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2020 Routemap for Renewable Energy in Scotland

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3. Sectoral Routemaps

3.1 Offshore Wind

Ambition and Targets

With 25% of Europe's offshore wind potential, the manufacturing, supply chain, job creation and training opportunities present Scotland with huge scope for sustainable economic growth.

Scotland's Offshore Wind Route Map, published by the Offshore Wind Industry Group ( OWIG) in September 2010, illustrates and examines these opportunities in detail, as well as the challenges that exist.

Current Deployment

There are currently two offshore wind sites within Scottish Territorial Waters:

  • the Beatrice wind turbine demonstrator project in the Moray Firth - two 5 MW turbines, funded in part by a Scottish Government grant; and
  • Robin Rigg, an 180 MW development in the Solway Firth.

Planned Deployment

Following the award by The Crown Estate of "exclusivity agreements" to developers in a number of areas within Scottish territorial waters (up to 12 nautical miles from shore), the Scottish Government published Blue Seas - Green Energy A Sectoral Marine Plan for Offshore Wind Energy in Scottish Territorial Waters in March 2011. The Plan identifies the following 6 areas as possessing favourable conditions for the development of offshore wind, with the potential to deliver almost 5 GW of electricity generation capacity:

  • Islay;
  • Argyll Array;
  • Beatrice;
  • Inch Cape;
  • Neart na Gaoithe; and
  • Forth Array

The conclusion of this process now permits The Crown Estate to enter into Agreement for Lease with the developers involved in these sites, giving those developers the ability to prepare and submit their consent applications to Marine Scotland. The Sectoral Marine Plan for Offshore Wind forms a material consideration to the consenting process for offshore wind projects in Scotland.

Two leases have also been awarded by The Crown Estate for sites in the Moray Firth and Firth of Forth, beyond 12 nautical miles. These amount to a further 4.8 GW, giving a combined total potential of approximately 10 GW of electricity.

Deployment Potential

The Sectoral Marine Plan identifies a further 25 areas for further exploration in Scottish Territorial Waters. The Scottish Government has held initial discussions with The Crown Estate to gauge the level of interest in further leasing round opportunities.

This process will be carried out using an approach which takes developers' ambitions fully into account but which is also consistent with the results and conclusions of the recent Plan and public consultations.

Short-term sites and Medium Term Areas of Search

Successes to Date

We are still in the early stages of developing an offshore wind industry and capacity. However, the combination of our huge offshore renewables potential (estimated at 206 GW), supportive market mechanism (the Renewables Obligation) and our commitment to continue developing the necessary infrastructure has led 3 of the world's leading turbine manufacturers to announce an intention to locate here:

  • Doosan Power Systems - in March 2011 announced investment of £170m in Scottish wind power over the next 10 years. An R&D centre will be set up near Glasgow, creating 200 jobs, following which the company is looking to establish a manufacturing and assembly facility in Scotland. Doosan expects its offshore wind plans in Scotland to create up to 1,700 new jobs.
  • Gamesa - in Jan 2011 the Spanish company announced their intention to establish an offshore wind technology centre in Glasgow. Dundee could also benefit from related plans to establish a manufacturing and maintenance base in the city. This could represent a further investment of £42 million in Scotland and the creation of 300 jobs.
  • Mitsubishi Power Systems Europe Ltd - in December 2010, Mitsubishi announced intention to invest in an engineering facility in Edinburgh to carry out R&D into offshore wind turbine technology. Their presence in Scotland is likely to create up to 200 jobs over the next 5 years and lever up to £100 million investment into the economy.

We also have indigenous companies diversifying successfully and entering the offshore wind supply chain - notably BiFab from their bases in Fife.

Challenges to Deployment

OFFSHORE WIND
CHALLENGE

The cost of renewables

Only one proven turbine currently on the market. Essential that other original equipment manufacturers ( OEMs) bring tried & tested alternative turbines to the market to create competition.

Market mechanisms must continue to drive investment - Electricity Market Reform ( EMR) outcome critical for further development of sector.

Planning and regulation

Need to maintain the work undertaken thus far by Marine Scotland on streamlining the planning and consent process for marine renewables, and related efforts to establish a pragmatic approach to observing environmental effects (through 'deploy and monitor' framework). Planning advice needed on development proposals within inter-tidal zone, handling onshore elements of offshore proposals, dealing with onshore impacts of offshore wind proposals. Continued support from The Crown Estate in respect of further leasing rounds. Imperative to continue a research programme on the interactions between offshore wind developments and the natural environment to ensure the planning and consenting processes are fully informed.

