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2020 Routemap for Renewable Energy in Scotland

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2. Crosscutting Challenges

2.1 Overview and Demand Reduction Context

There are a wide range of crosscutting challenges to be faced by the sectors that make up the renewables industry, all of which must be overcome if we are to realise our ambitions for 2020 and beyond. It will be helpful to consider these generic issues and assess their impact, before moving on to the individual sectoral routemaps (in Section 3).

But first it is worth reiterating that our ambitions for renewables will not be at the expense of the higher principle of reduction in demand for energy. The Energy Efficiency Action Plan takes a comprehensive approach, orchestrating action across all sectors to create a broad platform from which we can drive greater overall momentum. The Plan looks at energy efficiency within individual sectors (housing, non-domestic and public sector), as well as the supporting infrastructure, including planning, district heating and skills.

All the challenges for renewable energy below must be seen in this wider context of demand reduction.

The crosscutting challenge for renewables is set out in the following table:

Figure 3: Crosscutting challenges for Renewables and their sectoral impacts

Figure 3: Crosscutting challenges for Renewables and their sectoral impacts

# Other and Emerging Technologies include deep geothermal, and storage technologies such as Hydrogen fuel cells

The rest of this section provides analysis on the issues identified above.

2.2 Costs and Access to Finance

2.2.1 The Challenge

We recognise that meeting Scotland's ambitious renewable energy targets will come at a cost, and that this cost will be spread across a number of areas. There will be financial implications for the public and private sector in terms of the planning process and in relation to the necessary environmental surveys and monitoring which will underpin the delivery of much of the new renewable capacity which meeting the targets will require.

2.2.2 Access to Finance

Access to development finance will be key. To unlock this opportunity, the Scottish Low Carbon Investment Project has been set up as a public-private partnership, led by the Scottish Government to identify investment propositions, explore different models of investment in innovation, and connect with the international investment community. The second Scottish Low Carbon Investment Conference will take place in Edinburgh in November and will cover investment in energy consumption, resource efficiency and "clean technologies" as well as renewables.

In addition of course the Scottish Government has made clear our interest in the UK Government's proposed Green Investment Bank which will fund investment projects in the green economy. The UK Government has proposed that Scottish Ministers agree to waive our right to the Fossil Fuel Levy, now standing at over £200m, in return for a guaranteed investment of £250m by the Green Investment Bank in Scotland. This does not meet the clear wish in Scotland to see early investment of the Fossil Fuel money in Scotland by Scottish Ministers, and discussions are continuing with Treasury.

2.2.3 Technology costs and costs to consumers

Meeting our renewables target will require major advances in the development and deployment of a number of technologies, some of which are yet to be proven at any kind of scale, and some of which exist at present only in extremely limited form(s). For example, the renewable heat target of 11% will be built upon a much wider development and uptake of such sources as geothermal, solar and biomass heat which will rely on access to the Renewable Heat Incentive for support; meanwhile, the transport target relies at present on the success of the Renewable Transport Fuel Obligation, but will depend much more over time on advances in the electrification of private and public vehicles.

On the renewable electricity front, the key challenge (and thus the costs) connected with meeting our target will arise from the development and deployment of offshore wind, wave and tidal technologies. While offshore wind is already being developed commercially, there are still several technology challenges and developments to be addressed and which will unlock development on a much greater scale, including installation and deployment techniques, the development of projects in deeper water (using new approaches such as floating turbines), and the build / testing of new and larger turbine types at purpose built facilities. It is likely that the public sector will need to play a continuing role in helping to meet these costs.

Wave and tidal development is at an earlier stage still. The public sector's investment at EMEC (upwards of £20 million) has delivered a world class facility which has been at the global forefront of full scale prototype testing for the past five years, and should be operating at full capacity in the next 12-24 months. However, the next stage of development, the build out of devices into small arrays in waters around Scotland, will be crucial in terms of driving costs down towards a commercial level. The marine renewables sector believes that the development of a 10 MW array based on current costs will amount typically to around £80 million, and that these will need to be supported through a mixture of public sector capital grant support plus an enhanced ROC rate through the Renewables Obligation (or its Electricity Market Reform process replacement).

Of course the costs of developing renewables have wider impacts. Significant upfront investment in low carbon technologies will not only provide more secure supplies, but will help reduce demand through increased efficiencies, allowing households to benefit to some extent from avoiding bearing the cost of increasingly expensive fossil fuels.

The Scottish Government have a number of initiatives underway to improve energy efficiency, aiming to mitigate the expected increases in customer bills.

In addition, in developing renewable technologies and encouraging take-up through market incentives, priority should be given to longer-term cost reduction in order to minimise impact on consumer bills and to mitigate any adverse impacts on fuel poverty. There is so much potential to grow the economy through renewables, including at a local level by means of asset ownership, but we need to make sure that this is not at the expense of the individual consumer.

2.2.4 Grid and Infrastructure

Connecting Scotland's enormous renewable resource will require major investment in new and upgraded electricity networks, not to mention the construction of local networks which will be necessary to capture and distribute renewable heat. The electricity grid investments and costs connected with our 100% target comprise upgrades to onshore networks and cables, as well as the construction of new subsea lines down the Scottish coast (see Section 2.4). The extra costs involved in delivering these improvements will ultimately be met by consumers; the Scottish Government will continue to strive for an outcome which means that these costs are levied fairly and efficiently, and that they are socialised across the UK, given the importance of Scotland's renewable resources to meeting UK targets.

Meanwhile, the manufacture and transport of steel, turbines and other components, particularly with respect to offshore renewables developments, will require huge investment in Scotland's port and harbour facilities. The Scottish Government, through Scottish Enterprise, has already announced its £70 million National Renewables Infrastructure Fund ( N-RIF) to help secure matched investments from the necessary private sector utility and manufacturing players. The N-RIF is supplemented by individual investments made by Highlands and Islands Enterprise in the areas in which it operates.

