Br i efi ng Pa p er

April 2013

(1302)

SCOTLAND NEEDS A BALANCED ENERGY POLICY:

a briefing for members of the Scottish Parliament

1 The Royal Society of Edinburgh, as Scotlands National Academy, offers the following briefing paper to MSPs as background for the debate on Scotland Needs a Balanced Energy Policy in the Scottish Parliament on 1st May 2013. The RSE has been engaged in trying to inform energy policy for a number of years, including undertaking its own major inquiry, Energy Issues for Scotland 1, which was published in 2006. Scotland faces losing a significant proportion of its current generating capacity. It cannot be taken for granted that power companies will replace these plants in Scotland. In light of this, security of supply is a pressing issue, and one that will have a significant impact on the country if not properly managed. 5 In terms of security and reliability of energy supply, while the longer term goal may be to have a largely renewable source of energy, it will be necessary to utilise non-renewable sources in the short and medium term. A diversity of energy sources is absolutely essential and all currently available sources and technologies will need to be considered as part of the energy mix, including renewables, clean technologies for fossil fuels and nuclear powered generation. One key question is the debate about electricity supply from fossil fuels, renewables, or nuclear sources. There is no requirement that all three sources are part of a Scottish mix, but choices to ignore, or de-emphasise, nuclear power means that fossil fuels must be rapidly decarbonised in Scotland, and that a large capacity of renewable generation has to be researched, developed, demonstrated, encouraged, consented and connected at an electricity price competitive with the rest of the UK and EU. If nuclear energy is to be phased out, and if Scotland is to meet its highly challenging emissions targets, the provision of secure baseload in Scotland will depend upon the hypothesis that carbon capture and storage (CCS) technology can be developed successfully and implemented in Scotland. We strongly emphasise that a diversity of supply is essential to achieve maximum security and flexibility, and suppression of greenhouse gases. To prepare for the longer term, investment in the development of alternative sources and cleaner technologies is essential.

First-order principles
2 The principles for Scotlands energy strategy must be to optimise between achieving renewable and emissions reduction targets; maximising energy security; and minimising cost to consumers. The optimal outcome will be achieved if energy providers are given freedom and support to use the widest range of generation technologies; if the electricity transmission and supply network is part of a UK-wide and preferably Europe-wide system so that generation can be brought on line at will to optimise achievement of strategic targets; and if energy efficiency can be maximised and demand reduced. Scotland must now invest in a stable, secure energy mix for the future with proper consideration given to long-term value that can be generated from energy infrastructure, jobs and income. Market competition against a background of long-term government commitment is most likely to hit emissions and energy security targets at minimum cost to the economy.

Security and reliability of energy supply

4 With the recent closure of Cockenzie coal-fired power station and with other large-scale electricity generating plants expected to come to the end of their operational lives in the next 10-15 years,

1 http://www.royalsoced.org.uk/cms/files/advice-papers/inquiry/energysupply/full_report.pdf

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Electricity Market Reform

6 The most important factor in the development and deployment of new and emerging technologies, including cleaner technologies for fossil fuels, for example CCS, and renewables such as offshore wind, wave and tidal, and key to attracting private sector support, is a stable, long-term policy and regulatory environment and investment framework. Many of the funding levers that can deliver decarbonised electricity lie with the new Electricity Market Reform, which is in the control of Westminster. In November 2012, the Energy Bill was introduced to the House of Commons and it seeks to implement the main elements of the Electricity Market Reform. The Energy Bill is expected to achieve Royal Assent this year. The Scottish and UK Governments should continue to work together on the delivery of the Reforms to reduce the risk of uncertainty that may discourage investment. As with all major changes, both Governments need to be alive to the possibility of unintended consequences.

challenges in relation to the electricity grid, and to progress development of other technologies, such as wave and tidal, to commercial scale. Until problems around grid capacity, stability, connections, and storage that will allow us to deal with the intermittent nature of renewables such as wind, are solved, there will be limits on the contribution that renewable technologies will be able to make to the energy mix. 12 While government can provide some seed money for research and development, investment needed for development of the grid and operational plants will be required to come from the private sector. Industry will only provide large-scale capital where it is confident of a reliable return. This will require technology to be proven, widely-accepted and with predictable costs; along with stable, long-term policy and regulatory frameworks.

