Hansard

This afternoon, I want to pay tribute to Scotland’s renewable energy industry and highlight some of our renewable energy achievements. I also want to set out the challenges that Scotland’s sector now faces given the current direction of United Kingdom Government policy, and how we intend to go forward.

I hope that members will join me in acknowledging the significant contribution that the renewable energy sector makes to Scotland’s economy and environment and to meeting its energy needs. The renewable energy industry in Scotland makes headlines and breaks records. In August, for the first time ever, wind turbines in Scotland generated more electricity than was used in the whole of the nation on a single day. In September, the First Minister unveiled the world’s largest planned tidal stream project, MeyGen, the first two turbines of which are now generating electricity in the Pentland Firth. Onshore works on the world’s largest consented floating offshore wind farm site have begun, and we can expect to see Statoil’s Hywind Scotland project deployed next summer.

A Scottish Renewables report that was published last week found that Scottish renewable energy businesses are working in more than 40 countries around the world. Recent figures from the Office for National Statistics show that low-carbon industries and their supply chains in Scotland generated turnover of almost £11 billion in 2014 and supported 43,500 jobs. In the words of UK Secretary of State for Business, Energy and Industrial Strategy, Greg Clark, last month,

“There are few nations that could claim to have embraced renewable energy with as much enthusiasm and success as Scotland. Last year, over half of Scotland’s electricity came from renewable technologies—a clear example to the rest of the world.”

Murdo Fraser, please note.

However, although UK Government ministers applaud our success, their policy decisions continue to create serious uncertainty across the sector and undermine Scotland’s renewables potential. I was extremely disappointed—indeed, I was angered—by the UK Government’s handling of the contracts for difference announcement in some respects. The Scottish Government repeatedly sought assurances from UK Government ministers about their plans to support renewable energy projects through the contracts for difference auction. I regret to say that I believe that the UK Government misled Scottish ministers and investors in the renewables industry and has reneged on earlier commitments.

I will give some key examples of that, the first of which is on island wind. Developers and communities on the remote islands of Scotland have told us that they are bitterly disappointed by the CFD announcement. They cannot understand why the UK Government has launched a further consultation on the treatment of island wind, which curiously the Conservative amendment seeks to celebrate. In the consultation, the UK Government has set out its position that island wind should not be considered as a separate technology, but should instead be treated in the same way as onshore wind.

That new minded-to position of the UK Government defies belief. It contradicts its previous position and undermines the work of the Scottish island renewables delivery forum, which is an intergovernmental working group that was set up to address the barriers to the deployment of island wind and marine technologies. The delivery forum, which is co-chaired by UK and Scottish Government ministers, has funded over £100,000 of research that found that, although island wind could capture some of Europe’s best wind resources, the projects face unique costs that obstruct deployment.

The research showed that unlocking the islands’ potential would provide a significant economic stimulus to our island communities, boost employment and spur innovation in other energy sectors. The use of multiterminal HVDC—high-voltage direct current—cables would provide learning benefits to offshore wind, and the export capacity that the transmission links would provide to the islands would open the door for further development of marine energy.

Island wind would also bring UK-wide supply chain benefits and contribute to the decarbonisation of the UK energy system, which will be crucial if the UK’s carbon emissions targets are to be met. However, the research highlighted that island projects face a number of technical and financial barriers that make them more akin to offshore than to onshore wind. Expensive HVDC cables are required to connect the islands to the mainland transmission grid—an individual cable to Shetland or the Western Isles would cost an estimated £600 million to £700 million. The remote and challenging conditions in which the projects would operate would increase their network and operations and maintenance costs. For instance, it is projected that a wind project on Shetland would face a transmission charge of £134 per kilowatt per annum compared with £18 for a mainland project. Similarly, a project on the Western Isles could pay up to £114 per kilowatt per annum.

The case for treating island wind as a distinct technology from onshore wind is the product of a close working relationship between our two Governments. From that evidence base, the UK Government twice proposed a strike price for island wind and concluded from its 2013 consultation that it warranted separate treatment. There was almost no industry dissent on that stance. Therefore, it was with great frustration that we learned with no prior warning that the UK Government had chosen to run a second consultation on the treatment of island wind—in effect, barring island wind from bidding for CFD allocation.