Secure grid access

Lack of grid access in areas of high resource still an issue. Sector and stakeholders can overcome some of these issues by working in partnership, but key influence in this area lies in outcome to Project TransmiT and a more sensible approach to grid investment and charging issues.

Skills

SDS's Energy Skills Investment Plan identifies the route to providing the skills required.

Repriorisation of the college and university sectors has ensured that the necessary courses are available.

Supply chain development

Critical that supply chain development keeps pace with and enables marine renewables deployment, and that Scottish businesses are in position to support and benefit from this sector and its huge potential. Key role for Government and development agencies in taking forward the National Renewables Infrastructure Plan ( NRIP) and advising and connecting relevant companies with the opportunities that exist - from device and foundation design, manufacture and installation to electrical design and cabling provision / installation.

Innovation /
R&D

Ongoing need for technology support. Key issues need to be addressed - reliability, survivability, installlation techniques, anchoring. Requirement for both on and offshore test & demo sites to be identified.

Public engagement

Ensuring Scotland's communities are engaged with the process. Ensuring developments consider public and community views.

Key Actions

  • Market incentives - the relative stability for renewables investors created by the Renewables Obligation ( RO) has been affected by the UK Government's Electricity Market Reform consultation which proposes that the RO should be replaced from 2017. This process must maintain an appropriate and effective level of support, and a system which is capable of continuing to support offshore wind development in a way which will grow an industry here and help meet the Scottish Government's ambitious targets. Action - Scottish Government to maintain the appropriate level of market support for offshore wind, both through the RO and its possible replacement.
  • Invest in infrastructure - offshore wind deployment needs the right infrastructure from which projects and turbines can be manufactured, launched and serviced. Scotland's £70 million National Renewables Infrastructure Fund (NRIF) is designed to help address this issue, and to leverage considerable private sector investment into key facilities. Action - continued focus by Government and development agencies on using NRIF to deliver and attract appropriate infrastructure investment.
  • Support for innovation - there is still genuine scope to reduce the costs of offshore wind development, developers estimate by approximately 30%. Achieving these reductions will lessen the risk attached to project development and investment, aiding the delivery of the proposed developments across Scotland by 2020. Action - the Scottish Government's continued support for initiatives such as the Carbon Trust's technology accelerator programme can help stimulate greater confidence in the technologies and attracting private investment.
  • Grid - the grid transmission charging and underwriting issues identified above must be tackled effectively through project TransmiT. The existing charging regime is a barrier to development; its satisfactory and timely resolution will play a vital role in developing the sector. Action - Scottish Government to continue arguing strongly for a positive outcome on grid regulation and charging issues.

Supporting Actions

  • Marine Scotland to maintain its focus on the simplification and streamlining of offshore planning, monitoring and determination of consent applications.
  • Link to wider focus on regulation and management of Crown Estate and seabed in Scottish waters.
  • Implementation of SDS's Skills Investment Plan.
  • Repriorisation of the college and university sectors has ensured that the necessary courses are available.
  • SE & HIE to engage and stimulate supply chain to the opportunity.
  • EUSET Plan inclusion - key to unlocking further resource and support for the sector.
  • HVDC project - in conjunction with SE/ TSB.
  • Continued support for CT's offshore wind accelerator.

3.2 Onshore Wind

Ambition and Targets

The Government is committed to the continued expansion of portfolio of onshore wind farms to help meet renewables targets, with a robust planning system providing spatial guidance, a clear policy framework and together with a timely and efficient processing of Section 36 Electricity Act and planning applications.

Our ambition is that by 2020, onshore wind developments ranging from small and community-scale to large power utility scale maximise engagement with communities; contribute electricity to renewables targets; and, through displacement of fossil fuel generation, help to reduce fossil fuel consumption.

Onshore wind is a mature and relatively low cost renewable technology with a large supply chain already established. It is capable of being deployed at a high rate. Onshore wind turbines can make a very large contribution to the progress to Scotland's renewable electricity target, and help establish Scotland's reputation as rapidly becoming the green powerhouse of Europe thanks to its underlying political commitment to make it happen. This could be crucial to attracting investment to Scotland for the other emerging technologies with their associated potential for job creation and economic benefit.

