Scottish Government announces Renewable Energy Investment Fund

The Scottish Government this week the creation of the Renewable Energy Investment Fund. The £103 million fund will be specifically targeted at certain types of renewable development to ensure that investment money will not be spent on renewable technologies which have already achieved commercialisation.

The Renewable Energy Investment Fund will be initially focused on the following types of project:

rural businesses and local communities will be given assistance and funding to establish community owned renewable developments, wave and tidal developers will be funded with a particular emphasis on the development and deployment of array projects, and district heating schemes.

It is intended that the Renewable Energy Investment Fund will “have a legacy for many years” as money is to be repaid into the fund and then reinvested into new developments. It is also intended that the Renewable Energy Investment Fund will work alongside funding from the Green Investment Bank (which is to head-quartered in Edinburgh) as the Investment Fund is aimed at projects at an earlier stage of development. Green Investment Bank funds are to be aimed at projects which are at a “near commercial” stage. This £103 fund comes in addition to the £200 million already committed over the next three years in the Scottish Government’s spending review.

Scottish Energy Minister announced the launch of the Renewable Energy Investment Fund:

“This “103 million Renewable Energy Investment Fund will allow communities all over Scotland to reap the benefits  of our green energy revolution.

“Scotland has astounding green energy potential and vast natural resources, and we have a responsibility to make sure our nation seizes this opportunity to create tens of thousands of new jobs and secure billions of pounds of investment in our economy.

“This fund will help us to make the most of our potential. Some have called on us to increase funding for marine technologies – this fund does that, demonstrates our commitment to marine and will ensure marine renewable technologies become commercial realities. It will help ensure district heating is rolled out throughout Scotland, and will support communities developing their own local renewable projects.

“The fund will not replicate existing grant and loan support. Instead, it will focus on investment by offering new and innovative instruments which complement existing Scottish routes.

“That is what this fund is all about – investing money from the technologies of the past to secure our energy future.”

Niall Stewart, chairman of Scottish Renewables greeted the news:

“After the recent positive announcement on locating the UK Green Investment Bank Headquarters in Edinburgh, the Energy Minister’s statement on the Renewable Energy Investment Fund makes for doubly good news for Scotland’s flourishing renewable energy sector.

“This new £103 million fund will inject much-needed investment into the development of the next generation of renewable technologies, such as marine energy and renewable heat. This kind of support can be a vital catalyst in attracting even greater levels of private investment.

“Scotland is already at the forefront of developing and testing emerging wave and tidal technologies and, with the correct level of government support, we can become a global centre of excellence in both the deployment of these technologies and their accompanying supply chains.

“The renewable energy industry is already providing thousands of Scottish jobs and has the potential to bring in billions of pounds into the Scottish economy. The Renewable Energy Investment Fund will help the industry and local communities continue to deliver Scotland’s ambition of maximising its renewable energy potential.”

Dr Richard Nixon, director of WWF Scotland commented:

“The focus on marine renewables and district heating are particularly welcome as these are two areas that need to grow quickly in the next few years if we are to cut emissions. However, we’re also pleased to see help for smaller renewable schemes as we know there are many around the country who wish to take action in their own communities.”

The announcement of the Renewable Energy Investment Fund and the head-quartering of the Green Investment Bank in Edinburgh demonstrates continued government support for the country’s renewable industry from both a Scottish and UK level.

Scottish Government publishes Electricity Generation Policy Statement

This week the Scottish Government launched the latest draft of its Electricity Generation Policy Statement which aims to outline how the ambitious 100% renewable energy target for 2020 will be achieved. The document contains a large amount of information including a projected breakdown of Scotland’s future energy mix, outlined aims for the countries energy network in 2020, carbon reduction targets, energy efficiency measures, planned grid connections with other countries, and the expected economic benefits in terms of investment levels and job creation. The complete document can be found here. Scottish Energy Minister, Fergus Ewing stated:

“This report shows that the Scottish Government’s target to generate the equivalent of 100 per cent of our electricity needs from renewables, as well as more from other sources, is achievable.

“We know there is doubt and scepticism about our 100 per cent renewables target, and the financial and engineering challenges required to meet it.

“But we will meet these challenges. I want to debate, engage and co-operate with every knowledgeable, interested and concerned party to ensure we achieve our goals.

“We know our target is technically achievable. Scotland already leads the world in renewable energy, and we have the natural resources and the expertise to achieve so much more.

“The prize at stake for the people of Scotland is huge, in terms of jobs, economic opportunities and lower electricity bills for all.”

The Electricity Generation Policy Statement initially outlines what the government hopes to achieve, long term, with the countries energy network.