2.2.5 Overcoming cost barriers to local ownership of energy

There is also the challenge to ensure that local communities do not face insurmountable costs challenges when considering developing their own renewable schemes.

We have already helped to mitigate risks for local ownership of energy through our CARES scheme, which is now supporting pre-planning costs with loans, and which are thus compatible with the Feed in Tariff and the Renewable Heat Incentive. But we recognise that this is solving only half the problem: many communities still face difficulties in gaining access to finance post-planning, particularly now that grant-funding is incompatible with access to the UK regulatory incentives above.

Thus we are committed to work with investors to establish a new Scottish Green Equity Fund to support the development of community projects. The first stage of this process will be to explore opportunities via the second Scottish Low Carbon Investment Conference which is taking place in September 2011.

2.2.6 Key opportunities

As set out above, Scotland needs to have access to UK funding opportunities to help us realise our full renewables potential, and the issues around Electricity Market Reform are set out at Section 1.2. The advent of the Green Investment Bank ( GIB) will also be an important step forward, and we are making a strong case for the GIB to be located in Edinburgh. Finally the issue of access to the Fossil Fuel Levy ( FFL) without penalty to Scottish "Block" funding must be resolved in the interest of Scottish and UK renewables policy. At May 2011, the Scottish FFL account stood at over £201M: this is funding that, under statute, can not be spent on anything other than the promotion of renewables in Scotland, and it needs to be made available now.

2.3 Planning and Consents

2.3.1 The Challenge

Planning is a crosscutting 'challenge' across all of the different sectors identified in this Routemap. Electricity schemes below 50 MW and heat schemes of all scales fall to the planning system (except for certain microgeneration technologies which have Permitted Development Rights).

The planning challenge is to ensure that there is the right level of direction and support for renewables:

  • at Government level in:
    • spatially co-ordinating planning effort on national priorities and targets
    • communicating national policy
    • providing proportionate guidance and advice
  • at planning authority level in:
    • timeously providing spatial guidance for developers and/or policies to steer and stimulate the correct types of development activity in the most suitable locations
    • providing 'open door' pre-application services to encourage and guide development activity
    • providing efficient and effective development management process which deliver appropriate permissions within reasonable time frames

2.3.2 Existing planning framework

There is already firm support for growing renewables through Scotland's national planning policy which is set out in the National Planning Framework ( NPF2) and Scottish Planning Policy ( SPP).

NPF2 sets out a spatial strategy for Scotland's development to 2030 and core parts of the strategy relate to the realisation of the potential of Scotland's renewable energy resources.

SPP provides a statement of the Scottish Government's policy on nationally important land use matters and reaffirms that electricity generated from renewable sources is a vital part of the response to climate change. It encourages planning authorities to support the development of a diverse range of renewable energy technologies, guide development to appropriate locations and provide clarity on the issues that will be taken into account when specific proposals are assessed.

In relation to onshore wind, SPP requires planning authorities to support the development of wind farms in locations where the technology can operate efficiently and environmental and cumulative impacts can be satisfactorily addressed. The SPP requires planning authorities to set out in the development plan a spatial framework for onshore wind farms of over 20 MW generating capacity and authorities may incorporate wind farms of less than 20 MW generating capacity in their spatial framework if considered appropriate.

Other technologies such as hydro, biomass, solar, energy from waste, landfill gas, offshore wind, wave and tidal are also encouraged through SPP, within the context of considering environmental and other constraints.

The Scottish Government is proactively engaged in enabling work on NRIP to secure the supply chain and appropriate infrastructure, in order to realise the full potential of offshore renewables, including wind, wave and tidal. This involves gearing up planning authorities in development planning, working with relevant interests on early survey and consenting, and ensuring effective development management processes.

Planning authorities are further supported by the Scottish Government in drafting Main Issues Reports, to ensure that they fully consider opportunities for renewables and consult early on these matters. The Scottish Government also supports planning authorities in developing fit for purpose Development Plans which encourage a diverse mix of renewables which make the most of locally available resources and guide developers to the correct locations.

Circulars and the recently launched online renewables advice offer further support for planning authorities in preparing main issue reports, development plans and installing efficient and effective DM processes.

Web based renewables planning advice was launched on the 14th February, 2011, and can be found on the Directorate for the Built Environment renewable energy policy pages:

http://www.scotland.gov.uk/Topics/Built-Environment/planning/National-Planning­Policy/themes/renewables.

This comprises advice on a range of renewable energy technologies, improving planning authorities' awareness of different sectors, the dynamics that are influencing change within sectors, suggests areas of focus for planning authorities, it promotes opportunities for growing renewables and provides advice on best practice planning processes. Input is being invited to inform periodic review and refinement and the web based nature of the advice is designed to ensure that advice remains current and responsive.

Headline items in the Renewables Advice include:

  • greater emphasis on spatial planning for wind farms below 20 MW, as more development interest at this scale emerges
  • encouraging spatial planning for hydro and dovetailing planning and CAR processes for hydro applications
  • heat strategies at local level linking woodfuel supply and waste streams to areas of high heat demand, based on heat mapping exercises
  • gathering information to support emerging technologies such as deep geothermal and energy storage and ensuring that there is sufficient development plan land use allocations in planning authority areas.

2.3.3 Further planning activity

Ministers are also actively considering where there is a need for new planning advice, such renewable heat, carbon assessment, handling the relationship between offshore renewables and planning etc.

Further Scottish Government planning activity relates to the rollout of permitted development rights for domestic and non-domestic microgeneration in accordance with Section 70 and 71 of the Climate Change (Scotland) Act 2009. There is also a requirement under Section 3F of the Town and Country Planning (Scotland) Act 1997 (amended by the 2009 Act) to have development plan GHG emissions policies with the aim of promoting the installation of more low and zero carbon generating technologies in new buildings.