Onshore wind also presents a prime opportunity for communities and the rural sector to generate local revenue and sustain local economies, and could be a key contributor to the target for 500 MW of renewables in community ownership by 2020.

Scotland's onshore wind resource has given favourable load factors to generation from wind, in line with the UK mean load factor and better than other more extensive adopters of onshore wind in Europe such as Germany and Denmark. The most recent load factor published in official statistics is 27.2% for 2009. However, even annual load factors can fluctuate considerably from year to year depending on the weather.

Current Deployment

  • 2.4 GW / 1367 turbines / 117 sites installed and operating.
  • 1 GW / 450 turbines / 20 sites under construction.

Planned Deployment

  • 2 GW / 755 turbines / 76 sites consented and ready to be deployed if developer proceeds.

Deployment Potential

  • 3.5 GW / 1445 turbines / 100 sites awaiting planning determination.
  • 3.9 GW / 1628 turbines / 94 sites have requested pre-application scoping opinion.

Development Sites

Windfarms in Scotland (February 2011)

Successes to Date

  • Requiring that proposals demonstrate carbon saving potential: to ensure that any wind farms which get built provide real carbon savings as well as renewable electricity, we have published Calculating carbon savings from wind farms on Scottish peat lands - A New Approach and updated it in June 2011. We will make use of this to provide a calculation of carbon payback time a requirement in all onshore wind farm planning consent applications to Scottish Ministers which are sited on peat lands as a means to influence design to optimise the benefit of schemes.
  • Removing barriers to community ownership: through the launch of the Community And Renewable Energy Scheme ( CARES) loan fund, discussed further in the Community section of this document.
  • Streamlining the planning system: consolidating the various documents which previously formed the Scottish Planning Policy into a single document. Planning advice on a range of renewable energy technologies launched as an online resource, giving greater scope to keep pace with the frequent changes in the renewables sector, particularly in terms of new technologies, innovations, new national policy initiatives, targets, incentives and planning practice.
  • Streamlining the Section 36 energy consents process: Introducing 9 month target for determination of Section 36 Consents applications which clear early gate-checking and provision of associated guidance to developers on the requirements of a good application.
  • Requiring leading-edge community benefit from wind farms on the National Forest Estate - FCS has streamlined its procedures for leasing land for renewable energy development including a mandatory requirement that communities receive a payment of at least £5,000 per megawatt of installed capacity per annum from the developer.
  • Leading the way on best practice in Europe: Scotland is leading the co­ordination of the ambitious GP Wind project from 8 European countries. This project will address barriers to the deployment of onshore and offshore wind generation, specifically by developing good practice in reconciling objectives on renewable energy with wider environmental objectives and actively involving communities in planning and implementation.
  • Guidance on Siting and Designing Wind Farms in the Landscape has been published by SNH, aimed at planners and developers to promote best practice.
  • Making Progress on Removing Aviation Barriers:
    • Blackcraig Hill and Blacklaw Extensions consented, both having overcome aviation objections.
    • Agreement in principle between developers and Prestwick Airport on financing of new radar.
    • Joint flight trials underway to confirm theoretical mitigations for numerous developments.
    • SG consultation on planning advice for the determination of wind farm applications with aviation issues and use of suspensive conditions now complete and advice to be finalised by June 2011.

Challenges to Deployment

ONSHORE WIND
CHALLENGE

The cost of renewables

The uncertainty about future support for onshore wind caused by the wide ranging review of the electricity markets by the UK Government has the potential to hold back investment decisions as the industry loses confidence in the longevity and level of support. What the UK Government does could have profound implications for the development of onshore wind in Scotland.

Secure grid access

Lack of grid access in areas of high resource still an issue. Sector and stakeholders can overcome some of these issues by working in partnership, but key challenge in this area lies in the timescale for grid upgrades and refining the approach to grid investment and charging issues.

Public engagement

Public acceptance issue around environmental impacts and benefits for local communities. Related issue around extent of genuine community engagement and benefit from onshore wind farms.

