The British government has confirmed that it will hold an auction for
contracts worth a total of £290 million to bidders of ‘less established’
renewable energy schemes.
At the same time, the government also announced that would hold a public
consultation to provide a comprehensive answer as to whether onshore wind
projects on ‘remote’ < ie, Scottish> islands should be treated differently
from onshore wind projects on mainland Great Britain.
The Shetland, Orkney and Western Isles have more than 800MW of large scale
renewable energy projects that have been consented and are ready to deliver:
Viking wind farm on the Shetland Isles – up to 457MW
Tolsta wind farm on the Western Isles – 42MW
Stornoway wind farm on Lewis – 180MW and
Eishken wind farm, also on Lewis – 162 MW
Developers of Scottish Island projects, which face higher grid connection
costs than those on the mainland, had been awaiting an announcement on a
specific Scottish Islands CfD.
However, the Government did not set out how this CfD auction would support
such projects, announcing instead that a 12-week consultation exercise is
being launched.
Hugh McNeal, Chief Executive, Renewables UK, commented: “New projects on
remote Scottish islands would provide much-needed power and economic
benefits to their local communities. Any delay means those won’t receive
these benefits. We need to ensure that this opportunity is offered to them.”
The second British Contracts for Difference auction will result in enough
renewable electricity to power around one million homes and reduce carbon
emissions by around 2.5 million tonnes per year from 2021-22 onwards.
UK Energy Minister Greg Clark explained: “This will also allow developers
of innovative renewable technologies to deliver the best deal for bill payers.
“For example, the maximum price for offshore wind projects is now 25% lower
than was set for the last auction, and a competitive auction could bring
that price down further.
“This allocation round is for less established technologies: offshore wind,
Advanced Conversion Technologies, Anaerobic Digestion (>5W), Dedicated
biomass with Combined Heat and Power, and wave, tidal stream and geothermal
projects starting to generate from 2021-22 or 2022-23.”
However, Clark also announced a call for evidence on fuelled technologies
and geothermal costs in the Contracts for Difference scheme.
The Draft Contract for Difference Administrative Strike Prices (£/MWh, 2012
prices) are set out below. Final strike prices will be confirmed at least
10 days ahead of the allocation round opening:
Technology For projects
deploying For projects deploying
in
2021-22 in 2022-23
Offshore
wind 105
100
Advanced Conversion Technologies (with/ without
CHP) 125 115
Anaerobic Digestion (with or without CHP)
(>5MW) 140 135
Dedicated Biomass with
CHP 115 115
Wave 310
300
Tidal
Stream 300
295
Geothermal Further information
sought in Call for Evidence on Fuelled Technologies and Geothermal
However the move to ‘long-grass’ a decision on whether wind-farms on the
‘remote’ Orkney, Shetland and Western Isles should be treated differently
from onshore wind projects on mainland Great Britain provoked a furious
response in Edinburgh from the Scottish Government.
Paul Wheelhouse, Scottish Energy Minister, exclaimed: “I am extremely
disappointed – indeed, angered – by the UK Government’s handling of this
vitally important issue.
“The Scottish Government repeatedly sought assurances from the UK
government about their plans to support renewable energy projects through
the Contracts for Difference auction.
“The UK government has misled Scottish Ministers and the members of the
Scottish Island Renewable Delivery Forum on the promised support for island
wind projects.
“The island projects have already waited for too long for the decision
promised by
Andrea Leadsom in September 2015.
“The Department for Business, Energy and Industrial Strategy were invited
to notify the state aid case for Remote Island Wind 10 months ago why
have they not used this time to consult?
“The Scottish Government and the island councils asked the UK Government
for a meeting of the Scottish Island Renewable Delivery Forum on numerous
occasions in the last year but received no response.
“At no time was it suggested there would be a further consultation. We now
call upon the Secretary of State to reconvene the Forum and have the
courtesy to explain this decision to those affected in person.
“The Scottish Government has also made BEIS aware of the tight timeline for
the actions needed to allow island wind projects and the transmission links
to be built.
“It is simply unacceptable that they now jeopardise these highly
significant projects by proposing a further indefinite delay.
“This delay means the CfD and the needs case submission to OFGEM are again
kicked into the long grass and developers are effectively barred from
competing in the next CfD round.”
UK Energy Minister Greg Clark, replied: “The renewables industry is a
strong success story for Scotland thanks to UK Government support, and this
latest auction will enable many more companies to access funding. Last year
alone a record £13 billion was invested across the UK with Scotland
continuing to benefit significantly.
“For onshore wind projects on remote islands, I have listened to partners
and Parliamentarians in Scotland and that’s why I am launching a
consultation to determine what support this technology should be eligible for.”
Meanwhile, Wheelhouse also complained about the removal of Scottish wave
and/or tidal energy projects from the contracts auction.
He added:“The marine sector has progressed more in 2016 than in any
previous year and Scottish firms are in a dominant position: –
“Edinburgh firm Nova Innovation has deployed the first two turbines of its
Shetland Tidal Array;
Atlantis Resources has installed the first four foundations of the world’s
largest planned tidal stream array in the Meygen project in the Pentland
Firth; and
Orkney-based Scotrenewables has begun testing the world’s largest tidal
turbine device at the European Marine Energy Centre.
“In this triumphant moment for the sector, it is extremely disappointing
that BEIS has reneged on its earlier commitment to provide a minimum
allocation for wave and tidal stream technologies.
“We are determined to do all we can to ensure the tidal energy sector, with
its potential to generate sustainable jobs, is taken forward in Scotland.
“We again call for a new approach to the UK’s relationship with Scotland on
energy issues, with key decisions on energy policy made following a process
of consultation and agreement with the Scottish Government, as set out in
the Scotland Act 2016.”
The consultation on whether onshore wind projects on remote islands should
be treated differently from onshore wind projects closes on 31 January 2017.
However, the GMB trade union said that subsidies for renewable energy
projects are simply a ‘flat tax’ on the poorest people in society.
GMB, the union for energy workers, warned that the system of energy
subsidiees must undergo a “radical rethink” as the UK government announced
a consultation on whether to give subsidies to onshore wind developments.
The UK government has said the consultation showed that it had listened to
representations from Scotland and the renewable energy industry on the
matter of subsidies.
The new consultation forms part of the UK government’s wider announcement
“to reaffirm” an earlier commitment to spend £730m of annual support to
renewable electricity projects over the current term of this parliament.
Gary Smith, GMB Scotland Secretary, said: “That subsidy is levied as a flat
tax on bills – and the burden for renewables subsidy has disproportionately
fallen on Scotland’s poorest.
“It’s their money that has been used to line the pockets of the big energy
companies, hedge funds and big land owners who have benefited from
renewables funding.
“We need to radically rethink how we fund the industry going forward.”
Meanwhile, the European ocean energy industry welcomed the inclusion of
wave and tidal energy technologies in the latest support mechanism put
forward by the UK government.
Rémi Gruet, Chief Executive of Brussels-based Ocean Energy Europe, said :
The CfD strike price should enable the sector to bring forward part of a
significant pipeline of projects.
“Clarity remains needed on how support will be ring-fenced for emerging
technologies. These cannot be expected to compete from day one with more
established industries, which have driven down costs by deploying volumes.
“The industry has shovel-ready projects in the UK. The economic opportunity
presented by wave and tidal is significant, and should be an integral part
of the UK’s and Europe’s industrial strategy.”
The Welsh Government has made formal ties with Ocean Energy Europe –
evidence of the strategic importance of Wales in the ocean energy sector as
both an early market and a centre of technology excellence.
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