Renewable heat
13 The Scottish Governments demanding target for renewable heat generation will require significant investment in research, development and infrastructure. Full assessment is needed of a wide variety of heat resources and their potential to be converted to commercial reserves. This may include waste heat from large thermal and nuclear power plant, mine water circulation, deep hot dry rock, and a multitude of air source and near-surface heat pumps. 14 The majority of Scotlands renewable heat capacity at present comes from biomass primary combustion or biomass combined heat and power. There has been some negative public reaction to the development of biomass plants in Scotland and public engagement must be properly managed if this infrastructure is to be developed.

Renewable Energy Targets

9 The Scottish Government has set a target of generating 30% of all energy needs from renewable sources by 2020. Specifically, targets call for the equivalent of 100% of Scotlands gross annual electricity consumption, 11% of its heat demand, and 10% of transport fuel from renewable sources by 2020 2. While these targets may be theoretically achievable, it is difficult to see them being met within the constraints of finance available and acceptable price for consumers. A more realistic timescale for achieving these targets may be by 2025 2030, but only then if nascent technologies make sufficient progress towards commercial application.

Grid access, transmission and distribution

15 The greater the diversity and distribution of generating plant the greater the need for investment in grid development and increased in-grid management. The importance of an extensive and intelligent grid system as a tool for minimising the problems of variability and intermittency, maximising efficiency and minimising risk cannot be overestimated. A fit-for-purpose grid will maximise the potential to transmit energy from outlying renewable energy sources, and allow Scotland to import electricity in times of need and export it in times of surplus. This will require appropriate interconnectors, both between Scotland and England, and between Scotland and the rest of Europe.

10 Within the 2020 timescale, wind is likely to be the only renewable technology available that can be substantially scaled up to increase generation but the levels of investment that would be required in both on-and off-shore wind capacity will be vast. Hydro will continue to be an important source of renewable generation, but is limited by the number of appropriate sites available. 11 Renewables will have an important role to play in replacing traditional forms of generation, but only if fundamental challenges of intermittency and a fit-for-purpose grid are addressed. Significant investment is needed to address major underlying

2 2020 Routemap for Renewable Energy in Scotland, The Scottish Government

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16 The RSE has recognised for some time that a consequence of the GB electricity transmission regime is that generators in Scotland have faced higher connection charges compared to generators elsewhere in GB because of their distance from centres of demand. This may have acted as a disincentive to renewable electricity generation in Scotland, particularly on the islands. The RSE has consistently called for this matter to be addressed by the regulator. We have therefore welcomed Ofgems Project TransmiT review of the transmission charging regime which has concluded that the status quo is no longer an option. We hope this is progressed timeously and that further action is taken in relation to islands charging. Scottish Government has been working to reform and modernise the planning system. In this context, it will be important to ensure that the planning system, particularly at local authority level, is properly resourced. 19 We note the Planning Minister has announced draft proposals for the third National Planning Framework and Scottish Planning Policy that will influence development plans across Scotland and guide future planning decisions on a range of sectors, including energy. In relation to wind farm developments, there are proposals to strengthen environmental protection in Scotlands wildest and most scenic land. 20 Scotlands National Marine Plan and the regional marine plans will be important in terms of reconciling the development of marine renewables with fair and balanced management of Scotlands seas.

Carbon Capture and Storage

17 In light of the issues of intermittency of supply from renewable generation, CCS may be necessary to allow continued generation from fossil fuel power stations that can provide secure back-up supply. To achieve the Scottish Governments carbon emission reduction targets in the long term, further investment in CCS must be considered as part of the debate on Scotlands future energy mix. Extremely large storage reservoirs have been provisionally identified off Scotlands coast, providing a significant business opportunity. But progress has been slow and the collapse of the CCS demonstrator at Longannet in 2011 shows clearly that fundamental issues of business risk and confidence will need to be addressed before commercial projects will be agreed to by companies. Propositions to develop CCS at the Peterhead gas plant provide an opportunity to develop operational CCS and prove off-shore storage reservoirs. We welcome the 2013 Budget announcement that Peterhead has been named as one of two preferred bidders in the UKs 1bn CCS Commercialisation Programme Competition. This has the potential to secure in Scotland the infrastructure around which subsequent projects may be located.

