whether to grant a license Scottish Ministers pay particular attention to:

• the potential hydrological effects;
• interference with other marine activities;
• potential risk to fish and other marine life, including mammals, from contaminants, noise and vibration;
• the effects of increased turbidity and potential for smothering or burial of benthic flora and fauna; and
• any adverse implications for designated marine conservation areas.

Crown Estate Lease

7. EMEC are finalising a general seabed lease with the Crown Estate. Further to this, Crown Estate will be kept informed of which devices are placed in the water.

ANNEX B

SCOTTISH STATUTORY INSTRUMENTS

2006 No.

ELECTRICITY

The Electricity Act 1989 (Requirement of Consent for Offshore Generating Stations) (Scotland) Amendment Order 2006

The Scottish Ministers, in exercise of the powers conferred on them by sections 36(4) and 111(2) of the Electricity Act 1989 [1] and of all other powers enabling them in that behalf, hereby make the following Order:

1. - Citation, commencement, interpretation and extent
(1) This Order may be cited as the Electricity Act 1989 (Requirement of Consent for Offshore Generating Stations) (Scotland) Amendment Order 2006 and shall come into force on [date] 2006.

(2) In this Order, "European Marine Energy Centre" means the European Marine Energy Centre Limited, a company incorporated in Scotland (Company No. SC249331) and having its registered office at Old Academy, Back Road, Stromness, Orkney KW16 3AW.

(3) This Order extends to Scotland only.

2. - Amendment to the Electricity Act 1989 (Requirement of Consent for Offshore Generating Stations) (Scotland) Order 2002
The Electricity Act 1989 (Requirement of Consent for Offshore Generating Stations) (Scotland) Order 2002 [2] is amended in accordance with article 3 .

3. In article 3 of the Electricity Act 1989 (Requirement of Consent for Offshore Generating Stations) (Scotland) Order 2002, after "generating stations" insert ", save for those with a contractual agreement to use the European Marine Energy Centre for the purpose of testing generating devices,";

Explanatory Note

(This note is not part of the Order)

This Order amends the Electricity Act 1989 (Requirement of Consent for Offshore Generating Stations) (Scotland) Order 2002 by specifying that generating devices with a contractual agreement to use the European Marine Energy Centre on Orkney for the purpose of testing, and driven wholly or mainly by wave or tidal power shall not require the consent of the Scottish Ministers in terms of section 36 of the Electricity act 1989. This allows less stringent control over test developments in the Centre.

[1] 1989 c. 29. The functions of the Secretary of State were transferred to the Scottish Ministers by virtue of the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 1999 (S.I. 1999/1750), Schedule 1.

[2] S.S.I. 2002/407.

ANNEX C

REGULATORY IMPACT ASSESSMENT

Title of Proposal

1. This is the Regulatory Impact Assessment relating to proposals to amend the Electricity Act 1989 (Requirement of Consent for Offshore Generating Stations) (Scotland) Order 2002 to allow wave and tidal devices with a generating capacity greater than 1 MW to be tested at the European Marine Energy Centre (EMEC) without requiring the consent of Scottish Ministers.

Purpose and Intended Effect of Proposals

Objective

2. The proposals aim to remove the need for wave and tidal energy developers who test devices greater than 1 MW in capacity at EMEC to make a Section 36 consent application under the Electricity Act 1989. Given that these devices will typically spend only 1-2 years being tested at EMEC, the consents process could potentially deter developers from testing in Scotland and therefore risk becoming a barrier to growth in the sector. It is intended that the proposal will help to maintain Scotland's position at the forefront or marine energy technology.

Background

3. Under Section 36 of the Electricity Act 1989, consents are required for the construction, operation or extension of generating stations with an installed capacity in excess of 50 Megawatts (MW), or in the case of hydro and marine developments 1 MW. To date, Section 36 consent has not been required for wave and tidal developers as test devices have not been capable of producing greater capacity than 1 MW.

4. The next generation of marine devices are likely to exceed the 1 MW threshold, thus some prototypes would have to go through the consents process before testing could commence. Going through this potentially lengthy process would heavily delay the testing of devices at EMEC.

5. EMEC provides a custom-built facility in which wave and tidal energy devices can be tested and monitored in ocean conditions. This involves devices being installed on site in order to generate electricity, which would be fed into the public electricity network, whilst being monitored.

Rationale for Government Intervention

6. If there is no intervention it is likely that some marine energy developers with devices over 1 MW will choose not to test at EMEC and, therefore, not test their devices in Scotland.

DRAFT

7. Should developments over 1 MW wish to go ahead and test and EMEC, they will be subject to a potentially lengthy Section 36 process which includes the Scottish Executive consulting with a wide range of bodies for their views on whether the proposal is acceptable and what changes might be needed. This delay in testing devices could see Scotland lose its leading position within the marine energy sector.

