Renewables Obligation Scotland Review
The first item of business this afternoon is a statement by Fergus Ewing on the renewables obligation Scotland review. The minister will take questions at the end of his statement, so there should be no interventions or interruptions.
The renewables obligation, or RO, is a vital component of our efforts to increase Scotland’s renewable energy production. The mechanism is established, it is understood and it is effective. The value of the RO to Scotland, the powers that it has exercised on behalf of and with the approval of this Parliament, and the need to respect and protect those powers, are subjects that I will return to during this afternoon’s debate.
Since 2002, successive Administrations have used the devolved powers to support new generation across Scotland; from onshore wind and hydro to—much more recently—offshore wind, wave and tidal projects. The devolved powers have always been used carefully and responsibly. We know and understand the value that our stakeholders place on having as much consistency as possible across the United Kingdom. However, where Scotland’s needs or priorities have differed from the rest of the UK, the RO in Scotland has reflected that difference. None of that is done lightly; any change to the mechanism, particularly in Scotland alone, is based on open dialogue with all interested parties and on a careful appreciation of the implications.
I am therefore pleased to announce to Parliament that the Scottish Government is today publishing its decisions on changes to the renewables obligation Scotland mechanism. This follows a detailed consultation on the proposals, which closed earlier this year. Our review raised a wide range of issues, and sought views on some significant changes to support under the RO, as well as to the criteria against which eligibility for that support is judged.
The changes that we are proposing—which will be subject to the approval of Parliament—are as follows. First, we listened carefully to the many responses on a proposed reduction to hydro generation. Scotland has a proud world-renowned heritage in that form of power generation. Although the stations that can still be built may be on a smaller scale, their contribution to our energy mix and renewables targets remains important. We accept that facing the development of such capacity in Scotland there are conditions and challenges that increase the associated investment risk. For that reason, we have decided to retain the hydro renewables obligation certificate band at its current level.
Our consultation also raised the issue of extra support for innovative offshore wind. Scotland has huge offshore wind generation potential, but much of that resource is located where there are far greater water depths than is the case elsewhere around the UK. It is therefore considerably more challenging and costly to exploit. A new band for testing floating turbines and other innovative offshore wind deployment in deep waters would help to tap that resource and bring costs down, and would create benefits for Scotland. We will work on the detailed structure and design of such a band and will, in due course, consult on our proposal.
On biomass generation, we asked for views on whether to restrict or remove support for large-scale wood-fuelled electricity-only and combined heat and power stations. A significant majority responded in favour of such restrictions, although others argued that biomass generation has an important role to play in meeting Scotland’s electricity and heat targets. I accept that role, but I also believe that our concerns over competition for the finite supply of wood and our concerns about the strategic value of biomass heat over electricity merit the introduction of a new control. I am therefore proposing that wood-fuelled stations with a total installed capacity that is greater than 10MW and that are not good-quality combined heat and power stations will not be eligible for ROCs after 2013. That will not apply to stations that commission after April 2013 but which received consent or planning permission before our consultation was published.
Our vision for biomass is clear: it is for small and sustainable stations that are close to available local supplies and operate as efficiently as possible. In July, we announced our intention to reduce support for onshore wind by 10 per cent. I am happy to confirm that decision today, and that the band will remain at that level for the review period; that is, until 2017. As with all technologies, we will revisit that band should evidence on costs emerge that would justify such a course of action. However, we made clear in July that evidence to support a further reduction does not exist at present, and I know that that clarity was helpful in concentrating the minds of the United Kingdom Government to reach the same conclusion.
For all other areas, we intend to make the same changes that will apply across the rest of the UK. Those include proposed levels of support, subject to a further short consultation, for higher levels of co-firing with biomass. That support will provide an option for the continued and cleaner operation of the large thermal generation at Longannet power station, and is therefore of strategic value. We will be looking at ways to ensure that the biomass fuel for such a venture is sourced from sustainable imports.
Our desire for as consistent an approach as possible means that we will also be consulting shortly in the same terms as the UK Government on issues including solar photovoltaic banding, additional cost controls for biomass generation and the future of certain types of small-scale generation technology under the RO.
This has been a lengthy process, but it was born of necessity. The changes in question will guide the development of renewables generation across Scotland for the next four years.
It has been vital that the Scottish Government listen closely, consider carefully and decide appropriately. I am confident that we have done so, and that the RO will continue to deliver new generation at an affordable cost to consumers.
I am happy to take questions regarding today’s announcement.
I intend to allow around 20 minutes for questions, after which we will move to the next debate.
I thank the minister for prior sight of his statement. I welcome it and much that it contains.