Delivering fit for purpose development plans and supplementary guidance for renewables, including spatial guidance, within suitable time frames is expected to be the most significant area of 'challenge', under 'planning', in generating greater numbers of renewables schemes, although further gains may be able to be achieved through time efficiency gains in development management processes or by suppressing / designing out planning constraints. It is likely that improving the 'front end' of planning will bring forward applications at the development management stage that are less contentious and have greater levels of support.

There will also be a number of 'technical' challenges in the coming months and years that will affect how many renewable energy development are deployed:-

  • securing development plans that purposefully encourage a sufficiently diverse mix of renewables and provide adequate guidance on emerging technologies;
  • dealing with onshore wind proposals on more difficult sites, closer to communities, on or near landscape and environmental sensitivities, on carbon rich soils etc;
  • dealing with the cumulative impacts of renewables, especially onshore wind farms, in certain locations;
  • securing spatial frameworks for wind above and below the 20 MW threshold together with effective spatial planning for other forms of renewables within useful time frames, when traditionally only some planning authorities have only been engaged in preparing spatial frameworks for wind over 20 MW;
  • dealing with aviation / radar constraints as more wind farms are consented;
  • resourcing the rollout of heat mapping and dealing with the various interactions that affect the viability of heat networks;
  • in preparing and resourcing planning authorities to deal with hydro applications up to 50 MW (previously only dealt with applications up to 1 MW)
  • gearing up planning authorities to support NRIP, to effectively secure the supply chain benefits of renewables in Scotland, including working with relevant partners to identify land requirements and to bring about early consents around ports and harbours;
  • upskilling planners, particularly in dealing with the diverse technological mix of renewables, spatially planning for renewable heat, considering carbon assessment etc;
  • providing additional Government planning advice to support solutions in areas such as renewable heat, carbon assessment, relationship between offshore/onshore, etc;
  • providing advice on development proposals within the inter-tidal zone, handling onshore elements of offshore proposals and dealing with onshore impacts of offshore wind, wave and tidal proposals;
  • considering new planning mechanisms to support the deployment of renewables, such as simplified planning zones, and monitoring the planning processes adopted by competitor countries in stimulating renewables.

2.3.4 Consents and Deployment

In order to meet the 2020 target for 100% of electricity consumption from renewables, a further increase in consenting and deployment rates will be required, especially for offshore wind. This will be achieved by driving excellence in planning and consenting processes, improving advice and guidance, developing and promoting best practice, and supporting community involvement in development proposals.

The challenge will be to ensure this is achieved in balance with environmental and community issues. There remains a need to ensure that, as renewable penetration increases onshore in particular, environmental and land use considerations are not compromised.

The Scottish Government aims to increase the rate of deployment for renewables responsibly, by:

  • Further streamlining the consenting process, and further emphasis on scoping, by promoting partnership working between developers and stakeholders leading to comprehensive pre-application engagement.
  • Simplifying planning advice - the new online advice described in 2.3.2 above improves accessibility and consistency and is designed to evolve as issues and initiatives emerge.
  • Resolving offshore consenting questions, e.g. uncertainty over regulatory route to consent and biodiversity issues.
  • Overcoming barriers to deployment, particularly aviation/radar issues but also including all relevant environmental issues.
  • Promoting community engagement in the design and siting of development proposals.
  • Developing the agenda and advice on cumulative impact and environmental issues.
  • Promoting community benefit - see 2.9.3, below - "Community benefits and ownership".
  • Driving best practice - SG is leading the EU-funded Good Practice Wind project ( GP Wind) which will record and share best practice for onshore and offshore wind development and deployment (see " GP Wind" below).

2.3.5 Improving the Quality of Energy Applications:

There will be a strong emphasis on pre-application engagement and the value of thorough scoping, aimed at generating better applications which travel more smoothly through the planning system and have more community support. This will minimise the need for further information (addenda to the application) and improve the likelihood of consent. This can be achieved by promoting, and requiring where necessary, partnership working with consultees and communities.

The consents unit will undertake to further gatecheck draft applications, in partnership with statutory consultees, to carry out a gap analysis aimed at identifying any areas where environmental information likely to be required is lacking.

2.3.6 Addressing Barriers to Deployment:

The Scottish Government will tackle barriers to deployment by engaging with stakeholders and promoting and investigating best practice, as follows:

  • Continue engagement at UK level through the Aviation Management Board and Aviation Advisory Panel, including to promote the development of technical solutions.
  • Chair and facilitate the SW Scotland Regional Aviation Solution Group.
  • Finalise planning advice on the use of suspensive conditions for aviation issues in planning consents.
  • Facilitate engagement and promote cooperation between developers, air navigation service providers and other aviation stakeholders.
  • Continue engagement over the issue of deployment around the Eskdalemuir Seismological Monitoring Station, including working towards MoD acceptance of technological solutions, supporting required research and facilitating engagement between stakeholders.
  • Lead the European GP Wind project, with a view to overcoming barriers presented by environmental and community issues through the development and promotion of good practice, see below.

2.3.7 GP Wind Project

The Scottish Government leads and manages this European Commission-funded project. Its objective is to share and record best practice in reconciling objectives on wind energy with wider environmental objectives and actively involving communities in planning and implementation.

GP WIND will develop a guide to good practice and a 'how to' toolkit, which will be used to facilitate deployment of renewable energy in support of the 2020 targets. Topics include:

  • Reconciling environmental concerns with the benefits of wind farm development, in terms of energy needs, CO 2 reduction, and local social and economic benefits.
  • Dealing with and understanding environmental impacts.
  • Development of planning policy and guidance.
  • Consenting processes, including interaction with stakeholders.
  • Engagement with local communities in the identification, planning and ongoing management of wind farms, including the role of community investment.

2.4 Grid

2.4.1 Grid reinforcements

The electricity transmission network (the grid) in Scotland - as in the rest of the UK - is old and was designed for a different era of cheap power generated close to centres of demand. It is a fact that the best sources of renewable energy is found at the peripheries of the current network, and we face a real challenge in building a grid which will allow Scotland to harvest and export its vast resources of clean energy.

