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Brian Wilson MPImportance of Scotland to the Government's Renewable Energy Policy |
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Thank you, Ian. I am delighted to be in Inverness today and to have the opportunity to talk to your Committee about the Government's renewable energy policy and in particular the important role that Scotland plays. I would like to start by addressing the question of infrastructure. We owe the present abundance of hydro capacity in Scotland (still our largest source of renewable electricity), not just to our natural resources but also to the vision of those people who could see the benefit of harnessing the natural resources and using them to take electricity to the most remote parts of the country – the areas you represent - years or even decades before it would otherwise have arrived. We now need a similar scale of vision, and a corresponding determination to carry it through, if we are to realise the potential of renewables in the years ahead. There is no point in producing clean electricity if it cannot be made available to the domestic and industrial consumers who need it. That is not a local issue but a national one. I am aware of the problems faced by the generators of renewable electricity in getting their products to markets and the Government has put in hand a number of steps to address and to reduce the barriers faced by small, renewable generators, both in this area and nationally. As you know, the electricity markets in England and Wales and in Scotland operate under different arrangements. One effect of this is that Scottish domestic and business consumers do not benefit from the level of competition that is established in the England and Wales market. The time is now right to create a wholesale electricity market for the whole of Britain. The introduction of BETTA (the British Electricity Trading and Transmission Arrangements) will enable us to drive forward with this in Scotland. Although there was no reference to BETTA in the Queen's Speech, I can assure you that work is continuing on the preparation of that legislation and that the target date for introduction is still 2004. Because of the way the electricity industry was privatised, its structure in Scotland is significantly different from the rest of the UK. That has certainly allowed the main utility companies, Scottish Power and Scottish and Southern, to maintain a stronger market position than most of their counterparts in England and Wales. I regard it as a matter for satisfaction that these two companies remain firmly in domestic ownership but we also have to ensure that Scotland's consumers, both domestic and industrial, have access to the competitive benefits that are available elsewhere in the UK. The Scotland Office, the Scottish Executive and Energywatch are all in support of consumers north and south of the border being treated in the same way and see the introduction of a competitive wholesale market as a vital step. The Government believes the time is now right to create such a market for the whole of Britain. And it is absolutely vital, for renewables, for the industry and for the consumer, that we get it right first time. Crucially, in the context of the renewables debate, BETTA will mean one set of trading rules; one set of connection policies and will reduce the barriers which inhibit independent generators in getting power south to customers. It will mean that the Government can take a joined-up approach to particular issues, such as those faced by renewables, CHP and other smaller generators. This will help us create a diverse generating base in Britain. In particular, these new arrangements will encourage new transmission capacity to be built, helping to support renewables development. We have set ourselves the target of April 2004 for the implementation of these new arrangements. We are committed to developing and implementing the right conditions to ensure a long-term diverse and secure supply of energy for Britain. I intend to use the next few months before BETTA is introduced to start the process of improving the grid infrastructure in Scotland, and particularly in the Highlands and Islands, with the aim of facilitating the development of renewables. The DTI has been working with the transmission companies and Ofgem, through the Transmission Issues Working Group to address the implications for the electricity network of a much larger contribution from renewables. They have looked at a range of possibilities including 2, 4 and 6 GW of new wind capacity in Scotland. It has become clear that all of these possibilities will require, as the first step, a major reinforcement of the Grid in Scotland and in England. The companies are in discussion with Ofgem on the regulatory framework for making this happen. I have made clear the outset that this approach must extend to the furthest northern and western points of the Highlands and Islands if the potential for renewable energy in these areas is to be fully realised. But I want to make one important statement of principle this morning. This is a national undertaking rather than a local one. The costs of providing the infrastructure which will enable generation to take place on the periphery of the country, contributing in an environmentally-friendly way to serve the energy needs of the great centres of population, cannot be borne disproportionately by consumers within this relatively sparsely populated region. As things stand, that is what the regulatory framework would dictate. But with the introduction of BETTA, which we intend will take place in April 2004, the costs of this new capacity will be spread fairly across all those that use electricity in Great Britain. This will represent a major step towards opening the door for the huge renewables potential of Scotland. I also want to make it clear that, even in advance of BETTA, this is the approach which I want to see adopted in so far as existing legislation permits, since we certainly cannot wait until 2004 for these major and crucial infrastructural changes to begin. In addition to the work of the Transmission Issues Working Group, my officials are discussing with the Highlands Council and with Scottish and Southern Electricity the possibility of mounting a study to investigate the feasibility of extending the grid infrastructure west from Dounreay and possibly linking into the reinforcement of connections to the Western Isles and also the Orkneys. This would address concerns that lack of infrastructure is preventing renewable projects from being developed. Nationally, I have also asked officials to review the effective working of the Renewables Obligation towards the end of its first year in operation. This is not a review of the policy – it is too early for that – but a technical review to ensure that the Obligation is working in the way it was designed to work. As part of that review, I will be looking to ensure that any transmission or distribution barriers affecting small and intermittent generators that could impact on the achievement of the renewables targets are identified and addressed. Taken together, the work we will be doing over the next year will be an essential step towards enabling independent generators to get the power from the outer reaches of Scotland, where it is produced, south to the consumers who need it. In this way we are creating the right conditions for our demanding renewable targets to be achievable. And those targets are indeed demanding.The Renewables Obligation, which we introduced in April this year, sets tough targets for the proportion of electricity generated from renewable sources year on year in order to achieve the 2010 target of 10%. 