A d v ic e Pa p er (11-02)

Februa ry 2 0 1 1

SCOTLANDS NEXT ENERGY REVOLUTION:

a response to the Scottish Governments consultation

Summary
If Scotland is to make the most of the opportunities the move to a low carbon economy presents, there must be a clear analysis of where its competitive advantages lie. It is not enough to have advantages in natural resources, there must also be access to engineering expertise, a skilled workforce, finance, infrastructure and a supportive regulatory environment. It is vital that Scotland maintains a secure, competitive, socially equitable and low carbon emissions supply of energy from a variety of sources as this is needed for social as well as economic reasons. In seeking to achieve this, the Scottish Government should also recognise the importance of the natural environment and the vital goods and services it provides to society and the benefits which its careful management bring to the attractiveness of Scotland as an investment location. Decision-making on Scotlands energy future must be based on a realistic evaluation of its future energy needs, balanced with an understanding of the capacity of the various options to meet those needs, within the limitations of capital and timescales available. No energy source should be ruled out until security of supply can be ensured. The importance of an extensive and intelligent grid system as a tool to maximise efficiency and minimise risk cannot be overestimated. Strategic investment and upgrading of the grid infrastructure within Scotland and the development of offshore grid capability will maximise the potential to transmit energy from outlying renewable energy sources.There needs to be investment so that Scotland can import electricity in times of need as well as export it in times of surplus. The potential for economic benefit to local communities from energy technology and energy production from renewable sources is substantial.We agree that it is of the greatest importance that local communities receive real financial benefits throughout the lifetime of activity from the outset. The Scottish Government should take account of lessons learned from previous attempts to engage with communities and set out specific actions that will ensure that people have a real and to them meaningful stake in the low carbon economy and emerging energy technologies rather than being consultees in a process over which they have no control.

A d v ic e Pa p er (11- 02)
Background
1 The Royal Society of Edinburgh (RSE), Scotlands National Academy, welcomes the opportunity to comment on the Scottish Governments consultation, Securing the Benefits of Scotlands Next Energy Revolution. The RSE has been particularly active in informing energy policy in Scotland, not least through its wide-ranging Inquiry into Energy Issues for Scotland (2006)1. It has also taken a strong interest in the climate change agendas being developed by both the UK and Scottish Administrations. It is shortly to publish the results of a further major inquiry entitled, Facing up to climate change: breaking the barriers to a low-carbon Scotland, which has involved major engagement and discussion with community groups, the results of which are highly germane to the current consultation. Given these interests and the expertise that exists within the Fellowship in the areas of energy, climate change, earth sciences, economics, environmental protection, business and industry, and civic society, the RSE is well-placed to respond. The Scottish Government consultation makes the case for Scotlands communities to secure the benefits of Scotlands transition to low carbon energy sources, and whilst our response is made from a broader perspective and comments on the prior issues that must be considered in relation to the development of low carbon energy sources, we hope it will prove useful in informing the debate. We recognise that the Scottish Government has substantial powers to determine energy strategy through its responsibility for the promotion of renewable energy, encouragement of energy efficiency, and its powers to grant consent for new electricity generation and transmission infrastructure. In these respects it is crucial that there are open lines of communication and wider connectivity at the Scottish and UK levels to ensure that there is a joined-up approach and alignment of energy policy. The approach should be to encourage interdependency with the UK, European and global markets. The transformation of Scotlands energy sector must be designed to not only contribute to economic growth through the development of cutting edge technologies and generation power that can be exported, but also to meet Scotlands own energy needs with a reliable, affordable, and sustainable supply. Further, this transformation will require major changes to the infrastructure that supports energy generation and distribution.
http://www.royalsoced.org.uk/enquiries/energy/index.htm