There are severe constraints on the grid in Scotland, and we welcome the implementation of the Connect and Manage scheme, which has seen many projects in Scotland connected to the grid in a much shorter timescale than under Ofgem's previous connections policy. However, we recognise that the need for grid reinforcement is greater than ever.

The Scottish Transmission System Owners ( SSE and Scottish Power) are investing heavily in delivering the reinforcements we need, but it will take sustained effort from a range of parties - including the Scottish and UK Governments and the UK regulator, Ofgem - to allow this work to be completed in time for 2020, ensuring that the many renewable projects are not delayed by a lack of available grid connections.

The Scottish Government has worked with the Electricity Networks Strategy Group ( ENSG) to identify those strategic developments in the grid that we will need to achieve our stringent 2020 renewable energy targets. We are working with a range of stakeholders across the UK, Europe, industry and academia to see that these projects are delivered on time.

2.4.2 Transmission charging

As a result of the strong locational pricing element in the charging methodology applied by Ofgem, generators in the North of Scotland have the highest charges in the UK (around £20.17 per Kilowatt Hour in the North of Scotland, compared to a subsidy of £5.87 per Kilowatt Hour in Cornwall).

Scotland has some of the best renewable energy resources in Europe, yet the locational charging approach to electricity generators results in Scotland facing the highest charges in the UK. This makes no sense.

Ofgem and National Grid believe locational charging gives signals about where to site new generation, and reflects the costs that generators cause. In practice it is a barrier to renewable energy generation in Scotland. It is not fit for purpose to deliver a more sustainable, low carbon energy mix, ensure security of energy supply and meet Scottish, UK and EU renewable energy targets.

In September 2010. Ofgem launched Project TransmiT, a review of the transmission charging system. Following a great deal of work, Ofgem has decided, in the short term, that Transmit will focus on options for change to TNUoS - instead of more fundamental trading reforms - so that its original timescales for the project will be met, and a degree of certainty will be given to the industry.
We welcome this approach, and hope that the changes that Ofgem will make to the charging system will result in a system which treats renewable generation in an equitable manner, and which is in line with the renewable goals of the Scottish and UK Governments.

2.4.3 Island links

The Scottish Government is determined that the proposed High Voltage Direct Current ( HVDC) links to the Western and Northern Isles must go ahead - and within a timescale that will allow these areas to contribute their enormous potential resources towards our renewable energy targets.

The planned sub sea cable is a HVDC link capable of approx 450 MW to meet the requirements of proposed Wind Farms - and other renewable energy projects on the Western Isles. These cables are three of a number of key reinforcements in the Scottish grid network identified in the work of the ENSG. We consider it to be a crucial infrastructure development for growing the renewables sector in the Western and Northern Isles. In addition to supporting the renewable sector potential of the Western Isles, the cable links also have strong arguments from wider economic development and growth aspects as well as supporting the connection of remote and island communities across Scotland.

These resources - wind in Shetland, tidal in Orkney, and wind and wave in the Western Isles - must not be squandered. The Scottish Government will continue to work with the island councils and other interested parties to bring these island interconnectors to fruition.

2.4.4 Offshore connections

The Scottish Government vision is for Scotland to play its part in developing onshore and offshore grid connections to the rest of the UK and to European partners - to put in place the key building blocks to export energy from Scotland to national electricity grids in the UK and Europe.

We want Scotland to play its part in building a European supergrid to help meet Scottish, UK and EU renewable energy targets, address the challenges of climate change, and ensure security of future energy supply through greater interconnection.

Scotland's remarkable offshore wind and wave energy potential offers a major opportunity for Scotland to play a part. But the challenge in developing the grid connections to make this happen - and the costs of doing so - is significant.

There are a number of grid connections across Europe - existing and planned, egUK - France, Scotland - Northern Ireland and Norway - Netherlands. These are evolving in a piecemeal way - responding to market demand in particular regions and with the development of wind farms.

Making the European Grid concept work will require a more strategic, co-ordinated and collaborative approach to developing interconnections between countries, regions and members states. Significant and sustained effort to work with EU countries and regions to standardise electricity transmission and energy regulation is necessary. The Scottish Government is working closely with UK and EU partners on this.

The period 2010-2018 will see significant activity to reinforce and develop these connections aimed at addressing some of the grid constraints within the GB system (ands between Scotland and England in particular) and at connecting both our onshore and offshore renewable generators.

The Scottish Government strongly supports the concept of an integrated European grid, incorporating offshore renewable generation. Scotland has remarkable potential, with an estimated offshore resource of 206 GW. This is of European significance, and its exploitation has been recognised as crucial to the ability of Scotland, the UK and the EU to meet their 2020 and 2050 carbon reduction targets. In his third annual report, published in December 2010, Georg Adamowitsch, the European Commission's North Sea grid co-ordinator, said that 'Scotland is a fine example of how different offshore technologies…..can be combined to form a coherent approach. To be able to use all these elements as part of a European sustainable energy policy, these Scottish renewables have to be connected to an integrated European grid.'

2.5 Fuel Sources

2.5.1 Bioenergy sustainability

It is essential that biomass feedstocks for energy, whether imported or domestic are sustainable.

Under the Renewables Obligation Scotland ( ROS) the Scottish Government introduced mandatory sustainability criteria for solid biomass and biogas from April 2011. All generators above 50 kWe need to report against the greenhouse gas and land use sustainability criteria from April 2011. From April 2013, if generators above 1 MW do not achieve a carbon intensity of 285.12 kg CO 2/ MWh or lower they will not be eligible for ROCs. Waste, landfill gas and sewage gas will not need to meet or report against the sustainability criteria.

Eligibility for receipt of ROCs for electricity generated from bioliquids will be dependent upon generators demonstrating that the sustainability criteria have been met from 1 April 2011 (as required by the Renewable Energy Directive).

