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
|Advanced Conversion Technologies (with or without CHP)||125||115|
|Anaerobic Digestion (with or without CHP) (>5MW)||140||135|
|Dedicated Biomass with CHP||115||115|
|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 <then junior Energy Minister> 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.”
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.