Scottish Land & Estates Environment Group member, James Duncan Miller reports for us on Scottish Renewables Annual Conference 2014 which was held on 18 March.
The scene setting and introduction of this conference held in Edinburgh was one of ongoing change which was not all good. Scottish Renewables work to promote all renewable energy production in Scotland and as such receive guidance from the Scottish Government whose target is 100% of electricity requirement available from renewable sources by 2020.
However funding comes largely from the UK Government under the recently introduced Electricity Market Reform (ERM), which sets out the guaranteed pricing structures for each sector up until the next election and shortly thereafter.
There were pleas from each sector in turn to extend these price guarantees beyond 2019 in order to give the industry stability and remove some of the risks that are getting in the way of Scotland realising its huge, almost unlimited, renewable potential down the line.
Other constraints on the sector were identified as including the ability to adjust capacity and grid connectivity, the inconsistency of planning which had become a lottery, the availability of future funding in a climate of high risk, and the political support from the end user when they see a seemingly unending series of price rises, mainly in the gas sector. Clearly there are difficult choices ahead if the country is to meet its 2050 target to reduce carbon by 50%.
Looking to the future it was clear that within the UK a Mori poll identified 85% support for the renewable industry while only 44% supported the exploration of the use of shale gas. The point was however made that shale gas was in fact just another form of gas, like that in the North Sea, and had similar carbon footprint. The future of nuclear power was also uncertain as vital decisions had been put off repeatedly and no decision will be forthcoming until beyond the forthcoming round of elections meaning that the existing reactors will become dated and their replacements, if any, not yet built.
Mike Thompson, the head of carbon Budgets on the Committee on Climate Change was clear that the Government needed to give leadership and to make tough decisions now for the benefit of the market beyond 2020 if there is to be any hope of meeting the reduced targets for carbon emissions by 2050.
A look at the whole sale markets by Mark Copley of OFGEM was interesting and alerted us to changes ahead. Essentially the operational efficiency of the electricity market place relied heavily on long term investment providing a contribution to the security of supply. At present there is a single zonal market price throughout the UK, but there are new proposals for a pan- Europe design standard to be introduced in the next two years with more interconnectors. It is hoped that this will add transparency, meet consumer interests, add capacity and assist in integration through better demand control. The OFGEM is working within the government policies and EU legislation and will bring forward, this summer, to industry ideas to determine what arrangements are fit for purpose going forward. It is hoped that this design will cover the trading arrangements, definition of bidding zones and aid the long term market by allowing technologies to flourish. OFGEM is entering into these discussions with no preconceptions, but it is clear that the Scottish generation has the opportunity to trade into Europe. At this stage Mr Copley thought that the balance of risk was outweighed by the opportunities for the UK as we already had a balanced trading market within the UK.
On the political front the Labour party are promising a Green Paper consultation due out by the end of March in part to help address the loss of confidence that they say the electorate have in SSE & SP due to ever rising prices. They recognise that the mainstay of power production in the UK as a whole is ageing but that the renewables sector will become the future mainstay of power production with gas being used as ‘top-up’. They talk of simplifying tariffs, improving transparency and focusing on the rights and expectations of the consumer. To this end they are talking of abolishing OFGEM replacing it with an Energy Security Board who should look at long term security and give guidance on future investment across all technologies throughout the whole of the UK. It was thought that there would be no new nuclear power stations built in Scotland, although there should be an announcement of one to be built in England shortly. They also claim to recognise the need for clear decarbonisation targets up to 2030.
The Coalition understandably trumpeted the investment made so far, which had doubled since 2010 in contrast to the rest of the EU where it had fallen, and recognised that Scotland had become a renewable hub and to this end were keen to see Scotland remain within the family of nations. The ERM coupled with the Energy Bill (now Act) had provided certainty, predictability and continuity and that the costs of developing PV had fallen by 30% and on shore wind by 10%. There was recognition that there was an ongoing need to develop new technologies and a grant of £2.7m was announced for offshore wind. There was also a need to focus on supply chains especially from the Scottish Islands. Mr Davey MP could not offer guarantees on trade prices but assured us that the use of competition would keep prices low. This would be impeded somewhat if after September 2014, a border between Scotland and England were introduced. He pointed out the fact that the size of the UK market helps protect Scotland, where Scottish output is only 10% of the UK total, but 25% of the UK support for renewables currently comes to Scotland. He also reminded us of the ongoing need to upgrade the transmission lines in remoter areas and that this was currently paid for by the whole of the UK. This was the keynote speech and provided a clear political message at the end of the day!