Heat installations with a capacity over 1 MWth will also be required to report against sustainability criteria, as set out in draft regulations for the Renewable Heat Incentive.

The introductions of these standards will help build public confidence in the sustainability of biomass feedstocks.

2.5.2 Energy from Waste

Generating energy from waste can avoid some of the competing uses and sustainability concerns which apply to virgin biomass feedstocks, but many other barriers, including public acceptability can apply. The recently published Zero Waste Plan sets out the Scottish Government's policy and ambition for EfW.

2.6 Skills

2.6.1 Skills for Scotland

As highlighted in the recent Scottish Parliamentary Debate on renewables (2 nd June 2011), our ambitions for renewable energy in Scotland could provide employment opportunities across a broad spectrum of attainment. Our approach to skills for renewables should aim to provide opportunities for all.

The Scottish Government's refreshed skills strategy, Skills for Scotland: Accelerating the Recovery and Increasing Sustainable Economic Growth, published last October sets out a flexible, responsive, partnership approach to addressing Scotland's skills needs and improving economic performance. It outlines a vision for Scotland where, among other things, high skill, high productivity, healthy workplaces enable people to perform at their best. The strategy places a renewed focus on the skills challenges and opportunities across new and emerging sectors, particularly those offered in the low carbon economy. The Government's ambition is to deliver a skills system that is responsive to the future growth objectives of the key sectors (as set out in the Government's Economic Strategy) individually and collectively, addressing the demographic profiles within the current workforce and anticipating the future skills challenges which new technologies and business growth opportunities present.

2.6.2 Skills Investment Plan for Energy

Scotland has the resources and ambition to be a world leader in sustainable energy and to take full advantage of the opportunity we must continue to develop a highly skilled workforce. It is critical that we have the right people, with the right skills and expertise, deployed and utilised effectively to continue attracting our share of investment in energy for Scotland. The Skills Investment Plan for the Energy Sector, commissioned by the Energy Advisory Board and published in March 2011 by Skills Development Scotland, details the skills need for the key energy sectors to 2020. The Plan identifies the potential for up to 95,000 job opportunities to 2020 combining replacement demand to sustain more established energy sectors with new additional growth in emerging sectors. Of these, at least 40,000 opportunities are in the renewables sector. It also identifies key areas for action for further collaboration and development across the education and training sectors to ensure that not only our own people have the opportunity to take advantage of the employment opportunities that will arise, but also to offer a solid skills foundation supporting inward investment.

2.6.3 Employment opportunities analysis

Figure 4: Employment opportunities from Renewables as assessed under the Skills Investment Plan for the Energy Sector ( SDS - March 2011)

Additional Demand

Opportunities to 2020

Notes

Renewables, offshore wind

Up to 28,000

The scale of opportunities is dependant on (a) the amount of capacity installed in Scottish waters and (b) the development of a robust Scottish offshore wind industry, servicing the local and global markets.

Renewables, marine

Up to 5,300

The uncertainty relates to the level of capacity deployed in Scottish waters. Covers direct employment only.

Renewables, commercial onshore wind

1,650+

Estimate derives by SQW from a number of sources. Covers direct employment only.

Renewable heat
1,350

Growth depends on the implementation of a robust UK renewable heat support mechanism. Covers direct employment only. Additional jobs are expected to arise in biomass fuel supply. More jobs could potentially be created if manufacturing capacity develops in Scotland.

Renewables, hydro power

Up to 1,400

Mostly small scale hydro (under 5 MW) Covers direct employment only.

Other microgeneration

~2,000

No authoritative, comprehensible microgeneration employment forecasts are available for Scotland. Jobs are likely to number in the low thousands, but difficult to be precise. Additional research is underway as part of the Energy Efficiency Action Plan. Covers direct employment only.

As noted in the Skills Investment Plan, the main skills requirements are widely recognised as engineers (especially civil, marine, engineering, structural and mechanical), leadership and management, project managers, welders, turbine technicians and divers. It also notes that the majority of jobs will be at technician level ( SVQ Level 3, which can be supported through apprenticeship frameworks).

It is therefore forecast that the vast majority of demand will be filled by people already in the labour force. This will include people changing jobs (both from within and outside Scotland) and movement from unemployment into employment. To facilitate this movement a range of skills provision will be required which are focused around issues of transition. This need is likely to require: postgraduate courses and individual modules; alongside technician-focussed college and private sector courses.

2.6.4 Uncertainties

In reviewing the current figures it is important to note that there is uncertainty around the figures and when employment opportunities may be realised owing to:

  • The newness of much of the technology to be employed
  • Financing and planning issues which always risk taking longer than expected
  • The sensitivity of development to energy policy in Scotland and elsewhere which could change the development profile
  • The sensitivity of employment projections to the culture and timing of a relatively small number of very large scale investment decisions
  • The extent to which Scottish based employers further capitalise on the global market.

2.6.5 Existing provision and action

There is already significant investment from the public sector in skills provision for the energy sector including:

  • Around 8,000 undergraduate entrants and 3,000 post graduates in related subjects;
  • 25,000 to 30,000 college learners in similar subjects;
  • A record 3,000 starts on engineering and energy related MAs each year over the last three years;
  • The Low Carbon Skills Fund, developed by SDS with support from ESF that enables employers to up-skill and re-skill employees in low carbon technologies;
  • A cluster of activity emerging around Tayside, Fife and Edinburgh colleges to support wind technologies, including the opening of the Whitlock Energy Collaboration Centre at Carnegie College and the launch of the MA wind turbine technician framework; and
  • The award of £1.2m of Spirit funding by the SFC to Strathclyde University towards the development of the Scottish Energy Research Academy and its associated doctoral research programme.

Since its publication, the Energy Skills Investment Plan has been making an immediate impact on the skills and training provision across the energy and low carbon sectors.