10% by 2010 is a challenging target, and we are starting from a low base – at present less than 3% of our electricity is generated from renewables. But it is a target that I am determined to achieve and I know that the industry shares my determination. To meet the targets, we need to work in partnership – government at national and local level, renewable generators, the electricity industry and manufacturing industry. Government is playing its part. The Renewables Obligation sets out a secure basis for the development of renewables by providing a market for renewable energy for the next quarter of a century. The value of support provided to the UK renewable energy industry through the Obligation is estimated to reach £1 billion per year by 2010. This is a massive commitment by any standards. While the Obligation is helping industry take forward renewable technologies that are close to being commercially competitive (eg onshore wind), we are also putting in place programmes of support for emerging technologies. The Government has committed nearly £250 million in capital grants over the next 3 years, together with £19 million per year for renewables research and development, mainly focussed on offshore wind, energy crops and solar photovoltaics. The 10% target would represent an annual saving of 2.5 million tonnes of carbon emissions – a very worthwhile contribution to the UK's Climate Change Programme and to meeting our Kyoto target. But the 2010 target is not the end of the story by any means. In June last year, the Prime Minister asked the Cabinet Office's Performance and Innovation Unit to carry out a major review of strategic issues surrounding energy policy for Great Britain up to 2050. The PIU Energy Review was published this February. It contained recommendations about bringing environmental policy to the heart of energy policy including setting a 20% renewables target for 2020. But the Energy Review also stressed the importance of maintaining security and keeping options open. The Government welcomed the report as a valuable input to necessary wider debate on energy and has been undertaking a consultation with energy stakeholders and the public over the summer. This will lead to an Energy White Paper to be published at the start of the New Year. You do not need me to tell you that Scotland is rich in renewable resources.It does indeed account for some three-quarters of the UK's installed renewable generation capacity. But we now need to concentrate more on delivery rather than potential. And, in delivery terms, Scotland is more than pulling its weight. At present around 11 to 12% of electricity generated in Scotland comes from renewable sources. I know the Scottish Executive is committed to raising this to 18% by 2010, and they are currently consulting on the basis of producing 40% of Scotland's electricity from renewable sources by 2020. These targets – both the UK target and the Scottish one – require a step change in the way renewables are being developed, and a spirit of partnership between Government and industry. Scotland's prominence in the field of renewable energy is of course based on its rich heritage of hydro electricity, a heritage which – with some recent refurbishments of older hydro stations - will continue making an important contribution for at least the next half-century. But renewable energy initiatives in Scotland equally belong to the present and to the future. In September, Scotland's largest wind farm (30 MW) started operations at Bowbeat, and I look forward to opening it next week. I understand applications for consent for onshore wind farms (some bigger than Bowbeat) are coming through at an encouraging rate in Scotland, and there is the proposed Robin Rigg offshore wind farm in the Solway Firth. Scotland is also the home of two of the UK's wave energy developers, Wavegen (who have developed the world's first commercial wave power device on Islay) and Ocean Power Delivery. I am happy to say that both of these companies have recently had projects approved for Government funding of over £1m each. Renewable sources of energy are therefore set to provide a large part of Scotland's energy requirements in the future. Highlands and Islands Enterprise (HIE) are already well engaged in the renewables sector, and are helping to place the Highlands at the forefront of this emerging industry and along the way, they have also forged strong links with the North East of England. Real co-operation has been established between respective Development Agencies and as a tangible measure of this success, I understand that companies from south of the boarder are already choosing to test their equipment in the challenging offshore conditions here in the north of Shetland. One example is the Stingray tidal stream demonstration project developed by The Engineering Business in Tyneside and tested in the Yell Sound. This morning, I announced what is surely one of the most innovative and far sighted initiatives of 2002, that is the signing of a Memorandum of Understanding which will see HIE formalise an agreement of co-operation with the Regional Development Agency for the North East of England. This will cement a closer working relationship and pave the way for extending the scope of co-operative working beyond renewables into other engineering sectors. I firmly believe this represents one of the best examples of joined up working and one which I am confident will bear fruit for both regions. As I hope I have shown today, the Government is committed to renewable energy. This is an exciting time for renewables which presents us all with opportunities and with challenges.Our task requires the vision to carry forward our objectives and to turn potential into reality. There are many barriers in our path, but the rewards are immense – reliable sources of clean energy, a reduction in carbon emissions, and a developing renewables industry. Scotland, especially the Highlands with its renewables tradition in hydro, has played a big part in the story so far. We all – national and local government, and industry – need to work together to lead the way into a renewables based future. |
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Other speeches by Brian Wilson MP
(the following are available from the archive) |
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