Renewable sources of energy are a key contributor to energy supply needs because they reduce whole life CO2 emissions from overall electricity production and also crucially, increase the diversity of fuel resources and hence security of supply. There are significant prospects as well as challenges for Scotland in utilising its natural resources as components of the energy mix. However, it must be recognised that abundance of resource does not necessarily result in its utilisation.That resource must first be harnessed efficiently and at a competitive price. The consultation document recognises that Scotland is well-placed in the carbon capture and storage (CCS) sector, both in terms of storage capacity and in expertise. Clearly, Scotland does have natural advantages in its wind and wave resources. However, there must be a quantative discussion of the technical aspects of the various options. How much energy will Scotland need in the low carbon economy? What is the generation capacity of different options? How reliable will each option be? What are the costs involved in both developing technology to a stage from which it can be rolled out at commercial scale and in installing or upgrading the infrastructure required? These questions must be considered both in terms of the supply and demand for energy from different sectors.All of this information is needed before decisions can be taken on what energy sources should be included, or ruled out. There must also be a clear picture of the stage of development of the various technologies. Onshore wind, for example, is now well developed at a commercial scale, although Scotland is not at the cutting edge of this sector which is dominated by Denmark, Germany and Spain. Offshore wind in the UK as a whole has recently seen a step change, with the allocation in January 2010 of nine development zones potentially yielding 32GW. The sector is still emerging and Scotlands ability to draw on the offshore expertise within the oil industry gives it a good opportunity to position itself as a world leader. However, huge investment is needed to get the sector off the ground. The same is true for other forms of renewable energy, such as wave and tidal, that are currently in their infancy. With regard to these forms of renewable energy, ultimately, the gap between capital costs, expected operational costs and revenue still remains too large for substantial industrial commitment without improvements in the subsidies and incentive schemes. The companies engaged in the technological development of marine renewables in Scotland still do not have adequate support from the public sector given their potential for supplying power to Scotland and developing export markets.

Scotlands Low Carbon Energy Potential

4

A d v ic e Pa p er (11- 02)
8 The levels of investment, including subsidies, that will be required in the coming years and the high costs of producing energy through methods that are still developing, clearly lead to concerns over the costs of energy for individuals and businesses in Scotland. This cost must be recognised, along with details on how the impacts on fuel poverty and competitiveness will be addressed. Innovations to reduce the costs of renewables, including cost reductions in plant build, operations and the development of low cost energy storage technologies, will be vitally important to change the economics of renewables industry and make renewable energy cost competitive. Grid access, connections and transmission infrastructure, and the technical difficulties in maintaining quality of supply in remote areas, are prominent barriers to realising Scotlands substantial renewables potential.These barriers are now beginning to be addressed through a number of avenues and it is essential that they are minimised.

Grid access, transmission and distribution

9

Distributed energy and community based schemes 12 More consideration should be given to ways of stimulating greater use of local energy sources. These are capable of reducing costs, reducing environmental impact and increasing resilience to fuel supply shortages or centralised supply and distribution outages.There is considerable opportunity for distributed energy systems in many parts of Scotland to create semi-autonomous networks. This could range from large-scale district heating or CHP in the major settlements to microgeneration facilities utilising renewable energy sources in the remoter areas of the mainland and on the islands. The statutory planning framework has not been effective in promoting the use of waste energy, or the development of district heating and CHP schemes and the blockages to progress need to be reviewed and action taken to remove them. There are many good examples in northern European countries from which lessons could be learned.
13 There are emerging technologies expected to come into productive use in future decades that can provide energy to local communities to reduce the reliance on imported sources, provide financial benefits, and not detract from the local environment.A bottom-up approach, as envisaged, can also provide significant employment and economic opportunities for local communities. Smaller scale wind, micro hydro-electric, the use of forest waste or low grade wood for biomass, the use of waste from industrial processes, as well as tidal and wave sources along the coast, are the ones most likely to emerge in the next decade or so. Although these technologies will not all develop at the same rate or have the same costs. 14 We applaud the activities of Community Energy Scotland. It can help to build community capacity to negotiate successfully with large energy companies. We would like to see more communities actively taking control of their energy production. 15 We consider that there is a gap in technical support between that at community level and those of the multinational companies.These are high barriers to entry.We suggest that support mechanisms, including capacity building and specialist advisory services, should be available to communities at low or nil cost. Community benefits 16 The potential for economic benefit to local communities from energy technology and energy production from renewable sources is substantial. The current concentration on onshore wind technology can bring community benefits provided that the scale and location of the development is in keeping with the local environment. 3

10 The greater the diversity and distribution of generating plant the greater the need for investment in grid development and increased in-grid management. Renewable sources tend to produce variable and intermittent supplies of electricity. The importance of an extensive and intelligent grid system as a tool for minimising the problems of intermittency, maximising efficiency and minimising risk cannot be overestimated. Strategic investment and upgrading of the grid infrastructure within Scotland and ensuring that it is efficiently linked to a UK and wider European network will maximise the potential to take energy from outlying renewable energy sources as they are available and thereby buffer the consequences of intermittency.An up-graded two-way Scotland-England connection will both permit valuable exports of excess Scottish power and import power to make up for any Scottish baseload deficit. It is crucial that the regulatory system provides investors with long term stability and confidence in which to make decisions. 11 The consultation document recognises that as a consequence of the GB electricity transmission charging regime, generators in Scotland face higher connection charges compared to generators elsewhere in GB because of their distance from centres of demand.We agree that this is a disincentive to renewable electricity generation in Scotland and needs to be reconsidered urgently by the regulator, particularly since the opportunities for renewable generation are much greater in Scotland than elsewhere in the UK and their realisation will help the UK to meet its carbon emissions reduction targets.

