Renewables projects ‘held up by uncertainty’ – Scotland on Sunday

by KRISTY DORSEY

SLOW progress on electricity reforms are doing little to help
decision-making for some of the biggest projects in the renewables sector,
it has been claimed.

The Energy Bill passed into law last month with the promise of driving the
£110 billion of investment needed to replace polluting power plants while
heading off the risk of blackouts.

The Act’s lengthy passage – 54 weeks through the House of Commons and the
House of Lords – was not helped by the on-going furore over household
utility bills, nor the subsequent wrangle over the cost of government green
initiatives.

Nevertheless, Energy Secretary Ed Davey, declared: “We have driven the
Energy Bill through parliament on time to send out a clear signal to
investors and industry. We have delivered the certainty they need and
confirmed Britain’s position as one of the most attractive countries in the
world to invest in energy generation.”

Though clean energy producers have been guaranteed a minimum price for
their electricity, assurances on other crucial matters are less clear.
Industry sources say these ambiguities are continuing to hold up investment
decisions.

One major Scottish project that has seen little progress is the £125
million wind turbine factory due to be built in Leith by Spanish renewable
group Gamesa.

First announced in March 2012, the plant will make blades and generator
units for offshore wind turbines, creating 800 jobs. There have been no
announcements since the memorandum of understanding (MoU) was signed, and
no one from Gamesa could be reached last week for comment. Scottish Hydro
owner SSE signed an MoU in December 2011 to build an offshore wind facility
at Dundee which would create 700 jobs. It too has gone quiet, with a
spokesman confirming last week that the company doesn’t “have anything to
say on it at the moment”.

As the property owner in both projects, Forth Ports said it is trying to
move developments forward. “In Dundee we are continuing to work with our
partners SSE, Scottish Enterprise and Dundee City Council to attract
investment; and in Leith there are a number of parties interested in
locating at the port,” a spokesman said.

“However, until we know how the outcome of the Electricity Market Reform
shapes the energy market there is still much uncertainty for many
organisations in the renewables marketplace.”

Electricity Market Reform (EMR) lies at the heart of the Energy Bill, and
will dictate how clean energy providers receive their guaranteed payments.
However, many of its elements will require state aid approval from the
European Commission.

There will also be a three-year overlap between the existing Renewables
Obligation (RO) payment support system and the new Contracts for Difference
(CfD) being brought in by reform. James Beard of the Renewable Energy Trust
points out that while both will draw from the same pot of money, it is not
known how much will be allocated through RO versus CfD.

“The passage of the Energy Bill meant that some of the balls came down to
the ground, but there are quite a few balls still in the air right now,” he
said.

Michael Rieley, senior policy manager at Scottish Renewables, said:
“Delivering EMR is a significant challenge and in the shorter term will
cause uncertainty as we transition from the [Renewables Obligation].
However, the challenge is not insurmountable.”