MPs report criticises cuts to Scotland’s renewable energy industry

The Scottish Affairs Committee warned that recent changes in government policy have created uncertainty that could threaten the industry’s prospects for further growth.

According to the Committee, Westminster’s recent tactics for cutting renewables support are “of serious concern” and an assessment of their “disproportionate” impact on Scotland is needed.

A report by the Committee highlighted the great successes that have been made in expanding renewable energy capacity in Scotland. It found that significant growth of the renewable sector in Scotland in recent years has demonstrated the benefit of a supportive policy environment.

The Committee found electricity production from sources as diverse as wind, hydro and biomass has attracted significant investment. Growth has been strong enough that it is estimated 21,000 people are now employed in the Scottish renewable sector, which produces almost 30 per cent of the UK’s renewable electricity.

There are, however, concerns that recent changes to subsidies for technologies which generate renewable electricity and uncertainty about future support have affected the confidence of investors in supporting the deployment of new generating capacity. The removal of subsidy for onshore wind in particular, one of cheapest renewable sources of renewable electricity, without consultation with the industry or Scottish Government is considered particularly troubling.

The lack of clarity about renewables policy has exacerbated long-standing concerns in Scotland surrounding transmission costs. Renewable plants, most often located in rural areas or on the Scottish Islands, face inadequate grid connections and high transmission charges to reach the urban areas where electricity is most needed.

The Committee called on Ofgem to look into levelling connection costs across the UK and called on the UK government to take action to support the improvement of infrastructure between the Scottish Islands and the mainland.

On publishing the report, Committee chair Pete Wishart said: “During the course of this inquiry it has been encouraging to see how Scotland has taken to renewable energy, and now produces over a quarter of the UK’s renewable electricity. This is an important sector of Scotland’s economy, and also makes a vital contribution to meeting our commitments to tackle climate change. The sector’s future success relies on a supportive policy framework in both Westminster and Holyrood.

“This report considers several policy changes the UK government has made to support for renewables—early closure of the Renewables Obligation for solar and onshore wind, cutting support through Feed-in-Tariffs, and delaying the next round of Contracts for Difference—which we found have weakened investor confidence in the renewable sector, and put at risk opportunities for future growth.

“We have urged the government to clarify the future support which will be available to the renewable sector, and set out how they will work with the Scottish Government to develop a clear, long-term plan that will allow renewable energy to remain a central part of the energy mix.

“Our report was produced before recent changes to the structure of government — the abolition of the Department of Energy and Climate Change, with its responsibilities moving to a new Department for Business, Energy and Industrial Strategy — but this change indicates a troubling shift in the government’s priorities. I hope that the government’s response to our report will go some way to allaying these fears.”

Jenny Hogan, director of policy at Scottish Renewables, said: “The Committee has highlighted the very real and bruising impacts of the sudden cuts and changes made to renewable energy policy in the last year.

“More importantly, the report reinforces that onshore wind is one of the cheapest forms of electricity generation and that UK government decisions to bar the sector from future support are in conflict with their own aims of reducing the cost of renewables.

“What the report illustrates is the lack of – and pressing need for – a long-term plan not just for how we develop renewables and meet our climate change targets, but for our energy sector as a whole.

“The Committee’s call for the UK and Scottish governments to work constructively on a long-term strategy for electricity supply is a welcome recognition of the significant role Scotland’s renewables sector plays in the UK energy mix.

“We would echo the Committee’s call for UK Ministers to set out, at the earliest opportunity, the full details for the next round of clean power auctions, and to give a clear indication about whether onshore wind farms and projects on Scotland’s remote islands will be able to bid into future rounds.

“Finally, the Committee is right to highlight that an unfair and disproportionate transmission charging regime is holding Scotland back from realising its true renewable energy potential. We would fully support the Committee’s recommendation that Ofgem look at levelling connection costs across Great Britain to address this issue.”

Fabrice Leveque, WWF Scotland climate and energy policy officer, added: “The Scottish Affairs Committee is right to highlight that there are real concerns that UK Government decisions have created a more challenging environment for renewable energy investment. However, thanks in no small part to long term vision and leadership from successive Scottish Governments, our renewable electricity sector continues to grow. More than half of Scotland’s electricity needs are generated by wind, hydro and solar, helping create jobs and meet climate targets.

“Despite the uncertainty created by Westminster decisions, the Scottish Government can continue to drive progress by setting a new goal to generate 50 per cent of all our energy needs, across electricity, heat & transport, from renewables by 2030. The Scottish Parliament has many of the powers it needs when it comes to heat and transport. Bringing forward new policies in these areas could not only ensure Scotland is part of the global energy transition, but help tackle fuel poverty, improve air quality and reduce the bills on our NHS.”