The most recent energy figures show renewables continue to go from strength to strength, with almost half of Scotland’s electricity use coming from renewables last year and wind delivering record amounts of power in the first three months of 2015. Scotland accounts for around a third of total UK renewables generation.
This makes the recent decision by the UK government to end the renewables obligation (RO) next year even more regrettable. While the abrupt and early curtailment of the RO will have serious implications for people right across the UK, the economic and supply chain impacts will have a disproportionate effect on Scotland as around 70 per cent of onshore wind projects in the UK planning system are here.
Amber Rudd, Energy and Climate Change Secretary, has confirmed that primary legislation will be introduced to close the RO from April 1, 2016 – a year earlier than the industry and community developers had been led to expect.
I appreciate the UK government had pledged to end new subsidies for onshore wind farms, but gave no notice to investors and developers that existing subsidies would be cut short. It is also disingenuous for the UK government to say they have reached the target for onshore wind or will do so by 2020 when onshore wind will provide 10 per cent of electricity generation – this was never a UK government target.
The economic and supply chain impacts will have a disproportionate effect on Scotland as around 70 per cent of onshore wind projects in the UK planning system are here
The Scottish government has been clear that onshore wind should be able to compete with other technologies through the contracts for difference auction. To prevent the cheapest technologies from competing in the auction will not deliver the best price for the consumer and I have asked UK government to provide clarity on this issue which is causing anxiety to the industry.
There can be no doubt that the move to close the RO prematurely will harm investment and jobs, damage severely the prospects of community energy schemes, and ultimately increase the consumer cost of meeting renewable energy targets.
The key impacts fall into four categories for consumers, communities, companies and our renewable energy goals.
Consumers will pay the price in their energy bills. Onshore wind is the cheapest large-scale source of renewable electricity. Replacing onshore wind with more expensive technologies could cost consumers £2-3 billion more.
In addition to the impact on individuals and households, many communities will suffer. Communities planning to develop their own local schemes and those in line to gain from community benefit payments will lose from early closure of the RO. In the last 12 months, communities across Scotland received nearly £9 million from community benefit payments.
The third impact hits companies investing in Scotland. According to Scottish Renewables, up to £3-billion-worth of onshore wind projects in Scotland and more than 5,000 jobs are at risk.
The impacts reverberate across the wider supply chain including ports and harbours, transmission and distribution, consultancy, universities and the civil engineering sector.
The CBI has warned this “sends a worrying signal about the stability of the UK’s energy policy framework… and could damage our reputation as a good place to invest in energy infrastructure”. Above all else investors value certainty while sudden changes undermine trust and deter investment.
Finally, RO closure raises serious questions about the deliverability of the UK’s 2020 renewable energy target. The target is to meet 15 per cent of total energy needs from renewable sources by 2020 – well below the EU’s overall aim of 20 per cent – and the latest out-turn figures for 2013-14 show the UK achieved just 5.4 per cent.
As Climate Change Secretary, and the person who will represent the UK in the crucial UN climate change talks in Paris in December, Amber Rudd must not ignore the major contribution that onshore wind – as the cheapest large-scale source of renewable electricity – can make to compensate for slow progress in other areas such as heat and transport. Yet her first act in the new government is to cut green energy provisions – setting a terrible example to the rest of the world.
I met Ms Rudd recently and invited her to Scotland this summer to meet the industry and developers who have invested significant amounts of money in renewables schemes, and have now found the goal posts have been moved.
Onshore wind is the least expensive source of renewable electricity and to ignore the massive resource available from Scotland, and squander the huge economic benefits for consumers, communities and companies is utter folly.
