Uncertainty harming growth in the Scottish renewable industry

ERI 29-07-2016
Image from Dorli Photography

The Scottish Affairs Committee (a cross party body which is appointed by the UK parliament to examine the expenditure, administration, and policy in Scotland) found that policy changes from the central UK Government is putting at risk future growth in Scotland’s renewable industry.

In the report published by the group these changes are listed as the early closure of the Renewables Obligation for solar and onshore wind, cutting Feed-in-Tariff support rates, and delaying the next round of Contracts for Difference (CfD). The removal of subsidy for onshore wind was identified as being a particular area of concern. The decision was considered to be troubling, as it was taken without consultation with the industry or Scottish Government.

The report also found lack of clarity about renewables policy has exacerbated long-standing concerns of transmission costs in Scotland. Renewable development, and the largest renewable resources, are often located in the NPA region of Scotland and made up of rural areas or islands. These areas face inadequate grid connections and high transmission charges to reach the urban areas where electricity is most needed. In response to these issues the Committee has called on Ofgem (the government regulator for electricity) to look into levelling connection costs across the UK. In addition it has also called on the UK Government to take action to support the improvement of infrastructure between the Scottish Islands and the mainland.

Since the production of the report the Department of Energy and Climate Change (DECC) has been abolished. Among other things DECC was in control of the subsidy schemes for renewable energy. As a result KPMG suggest further delays in the announcement of next the CfD auction round, or announcements about plans for “greater separation” of the System Operator. Of course this will not assist with investor confidence. However, perhaps more worrying is the ideological change the abolition of DECC implies. These concerns are communicated by the chair of the Scottish Affairs Committee, Pete Wishart, who described the decision as showing “a troubling shift in the Government’s priorities”.

A short summary of the report can be found at:

https://www.parliament.uk/business/committees/committees-a-z/commons-select/scottish-affairs-committee/news-parliament-2015/renewable-energy-scotland-report-published-16-17/

With the full report being available at:

http://www.publications.parliament.uk/pa/cm201617/cmselect/cmscotaf/83/8302.htm

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