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Select committee: Scottish Affairs Committee

Fourth Report - Renewable energy in Scotland

HC 51 Published 17 September 2021

Scottish Affairs Committee Renewable energy in Scotland Report on parliament.uk ↗

At a glance6 recommendations and 5 conclusions · Government response published 1 December 2021 (deadline 17 November 2021)

The government's response

Summary written by Accountability Index from the government's response. It is not the government's own words.

The government's response sets out its position on each recommendation, stating that network regulation and transmission charging are "a matter for Ofgem as the independent regulator" and that it "has no plans to amend Ofgem's statutory duties".

  • On grid reinforcement, the government "recognises the need for increased capacity on the grid" and says it "will continue to engage with Ofgem"; it gives no response on the Committee's deadline of the end of 2022.
  • On transmission charging, it "shares the Committee's view on the importance" of the arrangements. It notes that Ofgem published a call for evidence on possible reforms and has said it will announce next steps "later this quarter".
  • On Ofgem's statutory duties, it states it "has no plans to amend Ofgem's statutory duties to include a separate net-zero duty". It points instead to its commitment to consult on a Strategy and Policy Statement for Ofgem in 2021.
  • On tidal energy, it says tidal stream "will have to reduce its costs to compete" but is an eligible technology for Contracts for Difference. It is "evaluating" evidence from last year's call for evidence on marine energy.

