Contracts for difference for new onshore wind?

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After the 2015 Conservative manifesto pledge to “end any new public subsidy” for onshore wind farms, developers have been locked out of the Contracts for Difference (CfD) framework*.  New research reveals however that ministers could allow onshore wind bid on new contracts without contradicting its previous pledge to end all new subsidies.

The report** produced by industry experts Baringa Partners, commissioned by industry body Scottish Renewables, states that by allowing developers to bid in the first round of the auction, the industry could deliver an extra 1GW of capacity in the UK at the hugely competitive price of £49.40 per MWh. This is around half of the strike price agreed by the UK Government for Hinkley Point C nuclear power plant, after being adjusted for inflation.

Since the 2015 subsidy ending announcement there has been a marked slowdown in the rate of development. Neil Stuart, Chief Executive of Scottish Renewables said:

“Some companies are continuing to look at projects, but it is very difficult to see them going ahead without some sort of intervention,”

“If you want to deliver onshore wind capacity at a scale, which will make a meaningful contribution to the UK’s work to meet climate change targets and secondly keep bills down for consumers then you will need a CfD framework.”

Bidding on the first round of the CfD auction would not represent a subsidy as more money would return to the consumer over the last two thirds of the contract than the limited top up in the first third as the wholesale price of electricity increases. This would represent an overall saving for consumers.

The report also highlights the incredible reductions in the costs of renewables, particularly onshore wind, around the world. The decreasing price of turbines and auction mechanisms to ensure competition have seen the price tumble worldwide. The government can still now plan an important role in offering a low-risk route to market for subsidy free onshore wind.

The report that allows the UK Government to provide subsidy free support to onshore wind comes after a Conservative thinktank Bright Blue published a new survey*** claiming that the majority of Tory voters actually support on shore wind.

*The CfD mechanism is in place to stabilise revenue and cost for developers, thereby lowering the cost of capital and in turn minimises the cost of energy.

** https://www.scottishrenewables.com/publications/baringa-sr-analysis-potential-outcome-pot-1-cfd-/

*** http://www.brightblue.org.uk/images/Green%20conservatives%20polling%20report%20Final.pdf

Scotland sets 50% renewable energy target

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The Scottish Government has followed a world leading climate change target of cutting 66% of emissions by 2020 with a hugely ambitious renewable energy target – that 50% of all energy will be met by renewables by 2030.

The announcement was made at the end of January with the launch of the draft Scottish Energy strategy that aims to build on the strengths of the Scottish renewable energy sector and reduce emissions for 2050.

Paul Wheelhouse, the Energy Minister, has said that he hopes the “document stimulates debate about the energy challenges in Scotland and the policies needed to meet the aspirations of the people of Scotland to deliver a secure, sustainable energy future for all, in the best interests of our communities, economy and environment.”

The draft plan has a number of proposals such as a Scottish government-owned energy company with responsibility for helping local and community energy projects grow. It also sets out the ambition that Scotland will become the first place in the UK where onshore wind can thrive without subsidy.

Scottish Renewables, the representative body of the Scottish renewable sector, said the proposals are a “landmark moment in Scotland’s transition to a low-carbon economy”.

Jenny Hogan, director of policy at Scottish Renewables, said: “The new draft strategy shows that Scotland is serious about building on the fantastic progress made in renewable power over the past decade and maintaining our position as a global leader in green energy.

“Setting a new target for renewables to deliver half of our energy needs by 2030 sends a strong signal that renewable energy will be at the heart of Scotland’s economy and is key to meeting our climate change targets at lowest cost.

The strategy sets out a “renewed focus” on stalled efforts for energy efficiency with the hugely ambitious target of making Scotland’s buildings near zero carbon by 2050. It also seeks out views on alternative financial models for supporting low carbon technologies and services such as green bonds.

The Scottish Government has been proud of its progress but now looks at addressing challenging areas with this draft Energy Plan such as low-carbon heat, and transport. Opposition parties have welcomed the commitment but have stated that the challenge is in the implementation of energy policy.

Scottish firms exporting renewables expertise worldwide

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Research by Glasgow based industry body Scottish Renewables has found firms from across Scotland are working in countries as diverse as China, Russia, Taiwan and Cape Verde and are now active on every continent bar Antarctica.

Across the Northern Periphery and Arctic area Scottish companies have been active in the Faroe Islands, Finland, Norway, Sweden as well as other northern countries including Canada and Russia. Firms have been involved in projects totalling £125.3 million across 43 countries.

Businesses have included Orkney based consultancy Aquatera which has been involved in creating marine energy projects across the United States, Chile, Japan, Columbia, Peru and Indonesia.  An Ayrshire based crane company, Windhoist, has installed more than 4,800 wind turbines across the globe whilst Glasgow’s Star Renewable Energy has installed a heat pump in Drammen, Norway, which now provides warmth for the city’s 63,000 residents.   Jenny Hogan of Scottish Renewables has said “This research clearly shows that Scotland’s expertise in renewable energy is in demand around the world.”

“The stretching targets set in Scotland have meant our home-grown green energy industry has developed skills which are in demand on every inhabited continent, bringing investment and income to Scotland from across the world.”