Consultation with Government

8. The proposals have been developed by Scottish Executive officials in Energy Division and the Office of the Solicitor to the Scottish Executive.

Public Consultation

9. A consultation was launched on 4 September 2006 and will run until 16 October 2006.

10. The proposals have been under discussion for some time with EMEC and are known to several members of the marine energy industry. They have indicated support for the proposals and a desire to see them taken forward.

Options

11. There are two options for consideration:

12. Option 1 is to do nothing. Developers with devices of 1 MW or over would have to make a Section 36 application. This could result in delays before they install, which would result in EMEC's ability to operate as a test centre being impinged upon and signal to industry that the Executive is not totally committed to supporting the emerging marine energy sector. This may jeopardise the Executive's long-term renewable energy targets. Choosing Option 1 would also undo some of the progress being made through other proposed legislative support for wave and tidal generation.

13. Option 2 is to exempt EMEC from the process of Section 36 consents. This would allow developers who are testing marine devices above 1 MW in output at EMEC to install and run these devices without seeking consent from Scottish Ministers. Any devices over 1 MW, designed for commercial use outside EMEC, would still require consent from Ministers. This option would address any concerns of environmental groups and the public while also helping to maintain Scotland's lead in the area of marine energy technology.

Costs and Benefits

14. The proposals will have an impact on marine energy developers wishing to operate and test generating stations exceeding 1 MW capacity, at EMEC. The removal of Section 36 process for these developers will also mean they will not be required to pay the corresponding processing fee of £5,000 to the Scottish Executive. It will also reduce their administrative costs relating to making an application for consent and hopefully bring their devices to the point of commercial viability more quickly. These will have positive impacts on their development.

The Small Firms Impact Test

15. The majority of wave and tidal developers are Small or Medium-sized Enterprises. Having consulted with several of these, their opinion is that the delay involved with the Section 36 process may impact heavily upon their ability to operate as a business, especially while the technology is still at the pre-commercial stage. This risk may lead to developers testing outside EMEC and, indeed, Scotland. It is therefore concluded that the proposals would have a positive impact on developers as successful devices will be able to reach commercial viability sooner. The impact of the proposals on small businesses, in general, would not be significant.

Competition Assessment

16. We do not believe the proposals are likely to affect the structure of the electricity market or competitive basis of the businesses operating in the market.

Enforcement and Sanctions

17. The proposals are designed to assist the development of wave and tidal projects. Sanctions are not appropriate for the legislative proposals.

Implementation and Delivery Plan

18. The change in policy will be brought about by an amending Statutory Scottish Instrument (SSI) which will in essence exempt EMEC from the conditions of the Section 36 process. The SSI will amend The Electricity Act (Requirement of Consent for Offshore Generating Stations) (Scotland) Order 2002. The Scottish Executive have been responsible for creating the SSI.

Post Implementation Review

19. In terms of the legislative changes, the Executive's Renewables and Consents Policy branch will work closely with EMEC to monitor the effectiveness of the amendment in maintaining a short lead-in time for developers wishing to test devices there.

Summary and Conclusions

20. The Scottish Executive believes that the proposals set out in option 2 will assist the development of the marine energy sector in Scotland by allowing developers to test devices with over 1 MW capacity at EMEC without requiring the consent of Scottish Ministers.

21. The Scottish Executive intends that the Amendment Order will come into force by March 2007.

Summary Cost and Benefit Table

22. The figures above are based on estimates. We do not know how many marine projects with capacity over 1 MW will wish to test at EMEC in the forthcoming year. However, we will make an assumption of 3 projects, each with capacity of 2 MW.

23. Estimated £15,000 saving to industry assuming 3 projects received in a year which each pay a Section 36 consents application fee of £5,000.

24. Potential environmental savings are difficult to estimate. However, as a purely hypothetical example we estimate savings equivalent to £83,443.50. This assumes 3 projects generating at 2 MW each. This equates to 6 MW of renewable energy displacing fossil fuel generation. The Sustainable Energy Network calculates that a coal powered station emits 397.35 tons of carbon dioxide per year for 1 MW of electricity produced. 6 MW therefore equates to 2384.1 tons of carbon which could be saved over one year. Applying a monetary value of £35 per ton of carbon (DEFRA lower band figure) gives total carbon savings of £83,443.50.

25. Note that this figure is for a small number of projects still at an early stage of development. As the marine energy sector grows and developers successfully test at EMEC, much larger arrays of devices will be deployed in Scottish waters, capable of producing greater levels of electricity. It follows on that the monetary carbon savings are likely to increase year on year as marine energy technology develops.

Declaration and Publication

26. I have read the Regulatory Impact Assessment and I am satisfied that the benefits justify the costs.

Signed …………………………………

Date …………………………………..

Allan Wilson

Deputy Minister for Enterprise and Lifelong Learning

Enterprise, Transport and Lifelong Learning Department