  • SDS and SFC have agreed to prioritise the energy sector when making future skills investment decisions;
  • The college sector has agreed to adopt a more collaborative approach in responding to the needs of the sector. This approach will offer learners and industry a clear and easily understood route to training by creating specialist training hubs.
  • Up to an additional £1m has been made available for SDS to create as many as 500 MAs in 2011/12 to specifically support Scotland's energy and low carbon industries.
  • In late 2010 we commissioned the Alliance of Sector Skills Councils to undertake a piece of Energy Efficiency and Microgeneration Skills Research to allow us to develop a view on the implications for employment and skills that these areas present. This will enhance the evidence base for energy efficiency and microgeneration skills in Scotland.

2.6.6 Next Steps

Skills for the renewable energy sector will continue to be developed as part of the wider Energy Sector Skills needs. We will continue to work with key partners to take forward the key actions contained within the Energy Skills Investment Plan. Specific activity includes:

- Increasing sector attractiveness to young people and job changers through:

  • Working with LTS, Scottish Renewables, STEM colleagues and SDS to produce short careers guidance leaflets
  • Influencing the Curriculum for Excellence to include 'renewables' topics in STEM subjects
  • Junior Green Energy Awards planned for June 2011
  • SDS developing Energy Skills Gateway which will include a database for training provision to be linked to other employer portals
  • Creating a 'national offering' of resources to support careers interest in renewables

- Engaging with business to identify future skills need through:

  • Replacing the FREDS Skills Sub-group with an Employers Skills Council to govern the delivery and implementation of the Skills Investment Plan for the Energy Sector
  • Arranging with SDS Ministerial led Growth Sector conversation events with Industry
  • Encouraging the adoption of the EU Skills workforce planning tool

- Developing training provision and infrastructure to meet future need through:

  • Encouraging and supporting the college partnership process
  • Increasing skills focus in Microgeneration
  • Using output of the EU Skills workforce planning tool to inform training provision
  • Monitoring for gaps in qualification provision

2.7 Supply Chain and Infrastructure

2.7.1 The Challenge

The Scottish economic development agencies will have to work hard to nurture and promote the supply chain and other economic benefits from the low carbon energy sector. The projects identified in the National Renewables Infrastructure Plan must be in place by 2020, and we will now require even greater investment in secondary infrastructure and business development to meet the new 100% renewable electricity target. This will have to be achieved while considering the effect of the potential external constraints such as steel availability and prices, and vessel availability.

Scotland's economic development agencies will have a key role to play.

The commitment to increase the development and deployment of renewable technologies across Scotland combined with the growing global market for renewables presents Scottish businesses across the full supply chain spectrum with significant market opportunities. Whilst there will be business growth prospects throughout the renewable spectrum, there are undoubtedly opportunities of scale within the offshore wind market, estimated at c.£7billion for Scottish projects alone (Offshore Wind Industry Group Routemap, 2010) and in wave and tidal markets (see case study below on Pentland Firth and Orkney Waters). Combined, these markets have the potential to lead to the re-industrialisation of Scotland.

Case study: Pentland Firth and Orkney Waters

During 2010 The Crown Estate announced development rights to eleven wave and tidal stream energy projects as part of the world's first commercial scale marine energy leasing programme. Developer intentions suggest a total capacity of 1,600 MW installed by 2020, and represent investment opportunities as follows:-

-£100 million on project development and consenting activities, to be incurred by 2015;

-£4 billion on device manufacturing, foundations, moorings, subsea cabling, offshore substations;

-£2 billion on installation costs

-Therefore a total capex in excess of £6 billion, with the majority being towards the latter half of this decade.

- O&M expenditure estimated at £100 million per annum

Such investment is dependent upon a range of significant challenges and dependent upon successful completion of each stage of the project development process, but nevertheless illustrates the potential scale of the opportunity.

Source: Wave and tidal energy in the Pentland Firth and Orkney Waters: How the projects could be built, A report commissioned by The Crown Estate and prepared by BVG Associates, May 2011

2.7.2 Enterprise Agencies' focus on offshore energy

The Enterprise Agencies and partners will progress supply chain development programmes with our indigenous companies with the relevant capabilities and competencies, supporting them to expand into renewable markets with tailored programmes of support including the Offshore Wind Expert Support Programme and through specific company investments. Whilst the aim will be to develop a supply chain capable of delivering projects around the UK, it will also be to replicate the success of the North Sea oil and gas industry where skills and expertise is exported worldwide and generating wealth throughout the country. We are still in the relatively early stages of developing the supply chain for the offshore sector, but building on a strong base from the North Sea oil and gas industry.

Notable examples of where Scotland's supply chain is already expanding into renewables include BiFab, based at Methil, Burntisland and Arnish, producing jacket foundations for the offshore wind market and manufacturing marine energy prototypes; Isleburn Ltd, part of the Global Energy Group, part of the team assembling and installing the Beatrice offshore wind prototype and manufacturing a range of full scale wave and tidal technology prototypes; and Technip and Subsea 7 establishing renewable divisions in Aberdeen.

Efforts to further mobilise the indigenous supply chain and to raise awareness of Scotland's expertise will include promotion of the Offshore Wind Portal and the Offshore Renewable Supply Chain Database, building upon the extensive capability mapping work already undertaken.

In conjunction with Invest Northern Ireland and Enterprise Ireland, Highlands and Islands Enterprise has submitted an Interreg IVA application for funding for a project centred around increasing the level of local content in future marine (wave and tidal) and offshore wind projects principally in the waters around Scotland and Ireland but also more widely around the UK. The Scottish Enterprise area is not eligible under this programme, but complementary activity is underway in this area to ensure that Scotland has a comprehensive offering to its existing supply chain.

HIE will apply learning from the development of indigenous supply chain collaborative networks in the Nuclear and Oil & Gas arenas to the offshore renewables sector. This will support companies to overcome barriers to market entry such as capability, capacity and scale/turnover, and facilitate effective engagement with offshore renewables project developers and top tier contractors.