Read the government's response ↗ Report an error

Sources

Recommendations and conclusions 11

  1. 1
    The potential scale of renewable energy in Scotland is huge. Conclusion · paragraph 7 · addressed to Scotland Office Conclusion (the committee's words)
    The potential scale of renewable energy in Scotland is huge. The abundance of natural resources can benefit individuals, organisations, and businesses across the UK. We welcome the targets set by the UK Government for net zero and look forward to seeing how the overarching net zero strategy will impact the renewable energy sector in Scotland and look forward to seeing how this will be reflected in the upcoming Spending Review.
  2. 2
    The grid is critical for renewable energy to reach consumers. Recommendation · paragraph 11 · addressed to Scotland Office Recommendation (the committee's words)
    The grid is critical for renewable energy to reach consumers. Urgent investment is needed in the grid to ensure that net zero targets are met. The grid needs to be reinforced and expanded to ensure that renewable energy generated in Scotland can connect to the grid and benefit the rest of the UK. We recommend that Ofgem completes a review of the grid in Scotland as a matter of urgency, and at the latest by the end of 2022 to implement changes in good time for the 2045 target. Ofgem should make bold decisions by prioritising reinforcement of the grid in areas where there is potential for a high renewable energy yield. Since net zero targets have already been set in law, Scotland should be enabled to play its part fully in the renewable energy mix of the UK.
  3. 3
    The evidence we have heard has highlighted issues around the volatility of transmission charges. Conclusion · paragraph 14 · addressed to Scotland Office Conclusion (the committee's words)
    The evidence we have heard has highlighted issues around the volatility of transmission charges. The short-term volatility of transmission charges is a barrier to the development of renewable energy as it affects confidence in investment and the future cost of a project.
  4. 4
    Locational transmission charges weigh more heavily on developers in Scotland when projects in other areas... Conclusion · paragraph 20 · addressed to Scotland Office Conclusion (the committee's words)
    Locational transmission charges weigh more heavily on developers in Scotland when projects in other areas of the UK, like Wales, are paid to connect to the grid. The financial burden of transmission charges and grid investment needs to be justly shared across the UK and not fall heavily, and unjustly, on the developers of renewable energy projects in Scotland. The current review by Ofgem about locational transmission charges is not happening at a fast-enough pace.
  5. 5
    We recommend that the UK Government specifies that, as part of its internal review, Ofgem... Recommendation · paragraph 21 · addressed to Scotland Office Recommendation (the committee's words)
    We recommend that the UK Government specifies that, as part of its internal review, Ofgem must consider the financial burden of transmission charges in Scotland. Ofgem should consider the long-term impacts on net zero targets and aim for a way to ensure renewable energy projects have the chance to flourish over the next 30 years, rather than pushing for a short-term, lowest cost view. Ofgem should publish the result of their internal transmission charges review as soon as practicable, and certainly within six months.
  6. 6
    Ofgem is considering net zero targets in their planning. Recommendation · paragraph 24 · addressed to Scotland Office Recommendation (the committee's words)
    Ofgem is considering net zero targets in their planning. However, we are convinced by significant evidence to suggest that more emphasis should be put on net zero and this should be made explicit and formalised within Ofgem’s remit. We recommend that the UK Government amend Ofgem’s statutory duties to consider net zero targets in all its decision making, alongside the duty to protect the interests of existing and future consumers.
  7. 7
    Contracts for Difference (CfD) has been useful in driving down the cost of offshore wind... Recommendation · paragraph 37 · addressed to Scotland Office Recommendation (the committee's words)
    Contracts for Difference (CfD) has been useful in driving down the cost of offshore wind and provides certainty to developers of renewable technology, but more could be done to improve the CfD system. By focusing on net zero goals the CfD could be realigned to prioritise best value, not just lowest cost. We recommend the next CfD round should prioritise renewable energy systems, not just at the lowest cost, but with a long-term view that focuses heavily on net zero targets and best value for money, up to 2050.
  8. 8
    The UK is at the forefront of tidal renewable energy technology, but the UK Government... Recommendation · paragraph 45 · addressed to Scotland Office Recommendation (the committee's words)
    The UK is at the forefront of tidal renewable energy technology, but the UK Government must invest more in this sector to ensure that the UK retains its world leading position. A laissez-faire approach risks the UK being left behind again, as happened when Denmark eclipsed the UK in its approach to the offshore wind market. The UK can become world leaders within the tidal energy sector if the right level of investment is introduced and sustained. We welcome the announcement of the tidal stream strike price, but there is concern that this is not the correct funding mechanism for emerging renewable technology. This investment could also bring huge export benefits to the UK. We recommend that guaranteed financial support be provided by the UK Government for development of tidal energy through the CfD mechanism. This investment will be able to bring tidal energy generation to market to maximise the potential of renewable energy in the UK, give confidence to investors, and increase exports of tidal technology.
  9. 9
    The Scottish Government suggested in analysis that 130,000 green jobs could have been created by... Conclusion · paragraph 54 · addressed to Scotland Office Conclusion (the committee's words)
    The Scottish Government suggested in analysis that 130,000 green jobs could have been created by 2020, we are disappointed that the evidence we received from Unite the Union stated that only 6% of this was reached. Funding for a green recovery from the UK and Scottish Governments is welcome and we look forward to seeing how this improves job prospects for the people of Scotland including upskilling workers. This is vital to meet renewable energy and net zero targets. The evidence presented to us has exposed the interconnectivity between pipelines of energy projections, the supply chain, funding, and grid capacity and if these factors align, then jobs will follow.
  10. 10
    We recommend that the Scottish Government progress their Green Jobs Fund more rapidly and the... Recommendation · paragraph 55 · addressed to Scotland Office Recommendation (the committee's words)
    We recommend that the Scottish Government progress their Green Jobs Fund more rapidly and the UK Government should use part of the £12 billion outlined in the Ten Point Plan to invest in renewable energy in Scotland. This investment should focus on the pipeline of energy projects in Scotland including established and emerging renewable technology. This investment could provide economic multipliers in terms of jobs and improved prospects for renewable energy companies and the people of Scotland.
  11. 11
    Due to the wide subject of renewable energy, we were not able to focus on... Conclusion · paragraph 57 · addressed to Scotland Office Conclusion (the committee's words)
    Due to the wide subject of renewable energy, we were not able to focus on all issues that have been raised. Green hydrogen and Carbon Capture Utilisation and Storage 24 Renewable energy in Scotland (CCUS) need dedicated time to see how the technologies can help grow jobs in renewable energy and achieve the best for the people of Scotland. We may return to these subjects later in the Parliament.