The Scottish Government has welcomed the figures as evidence of low carbon industries to the Scottish economy.  Business, innovation and energy minister Paul Wheelhouse added: “Low-carbon industries and their supply chains generated almost £11 billion in 2014 and supported 43,500 jobs, according to figures from the Office for National Statistics published recently. “Together with this new research from Scottish Renewables, the figures reinforce the growing importance of the low-carbon industries, including renewable energy businesses, to the Scottish economy and vindicates the Scottish Government’s support for the sector and the increasingly crucial role it plays within our energy mix and the wider economy.”

Proactive integration of environmental protection and renewable development

There is often seen to be a conflict between conservation charities and renewable developers. In the UK the Royal Society for the Protection of Birds (RSPB) is often perceived as one of the more vocal of these charities, with wind farms and associated bird displacement and strikes being one of the most of controversial issues.

However, in a newly released report “The RSPB’s 2050 energy vision” UK wide spatial analysis is undertaken, proactively identifying sites for renewable development which would have a low ecological impact (see Figure 1).

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Figure 1. Indicative areas of opportunity for the deployment of renewable technologies in the UK with low/unknown ecological sensitivity, taking into account physical constraints, policy constraints and areas of high/medium ecological sensitivity. Image taken from The RSPB’s 2050 Energy Vision.

The report raises three key points for renewable energy in Scotland:

  • Onshore wind, which has already shown strong progress in Scotland, could continue to develop in harmony with nature. Up to 41 TWh/year could be generated if carefully planned, more than trebling generation from 2014 levels. Repowering existing well planned sites may be an opportunity to increase capacity at low ecological impact.
  • There is very limited capacity for fixed offshore wind (up to 2.3 GW installed capacity) in shallow waters without significant risks to wildlife, unless knowledge of impacts improves, enabling ecologically sustainable development. In the long term, however, there is vast potential for floating wind in deeper waters.
  • There are also large areas potentially suitable for wave energy generation at low ecological risk, if the industry is supported to enable commercialisation.

Additionally, the report suggests Scotland could increase its solar production to 30 times its current level. However, the low power density of this resource in Scotland, coupled with large reductions in subsidy levels, means exploitation on this scale is unlikely.

Overall, the report has been well received by the renewable industry in Scotland, with Scottish Renewables (the representative body of the Scottish renewable energy industry) describing it as “positive”. Lindsay Roberts, senior policy manager at Scottish Renewables describes the research as clearly showing: “that meeting our renewable energy targets and protecting our natural environment can go hand-in-hand.”

Such studies pre-emptively identifying areas which are environmentally unsuitable for renewables should help streamline the consenting process; with opposition on environmental grounds being decreased, reducing time and costs for developers. As such initiatives like this should be encouraged; however, the findings should be treated with caution. In this instance the huge reliance on floating offshore wind to create large headline figures should be noted; floating offshore wind accounts for ~90% of the resource identified. Such heavily reliance on floating wind should be treated with caution as although it certainly has huge potential the development of the world’s first commercial site is only just beginning Scotland. So as always, particularly on a 2050 timeframe, studies should be treated with scepticism but this study is certainly a proactive step forward in the relationship between one of the UK’s major conservation charities and the renewable sector.

For greater details on the report visit: http://www.rspb.org.uk/whatwedo/projects/details.aspx?id=350939

A new target for Scotland: 50% renewable energy by 2030

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Scottish Renewables (the body representing the renewable industry in Scotland) has in its latest manifesto, Renewed Ambitions: Defining the Future of Renewable Energy in Scotland, put forward that Scotland should aim for 50% of all its energy too come from renewable sources by 2030. The aim is seen as a progression from the Scottish Government’s own targets; a summary of which, and current progress on, is provided below:

  • Overall renewable energy target: 30% of total Scottish energy consumption from renewables by 2020. As of 2013 13.1% had been achieved.
  • Renewable electricity target: 100% of gross electricity consumption to come from renewables by 2020. As of 2014 49.7% had been achieved.
  • Renewable heat target: 11% of non-electric heat demand from renewables by 2020. As of 2013 2.7% had been achieved.
  • Renewable transport target: 10% of transport petrol and diesel consumption to come from biofuels by 2020. As of 2014 3.9% had been achieved.
  • Energy consumption target: 12% reduction in final energy consumption by 2020. As of 2013 14.1% had been achieved.

All of the targets listed above are framed within a 2020 timescale. Niall Stuart, the chief executive for Scottish Renewables, considers it, “…time to look beyond 2020 and for Scotland to set a stretching target for renewables to produce the equivalent of at least 50% of all energy use across electricity, heat and transport by 2030.” The manifesto sets out a strategy for government, as to how Scottish Renewables believes this can be achieved. The course of action suggested shows the pertinence of the GREBE project; with much of the strategy being aimed at creating an environment to encourage renewable enterprise. This ranges from making energy storage viable for business investment to adjusting feed-in tariff policies, changes to which (as shown in a previous Apple Juice blog post) will have a large impact on small scale renewable generation enterprises.

The release of the manifesto is timed to come ahead of Scottish elections in May, with the hope of ensuring the topic is high on the political agenda. The timing is important as there is currently a high level uncertainty in the Scottish renewable industry, with UK wide cuts and changes to funding. The extent and impact of these changes were highlighted recently by Ed Davey, the ex UK Secretary of State for Energy and Climate Change, who described the approach of the current UK Government as: “…butchering the UK’s successful renewables industry.”