2.7.3 Inward investment opportunity

The scale of proposed offshore developments will also necessitate major manufacturers to locate in Scotland to ensure projects develop in a timely and cost effective manner. Working with SDI we will work to secure inward investments that support the total supply chain and build upon recent successes including:-

  • Doosan Power Systems - in March 2011 announced investment of £170m in Scottish wind power over the next 10 years, establishing a R&D centre near Glasgow creating 200 jobs;
  • Gamesa - in Jan 2011 the Spanish company announced their intention to establish an offshore wind technology centre in Glasgow, with Dundee potentially benefiting from related manufacturing investment and the creation of 300 jobs;
  • Mitsubishi Power Systems Europe Ltd - in December 2010 announced intention to invest in offshore wind turbine R&D facility in Edinburgh, likely to create 200 jobs;
  • Wind Towers (Scotland) Ltd - joint venture between SSE and Marsh to take over the tower manufacturing facility at Machrihanish, safeguarding 80 jobs with the potential to create a further 40-50 over the next 3 years.

2.7.4 Onshore

Onshore renewables are projected to make a significant contribution to renewable energy targets before 2020. Recognising the opportunities for supply chain companies, HIE will fund a programme of activity through the area trade body, Energy North, to drive up the level of local content in onshore projects. Through the account management process, HIE will work with companies to overcome the challenges of supplying the renewable energy industry and build confidence in the supply chain.

2.7.5 Investment in infrastructure

Investment in key infrastructure developments will also be critical to ensure that there are suitable sites in strategic locations capable of serving the offshore sector. Through the National Renewable Infrastructure Plan (N-RIP) sites have been identified and promoted to the tier 1, 2 and 3 manufacturers and project developers, and plans are being progressed for investment at a number of the more favoured locations. The £70m National Renewable Infrastructure Fund ( N-RIF) augmented by specific investments in the Highlands and Islands, aims to lever considerable private sector investment in to key facilities where there is strong market interest. The Enterprise Agencies have prioritised investment in this area, recognising they key role that the right infrastructure will play in securing lasting economic benefit from the renewable opportunity.

2.8 Innovation and R&D

2.8.1 The Challenge

Innovation and research and development within the renewables industry are essential to drive down capital and operational costs, increase adoption, and reduce risk and uncertainty. Across the offshore renewables sector in particular there is a common set of technology-based solutions required to enable the successful realisation of huge economic potential, e.g. in relation to offshore design and fabrication, installation, health and safety, operation and maintenance in a marine environment. Key challenges to be addressed include the need for commercial deployment of existing technologies, to reduce capital and operating costs and to develop and demonstrate the technical viability of new devices and systems i.e. their performance, reliability, deployment, maintenance and de-commissioning in a marine environment. Innovation is also required however in functions, logistics, business models and processes.

Innovation therefore needs to be embedded at the heart of the industry, and the appropriate policy measures and support infrastructure implemented to ensure barriers to innovation are minimised and overcome. This requires a co-ordinated, integrated and sustained effort from both public and private sector.

2.8.2 Scotland's strengths in innovation and R&D

Scotland has a number of strengths which can be capitalised upon to support a focused approach to innovation and R&D within renewables:

  • Major global utilities, such as SSE, Scottish Power, EoN and Npower with both a track record and commitment to the Renewables sector.
  • Leading marine energy device developers such as Voith Wavegen, Pelamis, Aquamarine Power Ltd, and EMEC, the world leading wave and tidal test centre.
  • Independent project developers specialising in the offshore wind opportunity, namely Mainstream Renewables and SeaEnergy.
  • Fabrication companies such as Neptune Deeptech, and Isleburn Ltd have recent experience of manufacturing full-scale prototypes of several marine energy devices while BurntIsland Fabrications Ltd ( BiFab) are manufacturing offshore wind jackets as well as marine devices.
  • Numerous SMEs active in offshore wind and marine energy, bringing forward novel, potentially world-beating, technologies e,g NGenTec.
  • UK universities are world-leading in research into offshore renewables. The UK's SuperGen Marine Energy Research consortium is led by the University of Edinburgh and includes the University of Strathclyde, University of the Highlands and Islands (through the Environmental Research Institute in Thurso), Heriot-Watt University, The Robert Gordon University and several other UK universities. Similar strengths exist in offshore wind R&D e.g. University of Strathclyde.
  • Recent announcements by e.g. Doosan Power Systems, Gamesa and University of Strathclyde of significant investment in R&D in Glasgow highlight that the city is emerging as a global centre for R&D in offshore wind.
  • Scotland has extensive test and demonstration facilities to support the development and commercial deployment of wind energy and an emerging supply industry.
  • Oil & Gas industry with decades of experience in offshore construction, installation and operation and transferable skills and expertise in many areas.
  • Strong government support.

2.8.3 Recent key developments

Key achievements in renewables over the past four years are listed at Section 1.1.7, and many of these will support innovation and R&D -including the launch of the WATERS fund, the Saltire Prize, marine leasing round, SEGEC, and the ETP.

In addition there have been the following key developments in innovation and R&D:

  • The announcement by TSB of the establishment of an Offshore Energy Technology Innovation Centre.
  • HVDC (the International Technology Renewables Energy Zone) will be established in Glasgow with over £100M of investment which is aimed at establishing Scotland as an international centre for research, design and development in offshore renewables
  • The Scottish Energy Laboratory ( SEL) will enable organisations to identify appropriate R&D and test facilities within key energy sectors in support of product development and commercialisation.
  • £10mAdvanced Forming Research Centre, opened in 2010 to support the development of large offshore wind structures and turbines has attracted interest and funding from global companies.
  • The Power Networks Demonstration Centre - the first of its kind in Europe-has been created by the University of Strathclyde and leading energy companies and will play a key role in increasing the UK electricity grids efficiency and reliability as well as testing next generation of smart electrical technologies.
  • The proposed £40mEuropean Offshore Wind Deployment Centre in Aberdeen will provide 12 grid connected demonstration and test pods is also attracting interest from major turbine manufacturers.
  • The development of nursery sites at the European Marine Energy Centre ( EMEC) in Orkney, to complement the existing full scale sites already in place, further reflecting industry needs and further positioning EMEC's leading role in the development of the sector.

