Scott Wright, Deputy Business Editor
THE family business of Scottish landowner the Duke of Buccleuch has warned
that uncertainty over UK renewables policy means an “energy crisis seems
inevitable”.
The commercial property to land-owning group, which is aiming to develop a
24 Megawatt (MW) wind farm on the site of the former Glenmuckloch opencast
coal mine, has claimed the continually shifting policy regime around
renewables makes it difficult to plan projects and attract investors.
Its warning came as Buccleuch reported that pre-tax profits had narrowed to
£1.2 million from £1.7m in the year ended October 31, with turnover
dropping to £45.1m from £49.8m.
Net asset value, which Buccleuch said is a more indicative measure of its
performance, rose by £5.5m to £128m.
“Energy policy continues to lurch from one technology to another providing
no clarity for investors to the extent that an energy crisis seems
inevitable,” the company declared in its latests accounts.
Asked to build on the company’s concerns about energy policy, chief
executive John Glen said: “The main thing is that the subsidy regimes have
been changing all the time. This lack of transparency as to where subsidy
regimes are going to go makes the development and financing of projects
more difficult. That’s really what the issue is.
“Obviously, everybody is focused on the onshore wind, but of course there
are other technologies, including pump storage hydro, for which there is no
clarity as yet as to what, if any, subsidy regime may exist, and what
mechanisms might be used.
“Everyone is anticipating that there needs to be some change, but the
problem we have is that until they make up their minds, it is difficult to
progress these projects.”
Buccleuch has ambitions to develop an energy park at Glenmuckloch, where a
community-owned wind project is already in operation. As well as seeking
planning to add a further wind farm, Buccleuch has submitted plans with
venture partner 2020 Renewables for a 400MW pumped storage hydro scheme on
the site.
It said 270 local construction jobs would be brought to the area over a
five to seven year period if the project gets the go ahead. Buccleuch is
also mulling two further potential onshore wind projects in Dumfries and
Galloway.
Mr Glen said pumped storage hydro schemes have a role to play in “balancing
out our energy needs”. He noted: “It is a renewable resource, and therefore
it strikes me we should have it in the basket of energy production within
the country. Hopefully we will see something develop that will enable us to
move forward, because the impact on the local community would be massive.”
Buccleuch said the company has continued its strategy of reducing debt and
re-allocating resources. It cut debt by £10.7m by reducing its exposure to
commercial property, in which it sold a number of mature properties.
Mr Glen: “The commercial property business has done very well in 2014/15.
We sold a number of properties which had come to maturity, [and] generated
good profits.
“The challenge in commercial property now is finding the next deals. Yields
have been compressed. On the other hand, on the development side, we are
beginning to see a pick-up in momentum in housebuilding.”
Buccleuch said profits from disposals were reinvested during the year in
its energy projects, rural portfolio and its redevelopment of Dalkeith
Country Park, where it is developing a multi-million pound food, drink,
retail, “wellness space” and adventure playground.
The £7m Restoration Yard, which is due to open in late July, will employ 40
staff.
Mr Glen said: “We’re hoping to attract well over 350,000 visitors to the
vicinity, which has a knock-on trickle-down effect into the local
community. It’s a major investment.”
During its last financial year, Buccleuch established a new holding
company, The MDS Estates, to encompass all of the businesses within the
Buccleuch group.
Meanwhile, Mr Glen said the referendums on first Scottish independence and
now the UK’s EU membership has removed the focus from domestic policy
issues. He said: “We seem to have had our eyes focused on other things for
quite some time.”
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