1Our inquiry
1.Scotland’s geography and natural resources, combined in recent years with supportive policies at Holyrood and Westminster, have enabled the renewable energy sector in Scotland to grow significantly over the last decade. In 2014, Scotland produced 29% of the UK’s renewable electricity,1 and it has been particularly successful at attracting the deployment of onshore wind technology, with 60% of the UK’s onshore wind generating capacity located in Scotland, and hydro technology, with over 85% of the UK’s hydro capacity located in Scotland.2
2.The renewable sector is important because renewable technologies generate electricity without producing the high levels of carbon emissions that result from traditional sources of electricity, such as coal and gas plants. Around a quarter of the UK’s carbon emissions are produced by generating electricity,3 and there are challenging targets, at a Scottish, UK and international level for combatting climate change by reducing carbon emissions and increasing the proportion of the UK’s energy which is generated by renewable technology. To date a significant focus of the UK’s efforts to reduce carbon emissions has been on decarbonising the supply of electricity. Broadly, this involves moving away from conventional electricity generators—such as coal and gas plants—which emit high levels of carbon, to low-carbon generators such as nuclear power plants and renewable technologies which are powered by natural resources such as wind and solar energy.
3.The wholesale price of electricity has been too low to support investment in renewable electricity generators by itself, so the UK Government has established various subsidies to support the generation of renewable electricity. These subsidies work by providing additional revenue, on top of the sale of electricity at market prices, for renewable generators, making them commercially viable in order to encourage investment. The cost of this support is, ultimately, paid for by electricity users through their energy bills.
Devolution settlement
4.Responsibility for policy areas relating to renewable energy and carbon emissions is divided between the UK and Scottish governments. In Scotland and Wales electricity, including support for the generation of renewable electricity, is a reserved matter and therefore the responsibility of the UK Government. Responsibility for electricity is devolved to Northern Ireland (which shares an electricity market with the Republic of Ireland). The UK Government therefore has responsibility for the electricity market across Great Britain, but not the whole of the UK. The control and regulation of carbon emissions is not reserved, and is therefore a matter for the Scottish Government, although the UK Government still sets UK-wide targets for reducing carbon emissions. As with all areas of policy, the Scotland Office is responsible for representing Scottish interests within the UK Government, and representing the UK Government in Scotland.
Recent policy changes
5.Following the 2015 General Election, the UK Government has made several changes to support for generators of renewable electricity, restricting access to some subsidies, reducing the level of support which is offered by others, and delaying the process of awarding new contracts to support the deployment of new renewable electricity generators.4 These changes have been prompted by a projected overspend on support for renewables, and also a manifesto commitment by the Conservative Party to end new subsidies for onshore wind.5
Our inquiry
6.In light of recent changes to support for renewables, and the importance of Scotland’s renewable sector—both to the Scottish economy and to the ability of both the whole UK and Scotland to meet legally-binding carbon emission targets—in January 2016 we launched an inquiry into the renewable energy sector in Scotland to consider the impact of recent policy changes and the future prospects for this sector.6 Because Scotland’s renewable sector is predominantly concerned with the generation of electricity, and it is Scotland’s renewable electricity sector which has been most affected by recent policy announcements, the focus of this Report is on renewable electricity.
7.To inform our inquiry we have taken evidence from representatives of the renewable sector, experts and academics from a range of institutions, community groups and ministers from the UK and Scottish governments. We also visited Orkney to discuss our inquiry with representatives of the local renewables industry, visit Hammars Hill wind farm and tour the European Marine Energy Centre. We are grateful to all those who have helped inform this report, and particularly to those who facilitated our visit to Orkney.7
8.The evidence which informed this Report was taken ahead of the EU referendum, and we did not look in detail at the consequences the UK’s withdrawal from the EU could have for the renewable sector. We present our findings on that basis.
Work by other Committees
9.Other Committees at both Westminster and Holyrood have looked at some of the issues we consider in this report, and we have referred to their evidence and findings where relevant. These include the House of Commons Energy and Climate Change Committee’s reports on Investor confidence in the UK energy sector, the Future of carbon capture and storage in the UK, Setting the fifth carbon budget and Low carbon network infrastructure.8 Also of relevance to our work are the Scottish Parliament’s Economy, Energy and Tourism Committee inquiry into security of supply, and a one-off oral evidence session that Committee held looking at Renewable energy in Scotland.9
1 Department of Energy and Climate Change, Energy Trends December 2015, December 2015
2 Department of Energy and Climate Change, Energy Trends: September 2015, special feature article - Renewable electricity in Scotland, Wales, Northern Ireland and the regions of England in 2014, September 2015
3 Committee on Climate Change, UK Emissions by Sector, accessed June 2016
4 See Chapter 3 for details of these changes.
5 Department for Energy and Climate Change, Controlling the cost of renewable energy, July 2015, The Conservative Party, The Conservative Party Manifesto 2015
6 The full terms of reference are available online: Renewable energy sector in Scotland inquiry launched
7 A full list of the evidence the Committee received is available on pages 49–52.
8 Energy and Climate Change Committee, Investor confidence in the UK energy sector, Third Report of Session 2015–16, HC 542, Energy and Climate Change Committee, Future of carbon capture and storage in the UK, Second Report of Session 2015–16, HC 692, Energy and Climate Change Committee, Setting the fifth carbon budget, Fifth Report of Session 2015–16, HC 659, Energy and Climate Change Committee, Low carbon network infrastructure, First Report of Session 2016–17, HC 267
9 Scottish Parliament, Economy, Energy and Tourism Committee, Plugged-in Switched-on Charged-up: Ensuring Scotland’s Energy Security, Eighth Report of Session Four, SP Paper 780, Scottish Parliament, Economy, Energy and Tourism Committee, Renewable energy in Scotland, December 2015
© Parliamentary copyright 2015
20 July 2016