Case Study - Innovation opportunities in Offshore Wind

Technology and market foresighting carried out by Scottish Enterprise (and validated by work by other agencies including the Carbon Trust and others) has highlighted opportunities which have potential to address the challenges highlighted above, through the application of innovation.

In total these opportunities, if all were successfully implemented, could cut the cost of offshore wind by nearly 50% and would be sufficient to offset expected cuts in UK Government support for offshore wind projects in 2014 and in the longer term bring costs down to parity with current onshore wind costs.

Innovation opportunities identified by this Foresighting touch on nearly all parts of an offshore wind project and a significant portion (covering 61% of total project costs) are in areas where it is considered innovation would provide Scottish firms with a good way of winning more value from a project.

Top ten identified opportunities

  • Next generation turbine designs
  • Support structures
  • Operating and maintenance strategies
  • Novel drive train technology
  • Deepwater installation vessels
  • Next generation blade technology
  • Personnel access for challenging offshore sites
  • Condition based monitoring
  • Wind farm array management
  • Innovative turbine maintenance methods

2.8.4 Priorities going forward

There is a need to continue to prioritise and focus on research & funding activities across the sector. Building on work to identify innovation priorities, such as the offshore wind foresighting highlighted above, R&D and innovation priorities will be developed and shared with partner organisations to develop a clear and focused agenda for R&D and innovation across renewables. These priorities need to be communicated to academia, potential technology developers and supply chain to ensure innovation activity is focussed and targeted in areas where the impact can be realised in lower deployment and operational costs.

Current funding mechanisms will be reviewed to assess their alignment against these agreed priorities and discussions will be held with key funders such as Carbon Trust, Energy Technology Partnership and the Technology Strategy Board to encourage greater alignment of funding priorities. This will also include maximising European funding opportunities through SEGEC. Consideration will be given to the development of further targeted support mechanisms.

The Enterprise Agencies will continue to build upon initiatives such as WATERS, Scottish Energy Laboratory and ETP to strengthen the links between the research base and industry through the development of effective collaboration and knowledge flows.

The Enterprise Agencies will also continue to support the effective implementation of the many significant initiatives such as ITREZ and the Offshore Energy Technology Innovation Centre highlighted above to maximise their impact across the Scottish renewables industry.

We will also continue to examine the research and technology landscape for the emergence of new and/or disruptive technologies and assess their impact upon the sector.

2.9 Public Engagement

2.9.1 Low Carbon Scotland Public Engagement Strategy

A low carbon society is one that uses less energy and fewer resources through greater energy efficiency, which can also mean reduced costs for households and businesses. It is one where the energy we do use increasingly comes from renewable sources such as wind, water, wave and solar power that produce fewer carbon emissions. It is a society that is ready and able to realise the economic opportunities that come from developing new technologies, creating new low carbon manufacturing industries and reshaping Scotland's infrastructure and creating thousands of jobs. It is a society that provides opportunities for healthier, more sustainable lifestyles.

Our Low Carbon Scotland Public Engagement Strategy highlights the ways in which we are seeking to meet the obligations in the Climate Change (Scotland) Act 2009 to inform people in Scotland about the climate change targets specified by the Act, encourage them to contribute to the achievement of those targets, and identify actions people in Scotland may take to contribute to the achievement of those targets. Our goal is to engage with a wide range of audiences on why Scotland can benefit from becoming a low carbon society, and the opportunities it can bring for jobs, skills, and quality of life.

2.9.2 The role for developers

Public engagement is also a crucial aspect for responsible and forward-thinking private sector developers of renewables. Involving communities at the earliest possible stage in the design and siting of developments will garner support and acceptance and improve the likelihood of consent. It will also reduce the chances of further information being required in support of an application which can lead to the requirement for further consultation and delays in the planning process. Community buy-in further reduces resistance to development and the chances of issues arising during and after construction.

2.9.3 Community benefits and ownership

While full details on this area can be found in the Routemap for community energy at Section 3.9, it is worth highlighting here that community benefits and scope for local ownership of energy are key elements of public engagement in renewables, helping to change cultural attitudes to renewables as well as to generate local revenue as part of the green low carbon economy.

The Scottish Government is committed to ensure that community benefits from renewables are maximised, including from commercial developments. We are already acting as an exemplar in this regard in terms of the renewables developed on the public estate. We have also consulted (in Securing the Benefits) on other options to increase benefits, including setting up a register of community benefits from commercial schemes and looking at the scope within the planning system to provide greater consistency. We will be following up this consultation shortly.

Case Study - Engaging with our young people and their communities

Highlands and Islands Enterprise recognises the need to raise public awareness of renewable energy and the opportunities it presents. HIE has organised various public education awareness raising activities over the last five years, and continues to run education programmes aimed at our young people in primary and secondary schools who will be required to service the industry, make policy decisions and at the most basic level make decisions about their energy use.

By the end of this year, every primary school in the Highlands and Islands will have a renewable energy toolkit and will have received CPD training in how to deliver renewable energy lessons in the classroom using the kit. The toolkit is aimed at primary 6 and 7 teachers and pupils and contains a range of activities, factsheets, games and gadgets to bring the subject to life in the classroom. All the different renewable energy technologies are covered using specially designed cartoon characters.

The Big Green Challenge debating competition is aimed at S1- S3 pupils to raise awareness of the opportunities and challenges surrounding renewable energy development. In order to ensure the successful growth of the sector we need our young people to be considering careers in renewable energy.

HIE has worked closely with teachers to ensure that both programmes fit with the Curriculum for Excellence. Targeting pupils in P6- P7 and S1- S3 ensures that they are able to consider a career in energy before they select their subjects.