A d v ic e Pa p er (11- 02)
We agree that it is of the greatest importance that local communities receive real financial benefits in the longer term. It has seldom been the case with such developments in the past. Communities should be supported in making the best of these opportunities rather than being bought off at a low cost by companies with superior negotiating skills. Novel means of communities gaining long term benefit should be urgently considered by the Scottish Government. Options include income based on units of energy generated akin to the arrangements developed by the former Zetland County Council on all oil landed in Shetland. 17 In terms of developments impinging on communities, natural heritage and the environment, we agree that some form of compensation or reparation payment could be developed to ensure that the impact is kept to a minimum and those directly affected can derive direct benefit. As examples, the Shetland Islands receive income from the North Sea oil revenues that has contributed to an improved economic state and infrastructure, and in Denmark, local attitudes to onshore wind installations softened substantially when electricity costs were reduced to hosting communities. of science and technology, primarily because of their failure to identify and engage effectively with public concerns. It is therefore imperative that preparation is made for public engagement and dialogue, with the intention of creating a degree of public consensus about the need for the development of emerging technologies, prior to the planning application stage. Central and local government are crucial in providing leadership and in setting the terms of that engagement, but non-governmental and voluntary bodies will need to energise civic society and promote individual and collective responsibility.

Skills and supply chain requirements

21 Changing the shape of Scotlands economy and driving forward growth of renewable and low-carbon technology sectors will only be possible if Scotlands work force is equipped with the skills these sectors require. Considerable expertise in offshore engineering already exists in Scotland.The Scottish Government must work closely with higher and further education institutions to identify skills needs, gaps and training that should be made available, as well as linking these outcomes to HEI/FEI budget priorities. 22 The Energy Technology Partnership (ETP) is a pooling collaboration between all of Scotlands Universities engaged in energy research.The members of the ETP are active across the range of energy sectors, including CCS, and across the research, development and demonstration spheres. It represents a very significant body of expertise working in Scotland. 23 The development of skills does, however, create a dilemma.We need to develop the skills with a tempo that is in phase with the tempo of industry development. Otherwise, there is either an excess of skilled people unable to find employment for their skills, or companies who cannot find the skills when and where they need them. In many industrially successful countries, development strategies ensure that all the individual components that will contribute to a major industrial shift are fully integrated.The same should happen in Scotland.

Planning and public acceptance

18 To date many applications for onshore wind turbines have been through a planning system which was not designed to cope with a large volume of applications and has not been updated to allow effective representation by objectors or speedier decision making, both of which are in the interests of all parties.The lack of a spatial strategy for renewable energy hinders the optimal contribution of onshore, coastal and marine resources to a low carbon future. It is not too late to put such a system in place as we have argued for the last five years.This would speed up the decision making process very considerably by ruling out those locations and sites where there are other overriding national interests, such as air navigation or international biodiversity conservation, and at the same time would provide a presumption in favour of other locations/sites where the public interest was overwhelmingly in favour of renewable energy development. 19 Emerging technologies, such as CCS, will raise new issues not previously experienced by planners and we have concerns whether even a reformed planning system will be capable of dealing with applications in a timely and efficient manner. 20 Along with the deficiencies of the planning system, public acceptance has been one of the greatest barriers to the deployment of energy generation technologies in Scotland and the UK, whether they are nuclear or fossil fuel base load plants, or a range of renewables. Governments find it increasingly difficult to implement policies that involve complex issues

Additional Information and References

Any enquiries about this Advice Paper should be addressed to the RSEs Consultations Officer, Mr William Hardie (Email: evidenceadvice@royalsoced.org.uk) Responses are published on the RSE website (www.royalsoced.org.uk).
Advice Paper (Royal Society of Edinburgh) ISSN 2040-2694

The Royal Society of Edinburgh (RSE) is Scotlands National Academy. It is an independent body with a multidisciplinary fellowship of men and women of international standing which makes it uniquely placed to offer informed, independent comment on matters of national interest. The Royal Society of Edinburgh, Scotland's National Academy, is Scottish Charity No. SC000470