I wrote to the minister regarding the renewables obligation and I am glad that he has taken on board what we had to say with regard to hydro and biomass. I hope that he has not closed the door to our third request regarding additional tariffs for the islands. Perhaps there can be on-going discussion on that point.
I welcome the announcement about a ROC for innovative offshore wind development. The minister will be aware that any delay in that regard could delay development in this area. Therefore, will he say what form the further consultation that he mentioned will take, when it will begin and when he will be in a position to announce the results of that consultation, so that we can move forward with the developments?
I am grateful for the support of Rhoda Grant and her Labour colleagues. I pay tribute in particular to Sarah Boyack for the work that she has done on the issue over the years. The matter has been taken forward on a largely cross-party basis, which is to be welcomed.
On the point about tariffs for the islands, that is more a matter for debate later in the afternoon. If I may, I will not comment on it at the moment, but will address it in my remarks in the ensuing debate, because it is not within the ambit of the announcement on ROCs that I have made.
Rhoda Grant asked about the timescale for the consultation on the proposed banding for innovative offshore wind development. It is our intention that a consultation paper be issued in October, and that the parties that are most directly involved in considering those potential innovative solutions will be consulted, as will the whole renewables sector and all those who are involved in bringing down the costs of offshore wind developments, whether fixed or floating. In particular, I hope that that will be of interest to companies and organisations that might be considering developing, or working with Scotland-based companies to develop, some of the ports and harbours around our shores. I should not really get into specifics, but there is at least one well-known port—I see that Rhoda Grant is thinking of it as I speak—that might benefit from such development.
We want to develop our renewables potential and create jobs in Scottish ports, towns, harbours and islands. That will be aided by the work that we want to do together with Rhoda Grant and her colleagues to take forward a specific Scottish solution to encouraging the innovative technology that is appropriate for deeper waters. Therefore, solutions that are not fixed to the seabed must be explored fully. We will take forward that work in the timescale that I have indicated.
I, too, thank the minister for providing an advance copy of his statement, and I congratulate him on being able to read Rhoda Grant’s mind.
The Scottish Conservatives fully welcome the statement. We welcome the retention of the hydro ROC band at its current level, given the conditions and challenges that hydro developments face. We are pleased to hear of the further consultations and the positive engagement with the UK Government on solar PV banding and certain types of small-scale generation.
My first question was to be on when the consultation on the innovative offshore ROC will start, but that has been answered. I welcome the fact that the consultation is to start as soon as next month.
My next question is on biomass. Given the finite supply of wood, the measures that are to be taken on ROCs for biomass appear to be sensible. However, is there any potential for flexibility regarding biomass development plans that received planning permission during or after the consultation, and which might have incurred considerable preparation costs?
I welcome the comments of Rhoda Grant—
Members: Mary Scanlon!
I am pleased that in Scotland and south of the border, we have maintained support for onshore wind.
On the points about timing, in my statement I referred to the fact that applications that have already received planning permission will be treated differently, which is fair because they were made before the current consultation—they got in under the radar, if you like. That is the correct approach.
Mary Scanlon is perfectly correct with regard to biomass. We have listened carefully to the interests of the timber sector in the broadest sense. A huge number of people are employed in that sector in Scotland, particularly in the area that she and I jointly represent. Leading Scottish companies such as BSW Timber Group—or Brownlie’s—in Boat of Garten and Fort William; John Gordon & Son in Nairn; and James Jones & Sons in Forres and many sawmills throughout the country have been concerned that very large-scale biomass for electricity only would consume much of the limited and finite source of timber in Scotland, and in so doing would receive a subsidy that is not available to sawmills. Of course, as Mary Scanlon well knows, Norbord has a substantial plant near Inverness.
It is fair to say that we listened very carefully indeed to the views of those companies and to the views of the other respondees to the consultation—there were 139 in total. We also listened carefully to the views of members of all parties who wrote to us to raise environmental concerns about large-scale biomass for electricity only. We took all that into account; the preponderance of views that were expressed to us from representatives and in the consultation said that a 10MW cap is appropriate. That will still allow smaller-scale community biomass schemes to operate successfully in the Highlands. Mary Scanlon and I know that many companies operate well in that field. It is reasonable to mention HWEnergy, which has installed about 200 biomass boilers. I know that because I kind of opened one at the Black Isle Brewery last Friday.
I welcome the statement and I am sure that it will provide support and reassurance to the renewables industry.
The minister mentioned at the start of the statement the importance of wave and tidal generation. Can he remind members what support the Scottish Government is giving to those technologies and what their potential impact would be across the Highlands and Islands region?
