This is the fourth year in which I've produced this review of the year in renewables, before writing this one I thought that it would be good to look back at what I'd said before.
To be honest, the headlines of previous reviews sum up the story of the past few years:
- 2014: Scotland's renewable energy: what way will the wind blow next?
- 2015: Can Scotland still drive a renewable future?
- 2016: A Power Struggle
So, what can be said about the year past and what lies ahead? Renewable energy is an area that is affected more than many others by global and national policy but, even by recent standards, 2016 was a rollercoaster year for the industry in Scotland.
In 2015 the Conservative government had dealt several body-blows to the industry, yet the year had ended with hope - a successful Paris Climate Change conference (COP21) in December and the anticipation that the agreement adopted would be ratified by the necessary numbers. Perhaps the rest of the world would drag the UK away from its anti-renewables stance, particularly as the EU had set new 2030 targets.
Facing up to the challenges
2016 was expected to deliver an extensive build-out programme, as developers looked to bring projects to energisation before the closure of the Renewables Order; a further Contract for Difference (CfD) allocation round; a Holyrood election that might demonstrate Scotland's ongoing commitment to renewables; the possibility of a EU referendum in which we were expected to remain; a new Scottish Energy Strategy in July; and the hope for some Scottish offshore wind projects.
But it hasn’t worked out that way. Mainstream's 450MW NNG offshore wind project lost its CfD in March and in July consent for the project was overturned after a Scottish court sided with RSPB over bird impacts. The even larger Inchcape and Seagreen projects were also halted by the ruling (the appeal is set for February 2017) while English offshore projects stole a march. Planning permissions became harder as the Scottish government wild land policy started to bite and many projects with consent stalled without the subsidy mechanism which gave them a route to market.
Then the shock Brexit decision threw the industry into turmoil, with the prospect of separation from the European energy market and the cancellation of planned interconnectors between the UK and the continent. Energy and Climate Change were then wrapped up in the Dept for Business, Energy and Industrial Strategy (BEIS) as DECC was abolished. Combined with the approval of the Chinese/French nuclear power station at Hinkley C (at a cost to the taxpayer which will be far greater that the cost of onshore wind and solar), the UK dropped down to 14th place in EY’s tables of the attractiveness of countries for renewable energy investment.
Still, there have been positives. In October, global leaders ratified COP21 and agreed the first global climate deal for aviation, along with a deal to phase out hydrofluorcarbons which could avoid as much 0.5C of future global warming. It remains to be seen whether the US President-elect will adhere to these agreements.
Over 57% of Scotland’s electricity consumption now comes from renewable sources. Almost 8 GWs of renewable electricity is now installed and there were windy days in the autumn when enough renewable electricity was generated to meet all our needs. Further hydros were installed and the first turbine of the Atlantis Resources' Meygen project in the Pentland Firth began producing power - with an eventual aim to have 269 turbines. Use of EV charging points in Scotland doubled from August 2015 to August 2016 as renewable transport moved forward, the cost of onshore wind and solar continued to fall and construction at the Beatrice 588MW offshore wind farm is expected to start in spring 2017.
In November, the UK government finally announced that the second allocation round under the CfD subsidy regime would go ahead in April 2017 with a £290m budget for projects for delivery in 2021-22 or 2022-23 and could support 800mws. It was, however, restricted to the so-called "Pot 2 emerging technologies", and could all be used up by one large offshore wind project. There were hopes that the Scottish "remote" islands – Shetland, Orkney and the Western Isles – would have been included in Pot 2 but they were instead relegated to a consultation document (on the government's revised position "that non-mainland onshore wind projects should not be classified as a separate technology"), which some commentators have seen as kicking the issue into the long grass.
The marine lobby was also disappointed at having to compete head on with other Pot 2 technologies such as offshore wind. BEIS justified this by saying these technologies were too expensive and innovation funding (i.e. capital) is the appropriate way to develop the technology not CfD (i.e. revenue). However, we can now distinguish between wave, still at the R&D stage, and tidal, now commercialised. Indeed, some tidal developers may compete against off-shore wind in this Pot.
The UK government has also pushed back a decision on the future of the Levy Control Framework until 2017, meaning that there is no clarity for the energy industry beyond the short term. Reforms to the Renewable Heat Incentive have also been delayed with implementation now set for April 2017. The Feed-in Tariff ends in 2019 and there are no signs of any replacement to further support small-scale renewables.
What can be done in 2017
Given that the UK Government are doing little for Scotland, it remains to be seen what the Scottish Government can do. There might be 56 SNP MPs and a majority at Holyrood, but can it actually combat Tory policies, from Brexit to energy?
The Scottish Government prepares to publish its Energy Strategy for Scotland in early 2017. It may include the target of at least 50% of Scotland's energy needs coming from renewables by 2030; more public sector involvement; a big increase in renewable heat output by 2030; at least double the current installed capacity of renewable electricity generation by 2030; maximising the electrification and decarbonisation of the transport system; more community shared ownership; becoming a world-leading centre of excellence and growing the supply chain.
But unless it secures a route to market for all large-scale renewable technologies (i.e. a basis on which they know they can sell the power produced at an economic rate) it will count for little. And that has to be on a level playing field – subsidies, tax breaks, rates relief and other incentives given to fossil fuels and other power plants either have to be withdrawn or also made available to renewables.
Either Scotland has to make the money available or we have to ensure there is an allocation of budget to Pot 1 (onshore wind and solar) technologies in future allocation rounds.
If there are economic constraints, then it is a question of what should be the country's priorities. The costs of onshore wind and solar are coming down fast but they are not quite at the subsidy-free level and certainly not with additional rating and other community costs on top. In this scenario, Scotland also has to revise its planning laws and soften its approach to wild land to create a presumption in favour of re-powering and accept that turbines are going to have to be higher to increase output.
Britain faces the same conundrum as every other country: how to reduce our reliance on fossil fuels while ensuring both energy security and affordability against a backdrop of increasing demand for electricity. But the UK government has failed to deliver energy security - we are still importing coal and oil from Russia, and gas and oil from Norway with the extra costs and emissions that involves.
Instead of building cleaner gas plants to meet demand when renewables cannot, the UK has been subsidising more polluting diesel-fired plants. We lack sufficient investment in new grid connections. A considerable amount of consented renewable projects (including 800mws on the Scottish islands) are now stuck with no route to market. The Government is also now failing the consumer on affordability as barriers are being erected against further development of the cheapest technologies.
There are potentially exciting new developments taking place. New battery storage projects are coming forward which will help the National Grid keep power supplies stable - they have to match power generation and usage on the UK grid as closely as possible to keep electricity supplies at a safe frequency so that household electricity appliances function properly. As more wind and solar farms are energised, the system can become less stable leading to more volatile functions in frequency. The batteries can either deliver or absorb power to or from the grid very quickly, re-balancing the system. Surges of excess power are stored for use later when the sun sets and consumption peaks early evening.
It's not all about busy lawyers …
There is also a buoyant secondary market in the buying and selling of built and consented renewable projects and increasing renewable heat work and these have kept us very busy in 2016. There will always be work for lawyers but it is not just about us – it is about our country and our children and grandchildren. As Britain starts the path to life outside the EU, it has to make the most of the resources and opportunities it has.