It states that Scotland’s generation mix should deliver; a secure electricity supply, at an affordable cost to consumers, which can achieve large scale de-carbonisation by 2030, and brings the greatest possible economic benefit to Scotland.

A number of individual targets have been set with these aims in mind. For example, total Scottish energy consumption should be lowered by 12% by 2020. Energy efficiency is internationally regarded as one of the most affordable ways in which energy demand and carbon emissions can be reduced and controlled. Steps are already being taken to meet this target; there was a 7.4% drop in year on year energy demand from 2008 to 2009.

No new nuclear power plants are to be constructed in Scotland although extending the lifespan of the countries two existing nuclear plants for  a further 5 years is being considered. Such a move would serve to ease the transition to a grid more heavily reliant upon renewables.

Carbon Capture and Storage technology is expected to play an important role. Allowing baseload power to be maintained whilst still reducing carbon emissions. A minimum of 2.5 GW of thermal generation fitted with CCS technology is expected to be operational by 2020. CCS technology, if successfully demonstrated at commercial scale, could create up to 5,000 jobs and be worth £3.5 billion to the Scottish economy.

14-16 Gigawatts of renewable capacity will be required to achieve the 100% renewable target by 2020. Currently there are 12 Gigawatts of renewable capacity in various stages of planning, development and deployment. This figure includes 3 Gigawatts of mainly onshore wind projects currently consented or in construction. Whilst it should be remembered that not all of the 12 Gigawatts worth of projects will make it to construction it demonstrates the interest the Scottish renewables sector is already attracting from investors.

To achieve the 2020 target installed renewable generation capacity will have to almost double over the next ten years.Wind (both onshore and offshore) will play a major part in this expansion. 13 Gigawatts of wind energy is expected to be installed by 2020. This will mean that wind power will be providing around 55% of Scotland’s electricity output by this time. The Policy Statement identifies this target as a “major challenge” but argues that it is “consistent” with the projections made in a variety of different reports. Given Scotland’s huge potential for wind energy, strong backing from both the UK and Scottish Goverment’s, and the falling costs of both onshore and offshore wind it seems an achievable, if ambitious, target.

The Scottish Government has outlined a number of economic benefits that a strong and committed drive for increased renewable generation can bring. Firstly, it will serve to insulate consumers from the rising international prices of fossil fuels. The Policy Statement states that from 2013 increased renewable energy capacity will begin to halt the ever increasing cost to consumers from their energy bills.

Secondly, over the next ten years the renewable energy industry alone could be providing up to 40,000 jobs and £30 billion worth of investments into the Scottish economy. This is not including the economic benefits of CCS and increased usage of energy storage technologies. Additionally, the Scottish Government has targeted that 500MW should be owned by local communities by 2020. This level of communal ownership would see up £2.4 billion in Feed in-Tariff revenues over the next 20 years being held by local communities.

Thirdly, the necessary investment in and upgrading of Scotland’s electricity grid would pump £7 billion into the country’s economy and create 1,500 new jobs. The benefits of such investment are already being seen with both ScottishPower and Scottish and Southern Energy (SSE) announcing the creation of new training and apprenticeship schemes.

Reactions to the publication of the Electricity Generation Policy Statement have been largely positive.

Ian Marchant, Chief Executive of SSE commented:

“SSE welcomes the Scottish Government’s electricity generation policy statement. With energy supply now a global issue, it is vital that the policy objectives adopted at Scottish, UK and EU level are consistent. With its focus on energy security, affordability and de-carbonisation, this policy statement underlines the extent to which policy objectives are consistent, and it is very encouraging that this should be the case.”

Keith Anderson, ScottishPower’s Chief Corporate Officer and CEO of ScottishPower Renewables remarked:

“ScottishPower supports the commitment to increase low carbon electricity generation in Scotland and we welcome the clarity outlined in the Scottish Government’s policy statement. We are making significant investments in large scale renewable energy projects including new wind, wave and tidal power. This investment is critical in order to help Scotland achieve its renewable energy targets and will be a catalyst for economic growth and job creation.”

Alison Kay, Commercial Director for National Grid observed:

“Scotland already has the highest proportion of clean power generation across Great Britain, which plays a vital role in keeping the lights on and meeting demand. The future energy mix is uncertain and this statement sets out a clear vision for the future of energy in Scotland. It will further enable National Grid and other industry participants to effectively plan the networks of the future.”

The 2020 target is described in the Policy Statement as “both a statement of intent and a rallying call”. It has been demonstrated to be both feasible and achievable, with wind energy playing a massive part. It is hoped that the outlining of a long term plan to help achieve the 100% aim will provide investors with confidence.