Scotland’s renewables sector threatened by political ‘cloud of uncertainty’

Despite successfully expanding renewable energy capacity, Scotland's renewable energy sector is in a "state of flux", with policy amendments to the Renewables Obligation (RO), Feed in-tariffs (FiT) and Contract for Difference (CfD) auctions all contributing to an uncertain future.

That is the view of the Scottish Affairs Committee, which published a report today (25 July) reviewing the political support for renewable energy in Scotland. The report found that a lack of communication between the UK and Scottish Governments with industry organisations and experts is threatening prospects for further growth in the country’s otherwise impressive renewables sector.

The report highlights responses from ministers, experts and academics to an enquiry launched in January this year as to the impact of recent policy changes to renewable incentives and legislation, and what future ramifications this could attain.

Committee chair Pete Wishart said: “During the course of this inquiry it has been encouraging to see how Scotland has taken to renewable energy, and now produces over a quarter of the UK’s renewable electricity. 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.

“We have urged the Government to clarify the future support which 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.”

Political void

The Committee found that Scotland’s renewable sector had thrived in recent years, with the UK sourcing 29% of its renewable electricity from the country, as well 60% of its onshore wind capacity and more than 85% of hydro capacity. According to the report, an estimated 21,000 people are employed in Scotland’s renewable sector which will deliver £1bn each year in investments.

However recent policy changes – previously likened to a game of Jenga – have dented investor confidence in the sector. The report has criticised the decision to close the RO to onshore wind early, claiming it will cost Scotland up to £3bn and put 5,400 jobs at risk.

The report has also claimed that the current delays for the second round of CfDs – scheduled for the last three months of 2016 – had created a “void” where renewable projects were hindered by a lack of progress and support mechanisms.

The fact that the contracts are only offered up to a certain value and are secured by the lowest bidder is a worrying aspect for the Committee, with renewable generators often left unable to compete in competitive auctions. The report has called for the Government to review its decision to bar onshore wind schemes from accessing subsidies.

While the report highlighted the well-documented concerns over cuts to FiTs, it also raises the point that renewable plants located on the Scottish Islands are facing inadequate gird connections and high transmission charges, despite having the potential to generate a £725m windfall.

As a result, the report has called on Ofgem to level connection costs across the entirety of the UK. The Committee also noted that engagement between UK and Scottish Government would be a “crucial” step in overcoming the poorly balanced transmission fees.

The report was published prior to the recent abolition of DECC, but Wishart admitted that the decision indicates a “troubling shift” in Government policies, which has led to the UK falling from 8th to 11th place in the EY Renewable Energy Country Attractiveness Index.

Matt Mace

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