1st Report - Clean Power by 2030: A fair deal for Scotland?

The Clean Power by 2030 target is extremely ambitious, and we would suggest the Government must use all the levers it possesses if it is to achieve it. Maintaining public confidence and rebuilding political consensus around the pace, cost and implementation of the energy transition will be essential if the UK is to meet this Government’s clean energy mission. This confidence will be undermined if targets are missed. The UK Government must reflect on this risk and ensure it continues to be realistic about the deliverability of its clean power ambitions. (Conclusion, Paragraph 12)

The risk of undermining confidence in the transition is especially acute for those Scottish communities being asked to host significant new energy infrastructure. In many cases, these communities—often in rural and remote Scotland—already feel disproportionately affected by the costs and impacts of the transition. These communities are also experiencing higher energy costs due to higher standing charges, limitations on the type of fuel they can access, and housing stock which can be harder to heat. Clean power targets will only succeed if communities experience the transition as something that is done with them and not to them. It would be damaging to the UK’s clean power ambitions for there to be a perception that Scottish communities are being disadvantaged as a result of the ambition around clean power. (Conclusion, Paragraph 13)

Great British Energy has important objectives and the backing of a substantial £8.3 billon capital funding allocation. However, the organisation remains in its infancy and is yet to become the fundamental driver of clean energy development it is envisioned to be. To a certain extent, this reflects the fact that it is only one year since it was formally established, but we note that GBE was billed as a key vehicle in the delivery of the Government’s CP2030 mission, now just three and a half years away. It is important that claims made about GBE and its capabilities are realistic, and that public understanding and expectations about its role in the transition are managed accordingly. (Conclusion, Paragraph 21) 50

If Great British Energy is to become the catalyst required to accelerate renewable generation and meet CP30, it must now move quickly beyond the initial start-up phase and scale up delivery. This will be especially important if it is to fully deploy its share of the £8.3 billion capital allocation made to GBE and GBE-Nuclear by the end of this Parliament in a responsible way that maximises value for taxpayer’s money. (Conclusion, Paragraph 22)

The Government’s intention to take a more direct role in determining Great British Energy’s investment in Scotland, rather than allocating funding through existing Scottish Government programmes and public bodies, presents a potential risk of duplication and inefficiency. In its response to this report, the Government should set out how it intends to work with the Scottish Government to mitigate this risk, and ensure taxpayers’ money is spent in the most efficient way. (Recommendation, Paragraph 23)

Given Great British Energy’s core objective is to increase public ownership of clean power, transparency is essential. In its response to this report, the Government should clarify how much of Great British Energy’s £8.3 billion capital allocation has been spent to date and on which projects. It should also set out how it intends to ensure Great British Energy’s spending and returns are regularly reported and accessible to the public moving forward. (Recommendation, Paragraph 24) Upgrading the grid for CP30

Scotland currently faces higher-than-average standing charges, largely reflecting the higher costs of transporting power to rural areas compared with large population centres. The burden of higher standing charges is particularly acute for Scotland’s remote and island communities, who also experience higher levels of fuel poverty and, in many cases, are bearing the brunt of the infrastructure required to deliver UK- wide clean power ambitions. This disparity risks undermining public confidence in the transition and exacerbating inequalities, particularly in the short-term, as increased infrastructure investment pushes up bills. (Conclusion, Paragraph 43)

Following the outcome of Ofgem’s imminent review of energy system costs, the Government should introduce a standing charge that applies consistently to all regions, which would lead to a fairer system for consumers across Great Britain, including in Scotland. (Recommendation, Paragraph 44)

Successive administrations have chronically underinvested in the electricity grid. As a result, grid capacity has not kept pace with the expansion of renewables across the UK system. This causes the perverse outcome 51 of Scottish windfarms being switched off—sometimes more frequently than they are generating—while a fossil fuel power station is fired up elsewhere in the UK. UK energy consumers are currently seeing the costs of curtailments, the expansion of renewables, and grid upgrades added to their energy bills. This does not help to inspire public confidence in the fairness of the energy transition. While we note the UK Government’s demand-side measures, it must do more to reduce current levels of curtailment. (Conclusion, Paragraph 58)

