Hansard

Including the minister’s four unused minutes, Presiding Officer?

I suspect that many members feel, as I do, a sense of pride and achievement in Scotland’s hydro industry, and in Tom Johnston and the difference that his work made to the Highlands in particular. I suspect that we are also proud of the industry’s on-going contribution to meeting our energy needs in a low-carbon Scotland.

One of my strongest memories from my schooldays in Oban is of a class trip to the Cruachan dam, above Loch Awe, to see the pumped-storage station. Although I eventually chose a different path, for many years I was drawn towards engineering, simply because of the impression that the long tunnel and the turbines inside the mountain had made on me. However, I must confess that my account of the school trip, which was written when I was nine or 10 and which I still have, focuses more on the minestrone soup that I had than on the technology that I saw in action.

That said, and delighted as I am to talk about hydro’s past and future contribution, I am a little surprised that the Scottish Government would want to devote a whole afternoon of parliamentary time to a subject on which I imagine that we are in broad agreement. However, now that we are here, it is useful to take stock of the huge developments in hydro power in Scotland since the first successful project in Fort Augustus 123 years ago in 1890.

In the years that followed, some of the most famous hydroelectric schemes came into being, not least the British Aluminium Company’s Kinlochleven project in 1909, which to this day remains an example of how hydro schemes could be both power generators and world-renowned architectural feats. However, it has been a slow process from those first forays into harnessing the power of Scotland’s abundant supply of water for electricity generation to the point where Scotland now has 120 installed hydrogenerating stations that range from more than 100MW down to a few kilowatts and which amount in total to more than 1,800MW of capacity or 12 per cent of our electricity demand.

The House of Commons debated a bill on this issue in 1941 with a view to erecting hydroelectric works at Glen Affric and Glen Cannich. However, the bill failed and it was only through the concerted efforts of the aforementioned Labour Secretary of State for Scotland, Tom Johnston, and others from across the political spectrum that the North of Scotland Hydro-Electric Board and the large-scale hydro projects that came with it got on to the statute books.

The 1943 act and its passage through Parliament make fascinating reading. The fact that it came in a middle of a war from a coalition Government with a Tory Prime Minister and a Labour Scottish secretary makes it all the more significant. Indeed, one National Liberal MP, Sir James Henderson-Stewart, remarked that the bill was a

“hotch-potch of Scottish Nationalism and English Socialism”

while the MP for Glasgow Hillhead, James Reid, remarked:

“the Debate shows a new approach to post-war Scottish problems. Many ... Members on both sides of the House have approached the consideration of this Bill, leaving aside pre-war preconceptions and with the sole view of what is most practicable and likely to be most in the interests of Scotland as a whole, and of the Highlands in particular.”—[Official Report, House of Commons, 24 February 1943; Vol 387, c 238, 253.]

I am tempted to hope that just occasionally we in this Parliament could leave aside our pre-referendum preconceptions and focus on what we can do now, but I suspect that that might be asking too much.

It is important that we do not underestimate how much the 1943 act revolutionised hydro power generation and, in doing so, developed large swathes of the Highlands, which had been devastated by decades of outward migration and industrial decline.

In his opening remarks on the second reading of the Hydro-Electric Development (Scotland) Bill, Tom Johnston gave a powerful review of the Highlands at the time, arguing that it was necessary to introduce hydro power not to power the central belt but to redevelop the Highlands following decades of depopulation and decline. His thoughts, which are recounted in Hansard from 1943, are worth repeating:

“The cruisie and the farthing dip are no doubt quaint and interesting survivals, especially to summer visitors, but as lighting equipment their place is in a museum of antiquities. For my part, I should like before I go from this place to offer some of the amenities of life to the peasant, his wife, and his family. The amenities and comforts of civilisation have largely passed by the class from which Robert Burns sprang.”—[Official Report, House of Commons, 24 February 1943; Vol 387, c 188.]

The cruisie and farthing dip were very dirty and smelly types of lamp that were used in this country right up to the war. My father was born and brought up in a croft on Skye before the war and I find it almost incredible that before hydro he was leading the sort of life that Tom Johnston described. That said, I am not sure that he would have welcomed the use of the term “peasant”.

For Tom Johnston, the 1943 act was not just about providing electricity to tens of thousands across the north of Scotland but about opening up a part of the country that had largely been left behind in the industrial development that had gone before. We should continue to bear in mind that relationship between the hydro industry and the communities that it serves.

Hydro power continues to play an integral role in our country’s infrastructure today. Scotland is now the centre of the UK hydro power industry, accounting for almost 89 per cent of installed capacity and 94 per cent of UK hydro output. SSE, the privatised successor to the North of Scotland Hydro-Electric Board, has continued to develop new hydro schemes. In 2001, the first new scheme since the 1970s, Cuileig, south of Ullapool, began generating; in 2005, Kingairloch, on the Morvern peninsula, came into action; and new schemes are—if members will pardon the pun—in the pipeline for Loch Lochy and Invermoriston.