Demand reduction
21 No matter what the future energy mix looks like, costs to consumers will rise and fuel poverty will continue to be a major challenge in Scotland. 22 Reducing the demand for energy as well as improving efficiency will produce proportional reductions in the overall energy required. The possibilities for energy savings are large but the primary obstacle is behavioural change and the need to ensure for example, that savings in one area do not lead to increased consumption in another. 23 Despite advances in renewable technologies and an increase in public awareness of the need to reduce reliance on fossil fuels, there has been limited progress in reducing domestic emissions and energy demand. Current government initiatives aimed at influencing consumer behaviour and raising awareness do have a role to play. But in order to achieve the step change in behaviour that is needed to achieve emission reduction targets, the Scottish Government should also directly focus on re-shaping the infrastructures, built environment and local economic activity that make up society as a whole. This will require increased leadership and decisive use of its powers in areas such as energy efficiency, transport and travel, and planning, if fuel poverty is to be avoided in Scotlands inefficient housing stock, and if the energy consumption of people and households it to become more effective.

Planning
18 The location of renewable energy devices, and in particular onshore wind turbine installations, are controversial because of their impact. The RSE has previously expressed concern about the ability of the planning system to deal effectively with the large number of applications for onshore wind turbines. In its energy report of 2006, the RSE Committee of Inquiry highlighted the need for a locational strategy for renewable energy. We recognise that the

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Scotlands energy research and skills base

24 Research, development and demonstration of projects is paramount and there needs to be integration of these aspects. The real benefit of full scale demonstrators is their potential to provide confidence in a technology. 25 Scotlands universities and research institutes undertake a significant proportion of energy research that is carried out in the UK, and encompass a number of centres of excellence including the Institute for Energy Systems (Edinburgh), the Scottish European Green Energy Centre (Aberdeen), the flagship Technology and Innovation Centre that forms part of the International Technology and Renewable Energy Zone (Glasgow), and the European Marine Energy Centre (Orkney). Further, Scotlands research base is characterised by high levels of collaboration both

across its research institutes, between academia and industry, for example through the Energy Technology Partnership, Scottish Carbon Capture & Storage, the Edinburgh Centre for Carbon Innovation; and internationally. 26 Scotland must ensure that it maintains and develops the skills base needed to implement new developments. It must exploit the strength of its research base in the area of energy technologies. And it must exploit the presence in Scotland of major companies in the energy field. The Governments principal role should be to strengthen the already notable commitment to sustained long-term support for development of the energy sector and the skills base needed to sustain it. It may need to prioritise support for those areas of activity where there are large global markets, where Scotland is an acknowledged research leader in global terms and where we have companies able to take innovation to market.

Additional Information and References

The Royal Society of Edinburgh response to the Scottish Parliaments Economy, Energy and Tourism Committee on the Scottish Governments Renewable Energy Targets (February 2012) The Royal Society of Edinburgh response to the Scottish Government on Scotlands Next Energy Revolution (February 2011) The Royal Society of Edinburgh response to the UK Department of Energy and Climate Change, A Framework for the Development of Clean Coal (September 2009) The Royal Society of Edinburgh response to the Scottish Government, Framework for the Development and Deployment of Renewables in Scotland (December 2008) The Royal Society of Edinburgh response to the Scottish Parliament Economy, Energy and Tourism Committee, Inquiry into Determining and Delivering Scotlands Energy Future (August 2008) The Royal Society of Edinburgh response to the House of Lords Select Committee on Economic Affairs, Inquiry into the Economics of Renewable Energy (June 2008) The Royal Society of Edinburgh response to the Select Committee on Science and Technology, Inquiry into Renewable Energy-Generation Technologies (July 2007) The Royal Society of Edinburgh Inquiry, Energy Issues for Scotland (June 2006)

Any enquiries about this Briefing Paper should be addressed to the RSE Consultations Officer, Mr William Hardie (Email: evidenceadvice@royalsoced.org.uk) Responses are published on the RSE website (www.royalsoced.org.uk).

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, Scotlands National Academy, is Scottish Charity No. SC000470