Grid capacity is one of the biggest barriers to achieving Clean Power by

We welcome the Government’s commitment to introduce a mandatory community benefits scheme for new generation infrastructure. However, we remain concerned that the pace of implementation is too slow, with any scheme not expected to take effect until the end of 2027 at the earliest. Many developments—particularly across Scotland’s Highlands and Islands—will already be built out, leaving affected communities potentially feeling that they have been short-changed. (Conclusion, Paragraph 84)

Meaningful community benefit extends far beyond financial payments. Housing availability, access to skills training, and the creation of long-term local jobs are equally important. This is especially true in rural and remote Scotland, where the coming of renewable energy provides an opportunity to leave a transformative legacy of housing, skills and quality employment for communities which have historically seen limited investment. The Government must seize this opportunity by ensuring mandatory community benefit schemes are sufficiently flexible to reflect the differing needs and priorities of Scotland’s diverse communities. (Conclusion, Paragraph 85)

This should include a requirement that companies undertaking major infrastructure projects in rural areas construct worker accommodation to a standard suitable for retention as permanent community housing once the project is complete. (Recommendation, Paragraph 86) 52

While it is important to safeguard the commercial viability of renewable schemes, the Government must ensure that the minimum compensation provided through its mandatory community benefit scheme reflects fair compensation for communities hosting these schemes. The UK Government’s proposed £5,000 per MW community benefit contribution is insufficient, and does not meet this test. (Conclusion, Paragraph 87)

In its response to this report, the Government should set out its rationale for its proposed £5,000 per MW benefit contribution, and what insight it has taken from ten years’ experience of the Scottish Government’s voluntary community benefits guidance, which initially set minimum compensation at the same level. (Recommendation, Paragraph 88)

When determining the minimum compensation offered through its mandatory community benefits scheme, the Government should give careful consideration to the Highland Council’s position that £12,500 is a fair and proportionate level of compensation; this reflects the Council’s first-hand experience of clean energy deployment, as well as the lived experience of communities currently impacted by renewables. A figure in the region of £10,000 to £12,500 would seem appropriate. However, whatever figure is agreed must include a mechanism to maintain value over time. (Recommendation, Paragraph 89)

The mandatory community benefits scheme should also provide clear expectations on the delivery of non-financial benefits, while ensuring sufficient flexibility to reflect local needs. Given the scale of development currently underway, the scheme should be introduced sooner than the end of 2027. (Recommendation, Paragraph 90)

We would encourage the Government to use its existing powers under the Infrastructure Act 2015 to make shared ownership offers by developers of all new renewable energy projects. This would ensure community groups are able to take advantage of the opportunity of an ownership stake. (Recommendation, Paragraph 91) Community ownership of clean power

We welcome the Government’s ambition to accelerate community and locally owned clean energy through the Local Power Plan, delivered jointly with Great British Energy. However, it is disappointing that Scotland is disproportionately disadvantaged from benefitting from the Plan by its current Transmission Impact Assessment thresholds, which restrict opportunities for new community energy projects. It is encouraging that the Government recognises the grid-connection issue is acute in Scotland. However, with the transmission grid effectively fully allocated until 2035, the 53 sector is at a near-standstill. This logjam is at odds with the Government’s renewed ambition to scale up local and community energy and reflects a disconnect between the Local Power Plan’s aspirations and the practical reality in Scotland. We are concerned that Scotland could be effectively excluded from the Plan’s full benefits. (Conclusion, Paragraph 115)

The Government should set out the concrete steps it is taking to address this imbalance and to ensure Scotland can access the full benefits of the Local Power Plan, including grid connection. (Recommendation, Paragraph 116)

Repowering offers a timely opportunity for communities to expand community-owned energy while rebalancing some of the unfair outcomes of the transition. As both the UK and Scottish Governments support the expansion of community energy projects, closer coordination is needed to reduce barriers to decommissioning and repowering. We welcome the Scottish Government’s pilot enabling community groups the opportunity to lease public land to repower wind farms and the Minister’s commitment to consider this idea for use across the UK. (Conclusion, Paragraph 117)

The UK Government should learn from the Scottish Government’s evaluation of its pilot, so that lessons can be learned for possible implementation in other parts of the UK. In its response to this report, the UK Government should set out how, through the Local Power Plan, it will remove barriers to repowering community energy projects at the end of their lifetime, including barriers related to retained grid access and planning consents, which are devolved in Scotland. (Recommendation, Paragraph 118) 54