Mike MacKenzie is absolutely right to draw attention to the importance of wave and tidal generation. I had great pleasure in attending with my United Kingdom counterpart, Greg Barker, the opening of the marine energy park in the Pentland Firth and Orkney waters, in the summer. I am therefore particularly pleased that the review outcome for wave and tidal generation is extremely positive on both sides of the border and that the UK is following Scotland’s lead in setting higher ROC levels—five ROCs up to a 35MW project cap in respect of wave and two ROCs above the cap.
The scale and potential of wave and tidal energy in Scotland are truly immense. The developments that are being contemplated are world beating. If they go ahead, they will be massive projects with huge potential to help sustain and foster job creation in many of the most rural areas and the islands. It is a massive opportunity and I am delighted that, together with our UK colleagues, we have achieved the result of incentivising those forms of energy. Scotland has a huge proportion of the potential of wave and tidal power—not just here, but in the whole of Europe.
I echo the broad welcome for much of what is in the minister’s statement.
On the minister’s proposals for energy from waste—in other words, incinerators that generate electricity—the minister has, rather than reduce the ROC by 50 per cent, as was initially proposed, retained the current level of support, according to the information on page 9 of the booklet accompanying the statement. Can the minister either expand on or clarify his intentions as regards incinerators? He will be aware of the anxiety that many such proposals create in communities across Scotland. Without being too parochial I ask: does he support large-scale incineration from waste, as has been proposed in my own constituency in East Renfrewshire?
I should not express a view about specific projects. That is not dodging the question, it is because projects may, with respect to planning, come before ministers. We heard earlier today about the ministerial code, so I adopt those remarks.
In response to the question about why the Scottish Government continues to support energy from waste incineration under the RO, the RO has only ever supported energy from waste stations that capture and use the heat that is produced. That will remain the case. The fact that we have decided to do that reflects the responses that we received on the matter throughout the consultation. We also bear in mind—as Ken Macintosh will appreciate—that without that support those stations would, in fact, still be built, but many of them would operate much less efficiently. For those reasons we decided, following consultation, to maintain support at the current level of one ROC.
Many members are requesting to ask a question of the minister. I ask members to keep their questions brief and the minister to keep the answers brief. Then, hopefully, we will get through everybody.
I appreciate that the minister is unable to comment on live planning applications. However, he will be aware of my constituency interest in the Grangemouth biomass proposal. Can the minister expand on the impact of his statement on combined heat and biomass projects?
Angus MacDonald is right—I cannot and will not comment on specific proposals that may come before me or my colleagues.
I have already explained in my response to Mary Scanlon the general thinking behind our decision on biomass, and putting the cap at 10MW. However, the cap applies to projects that involve producing electricity only—in other words, using biomass only to generate electricity—and does not apply where there is combined heat and power. Where there is combined heat and power and the heat can be used for industrial purposes to perhaps assist a large user of heat to defray and reduce energy bills, that provides an additional valuable contribution—potentially extremely valuable—especially to companies that currently have very high bills and which would seek thereby to reduce them.
We intend to hold a brief consultation on the precise details. That is a chance for stakeholders to put final arguments on, for example, the size of the cap. The 10MW capacity ceiling was based on work that was conducted for us by the Forestry Commission’s forest research, North Energy and Xero Energy Ltd.
I will try to follow the Presiding Officer’s admonition, so the last thing that I will say is that the proposal does not put an automatic halt to any project. Generators of any size can still proceed if they can—as they should—capture and use the heat.
The statement mentions the reduction in ROCs for onshore wind but does not mention the proposal on page 10 in the banding review to close the band
“to new projects at or below 5MW from 1 April 2013, subject to consultation”.
I seek clarification from the minister that small-scale generation will continue to be supported so that there is an incentive for all communities to invest in the technologies. What technologies will be included in the consultation? What is the timescale for the consultation?
I am pleased that there is such a consensus in support of maintaining onshore wind support at 0.9 ROCs. Claudia Beamish is correct to say that there will be closure of the band to new projects at or below 5MW from 1 April 2013. However, that will be subject to detailed consultation. I hope that that consultation paper, too, will be issued around October—I say “around October” rather than “in October”, because that is slightly different. We need to take, I say with respect, a little time to make absolutely sure—I think for some of the reasons to which Claudia Beamish alludes—that we get this right, because the overriding concern is to continue to incentivise support for smaller projects.
I add my thanks for advance sight of the statement and join the general welcome for much of the content.
The minister is right to illustrate the importance of consistency across the UK, alongside the important flexibility that he is afforded through devolved powers.
Section 9 of the report, on solar PV, refers to
“the changing picture on PV generation costs, which suggests that these have fallen considerably”.