One of the most important and encouraging developments in more recent years has been the proliferation of smaller-scale projects. The 1943 schemes were necessarily large in scale, but small-scale hydro projects—generating from around 5kW for a single household up to 10MW—are equally important. The analysis that the Scottish Government published in 2010 suggests that there is considerable untapped potential from almost 7,000 possible schemes. Almost all of those would be smaller than 5MW in capacity, but in total they would be sufficient to supply more 1 million homes.

Before we get too carried away by our record and by the potential for further development, I should caution that I was contacted only this week by a constituent working in the renewables industry who struck a different note. My constituent has also written to the First Minister directly to suggest that it would be unfortunate to celebrate the hydro sector at a time when it faces a fundamental threat.

As well as touching on the historical legacy of hydro power, I hope that the debate will address the challenges facing the industry, which include: how to promote further community ownership; how to address fuel poverty in rural and other communities; the employment opportunities that hydro development offers; planning difficulties; the delays in grid connections; the difficulties with securing finance; the Government’s missed emissions reduction targets; and the potential for Scottish Water to become involved in hydro power.

I want to focus in particular on the issue of feed-in tariffs and degression rates, which I know have been the subject of many of the pre-debate briefings from Scottish Renewables and others. I know that the minister is aware of my constituent’s concerns on the issue, on which I wrote in May to the Secretary of State for Energy and Climate Change, Edward Davey. Alongside electricity market reform, the UK Government is proposing changes to feed-in tariffs, including the introduction of the mechanism of degression rates, which would reduce the feed-in tariff levels in line with increased levels of deployment.

One of the benefits of feed-in tariffs as originally introduced is that they finally made it commercially viable to build and operate smaller-scale hydro schemes, which would previously have been financially impossible. Unfortunately, the proposed changes to the tariffs do not properly take into account the long project lead-in times for hydro. Typically, a medium-scale hydro project will take three years or more from inception to deployment—longer if there are grid-related delays. Consequently, much of the interest in hydro that was stimulated by the introduction of feed-in tariffs in 2010 has yet to come to fruition.

The position for hydro is particularly harsh primarily as a consequence of the parallel introduction of preliminary registration, whereby schemes are entitled to register for the prevailing tariff up to two years before project commissioning, subject to having the necessary consents and a firm grid connection offer. In itself, preliminary registration is a positive initiative that provides comfort for investors dealing with long construction lead times. However, the sting in the tail is the UK Government’s decision that installations with preliminary accreditation will count towards degression triggers.

In effect, that means that, during 2013, up to three full years of projects—those to be commissioned in 2013, 2014 and 2015—will be registered for feed-in tariffs. Even on the basis of historical deployment figures, there is a risk that that could result in the highest degression trigger being activated, whereas in reality, due to a combination of supply chain constraints and grid connection delays, there is little prospect of actual deployment exceeding 25MW in any single year.

For all that there is the prospect of a significant rise in hydro deployment, even a doubling of historical levels would still result in hydro accounting for a very small proportion of overall feed-in tariff installations. Hydro schemes account for less than 0.1 per cent of all feed-in tariff installations and only 2 per cent of total installed capacity, and yet they contribute more than 10 per cent of the total electricity generated by feed-in tariff installations, thanks to average load factors in the 35 to 40 per cent range. Unlike many other feed-in tariff technologies, hydro schemes commonly have an operational life that extends long beyond the incentive payment period, with some schemes running for up to 100 years.

As things stand, we appear to be heading inexorably towards a 20 per cent real-terms cut in feed-in tariffs for hydro as from January 2014. It is the widespread view of the hydro industry that such a reduction in revenues will result in a majority of potential new schemes proving to be uncommercial. I hope that the minister will join Labour and others in the Parliament in putting maximum pressure on the UK Government to address that threat to the industry.

There are a number of issues that I hope to comment on later, and colleagues will undoubtedly raise them. I hope that the debate is a useful and constructive look at the hydro generation situation in Scotland. As I confided to Nigel Don earlier, I am particularly looking forward to Stewart Stevenson’s speech as I can only assume that he knew Tom Johnston personally.

I end with another snippet from the 1943 debate, which today’s ministers might take heed of. Sir James Henderson-Stewart from East Fife said:

“If national unity is to be interpreted as meaning that Scottish Members have got to say ‘Hear, hear’ to everything that emerges from St. Andrew’s House, then the sooner that convention is destroyed the better.”—[Official Report, House of Commons, 24 February 1943; Vol 387, c 232.]

If only that were true in more debates, Presiding Officer.