Plea for clarity over support for renewables
Fears policy uncertainty is putting industry at risk
MINISTERS have been urged to clarify future support for the renewables industry amid concerns current UK policy is putting growth and investment at risk.
The Scottish Affairs Committee heard evidence of uncertainty in the sector caused by recent changes to subsidies for renewable electricity generation.
These include the early closure of the renewables obligation scheme to onshore wind and solar, cuts to feed-in-tariffs and delays to the next round of contracts for difference.
The committee said the changes had been implemented in an “ad hoc” fashion with a lack of transparency over how decisions were made and without consultation with the industry or Scottish Government.
MPs concluded that the removal of subsidies for onshore wind would have a “disproportionate” impact in Scotland, which produces almost 30 per cent of the UK’s renewable electricity, and urged a review of the policy.
Scottish Renewables has said that the early closure of the renewables obligation to onshore wind could cost Scotland up to £3 billion in lost investment and put 5,400 jobs at risk.
The committee said it was “seriously concerned” the changes were implemented without an assessment of their impact on Scotland, and called for one to be carried out.
MPs also urged regulator Ofgem to look at levelling connection costs across the UK to help renewable generators that are often located in remote areas and pay higher transmission charges.
They want the UK Government to do more to support the improvement of infrastructure between the Scottish islands and the mainland.
SNP committee chairman Pete Wishart said: “This is an important sector of Scotland’s economy, and also makes a vital contribution to meeting our commitments to tackle climate change. The sector’s future success relies on a supportive policy framework in both Westminster and Holyrood.
“This report considers several policy changes the UK Government has made to support for renewables, which we found have weakened investor confidence in the renewable sector, and put at future growth at risk.
“We have urged the government to clarify the future support that will be available to the renewable sector, and set out how they will work with the Scottish Government to develop a clear, long-term plan that will allow renewable energy to remain a central part of the energy mix.”
He added: “Our report was produced before recent changes to the structure of government – the abolition of the Department of Energy and Climate Change, with its responsibilities moving to a new Department for Business, Energy and Industrial Strategy – but this change indicates a troubling shift in the government’s priorities. I hope the government’s response to our report will go some way to allaying these fears.”
A spokesman for the Department for Business, Energy and Industrial Strategy (BEIS), commented: “The creation of the Department for Business, Energy and Industrial Strategy puts climate change at the heart of our energy and industrial strategy, ensuring economic prosperity and security for our country.”
“The renewables industry has been a strong success in Scotland thanks to UK Government support and we have been completely clear that our commitment to the industry will continue with the announced £730m funding package for future renewable energy projects. In the last funding round more than 40 per cent of successful UK projects were based in Scotland and further details of the new round will be made soon.”
A column for outside contributors. Contact: agenda@theherald.co.uk SCOTLAND’S geography and natural resources, combined with supportive policies at Holyrood and Westminster, have enabled the renewable energy sector in Scotland to grow significantly over the last decade. In 2014, Scotland produced 29 per cent of the UK’s renewable electricity and Scotland is now responsible for more than 60 per cent of onshore wind capacity (and more than 40 per cent of all wind capacity), 85 per cent of wave and tidal capacity and more than 85 per cent of hydro capacity. Not only are we the Saudi Arabia of renewable energy we are practically the whole of Opec.
Scotland’s renewable sector is world class and an increasingly important and key part of Scotland’s economy. It provides employment for 21,000 people and delivers more than £1 billion a year in investment. It is an incredible success story and the growth of the sector has led to a massive increase in economic activity in large swathes of rural Scotland.
More than that it is a sector that helps both Scotland and the UK meet carbon emission targets. Around a quarter of the UK’s carbon emissions are produced by generating electricity and there are challenging targets, at a Scottish, UK and international level. Scotland more than pulls its weight in helping the UK meet its emission targets and obligations.
One would think that with this massive success story everything would be done to ensure this growth continued and investment increased to ensure Scottish renewables meet their full potential. Instead, the Westminster Government has decided to put the brakes on this sector and without any consultation have ended key levers of financial support, leading to widespread uncertainty that could threaten the industry’s further growth.
I remember being in Westminster last year when the statement was made that the UK Government would be ending the Renewable Obligation support for onshore wind and Solar PV a year earlier than planned. This, combined with reducing the level of support available through the Feed-inTariff scheme and delaying the next round of Contracts for Difference meant you could almost feel the tremors of uncertainty in the sector emanating from investors.
This was notionally done to save money to the bill payer but littered all the way through the statements was an apparent inbuilt hostility to some renewable technologies, particularly onshore wind. This contrasted sharply with what we heard from the Scottish Government which continues to see our renewable sector as a massive asset to Scotland that is to be properly supported to allow it to develop. The lack of consultation with the Scottish Government is something the committee found particularly unsatisfactory.
The changes in Westminster Government policy will disproportionately fall on Scotland because we possess the lion’s share of renewable resources. Scottish Renewables told us the early closure of the Renewables Obligation to onshore wind will cost Scotland up to £3bn in lost investment and put 5,400 jobs at risk.
As part of our inquiry we also travelled to Orkney to find a group of islands more than self-sufficient in renewable electricity supply. Some of the best natural resources for generating renewable electricity are found on the Scottish Islands, but they are hampered by prohibitive connections and the transmission infrastructure whose costs can be seven times higher than the costs for a generator located in North Scotland.
Our inquiry found a successful and developing sector reeling from these government announcements and investor confidence tumbling. This combined with the almost inexplicable announcement last week to axe the Department for Energy and Climate Change suggests a government at a policy and priority crossroads and about to embark down entirely the wrong road.
We asked the government to review its decision to abandon support for onshore wind. This is one of the cheapest means of generating renewable electricity, and the government’s decision to deny any further subsidy could see it in conflict with its own focus on reducing the costs of renewable technology.
Putting the brakes on a successful sector like Scotland’s renewable industry is absolutely baffling. What we need to do is to look at how we grow and develop this critical sector, not pull the rug from under its feet. SNP MP Pete Wishart is chairman of the Scottish Affairs Select Committee.