I appreciate that he will put the proposals out for further consultation, but given his previous criticisms of the UK Government’s decisions on solar PV, can he give the industry any advance indication of his early thinking about his intentions?
Solar PV has potential in Scotland, although perhaps not on a commercial scale. In common with the rest of the UK, solar PV installations have qualified for a band of two ROCs since 2009 and our proposal had been that that level of support be maintained. However, we have also noted the evidence that the UK Government has gathered on the changing picture on PV generation costs, which suggests that those have fallen considerably, which means that we need to look again at the ROC banding for the technology.
It is reasonable for me to say that when I made my previous remarks in the chamber about the UK Government’s decision to reduce support for solar PV, I did so in a moderate way. I acknowledged at the time that there was a rationale for the decision to reduce that support, albeit that the method that the UK Government had chosen to use to implement it was—shall we say?—somewhat controversial.
Revised proposals for solar PV will form part of a consultation that the Scottish Government will publish this autumn.
I, too, welcome the minister’s statement. He will be aware that the industry has some concern about uncertainty with regard to the UK Government’s support for renewables. Does he agree that, with this statement, the Scottish Government is delivering the necessary certainty to ensure further investment in Scotland?
I believe and hope that people throughout the UK recognise that investor confidence and certainty is a sine qua non of developing our renewables sector. Today’s statement further demonstrates the Scottish Government’s credentials for providing the necessary support—using the levers that are in our power—to progress the developments that can arise only if that confidence exists.
Renewable electricity generation in Scotland stood at nearly 14,000GWh at the end of 2011, and there was nearly 5GW of installed renewable electricity capacity. Statistics show that renewable electricity generation in Scotland reached nearly 5,000GWh for the first quarter of 2012, which was an increase of 45 per cent on the first quarter of 2011. That shows that we are already achieving success and need to move on to the next stage.
I remind members that we have very little time.
Page 5 of the document that accompanies the statement makes it clear that the Scottish Government intends to consult on the closure of the scheme to projects below 5MW. In my constituency, there is an innovative research and development company that is working with anaerobic digestion, and a distillery that is seeking to pilot the use of AD technology. Will the minister enlarge on his reasons for the presumption towards removing such projects from the scheme?
The decision on the closure of bands to new projects at or below 5MW was taken having had regard to consultation responses. However, the decision will be the subject of a consultation precisely because we want to receive representations from interested parties. I would be delighted to receive representations from Iain Gray or from his constituents’ businesses, and we will consider them very carefully.
I welcome the continued RO support for onshore wind and the special band for offshore wind development. Does the minister agree that that sends a clear signal to communities and developers that development of wind technology improves the efficiency of onshore wind, which is the key to building superefficient offshore wind farms such as Beatrice Offshore Wind Ltd and Moray Offshore Renewables Ltd and making them world leaders?
Yes, I do. I acknowledge that Rob Gibson has been campaigning on the issue for many decades—if I may put it thus—and he is quite right to say that we need to bring down the cost of offshore wind.
I am delighted that Andrew Jamieson has been appointed to head up the offshore renewable energy catapult. He will be tasked with reducing costs and with progressing the work that has already been done. That is excellent news.
Only 10 years ago, the largest capacity for a turbine was about 800kW; it is now 10 times that. Great progress has been made on efficiency, and I have no doubt that the costs will come down further. The expertise of the offshore oil and gas sector—from companies such as the Wood Group—will greatly assist us in finding engineering solutions to drive down costs.
It is an intriguing experience to be able to say that I welcome much of what Fergus Ewing had to say. However, how can he argue that a reduction in the banding for energy from waste plants would result in plants being built without a heat element? They will be built only if they are given consent. Should we not at least reduce the ROC banding for plants that consume materials that could be recycled?
I welcome the first part of Patrick Harvie’s remarks. The Scottish Government’s announcement today reflects many genuine concerns from a great many people. Many of those people are outwith the industry and have nothing to do with it at all, but are simply concerned about the effect of megaplants on the environment in their part of Scotland. The statement also reflects the interests of respondents to the consultation.
I should not comment on whether planning consent will be given to any particular plants.
With regard to how the scheme operates, 10 per cent of the electricity consumption is within Scotland, but 30 per cent of the ROCs are issued here. That is a clear example of how Scotland, in the UK, benefits from a UK electricity market. Will the minister describe how the scheme would be administered and funded if Scotland was to separate from the United Kingdom?
I have every confidence that we will operate efficiently in conjunction with our friends south of the border.
I offer my apologies to Alex Johnstone and John Wilson and regret that I was unable to call them.