Key Actions

To ensure the momentum of onshore wind deployment is kept, a key action will be to provide the right kind of financial support alongside a supportive planning system which provides clear spatial and policy direction, continues to engage local communities, and balances the need to protect the environment alongside the need to continue to make progress to renewable electricity targets:

  • Market incentives - Support for large onshore wind farms is given by the Renewables Obligation, which is banded to give different levels of support according to what has been deemed necessary to encourage the range of renewables technologies. The Feed-In Tariff provides support for smaller wind farms up to 5 MW in capacity. The Electricity Market Reform proposals from the UK Government introduce uncertainty for investors in predicting what the revenues of their proposals might be. These reviews and proposals must combine to deliver a coherent and effective level of support. Action - Scottish Government to maintain its effective market support for onshore wind, both through the RO and its possible replacement.
  • Grid - the grid transmission charging and underwriting issues identified above must be tackled effectively through project TransmiT. The existing charging regime is a barrier to development; its satisfactory and timely resolution will play a vital role in developing the sector. Action - Scottish Government to continue arguing strongly for a positive outcome on grid regulation and charging issues.
  • Planning - The planning system must continue to balance environmental sensitivities with the need to make progress on renewables targets, and support planning authorities in maximising opportunities. Planning Authorities should also be encouraged to complete the spatial frameworks required by Scottish Planning Policy, deliver development plans which clearly set out the spatial and policy context for renewables and implement development management procedures that allow for appropriately designed and sited onshore wind proposals to emerge. Action - Scottish Government to continue encouraging planning authorities to meet the requirement to produce spatial frameworks, to look for solutions in technical challenges around aviation, noise, proximity to communities, cumulative impacts in the landscape and to encourage best practice through the GP Wind project when complete.
  • Community Engagement - this should take place from an early stage so that communities are fully aware of what is proposed and the benefits that could be provided. Action - Scottish Government to consider responses to "Securing the Benefits"consultation.
  • Eskdalemuir - work continues between SG, DECC, MOD and developers to verify technology which can combat the noise and vibration emissions from wind turbines affecting the Seismic Array, and enable more turbines to be built near it. There is agreement from industry (subject to further consideration) to undertake a baseline study examining the issue as well as the potential for technological solutions. Action - Scottish Government to chair a new working group (after Newfield public inquiry).

3.3 Wave and Tidal Energy

Scotland's wave and tidal energy resource is almost unparalleled, representing a quarter of Europe's tidal stream and 10% of its wave energy potential.

The wave and tidal energy sector is still at an early stage; however, it has made remarkable progress over the past 3 years. Wave testing started in Orkney in 2004 and tidal in 2007, and all EMEC's berths are scheduled to be full by 2012, and further demand is strong for the newly developed nursery sites. There are also firm plans in place for pre-commercial and commercial arrays of wave and tidal machines from 2014 through to 2020. Much of the scale-up activity will take place within the Pentland Firth and Orkney Waters Strategic Area following on from the award of commercial leases in the area. These leases, the first of their kind in the world, amount to 1.6 GW of potential capacity which could be built out by 2020.

These technologies can make a huge contribution to Scotland's longer term renewable energy and carbon reduction targets. Reducing costs will be absolutely crucial in terms of helping the sector become commercially competitive; this heightens the importance attached to the learning effects that will be a product of the prototype and pre-commercial plans referred to above. This means that the next few years will be crucial for this sector, and why it is so important that all stakeholders continue working together to tackle the issues which can affect its progress. By doing so successfully, we can help build momentum and continue to attract investment to this hugely promising sector.

Current Deployment

The following devices are currently deployed and operating in Scotland:

  • Voith Wavegen's 500 kW Limpet on Islay is currently in its 11 th year of successful operation.
  • Pelamis P2 750 kW machine (commissioned by EON) deployed at the European Marine Energy Centre ( EMEC) in Orkney
  • Open Hydro 250 kW tidal turbine deployed at EMEC
  • Tidal Generation Ltd 500 kW turbine deployed at EMEC
  • Atlantis 1 MW tidal turbine deployed at EMEC
  • Scotrenewables 250 kW tidal generator deployed at EMEC

Planned Deployment

The following devices are scheduled for deployment in summer 2011:

  • Aquamarine Power's Oyster 2 wave energy hydro converter is due to be installed at EMEC in June/July 2011 (following on from successful deployment of Oyster 1 prototype during 2009/2010) - initially 800 kW, but building to 2.4 MW over 12 months.
  • Voith installing 1 MW tidal turbine at EMEC in July 2011.
  • Wello Oy installing 750 kW wave energy converter at EMEC in July 2011.
  • Pelamis P2 750 kW machine (commissioned by Scottish Power Renewables) installing at EMEC in June 2011.
  • Hammerfest Strom 1 MW tidal generator deploying at EMEC in Autumn 2011.

Deployment Potential

The Pentland Firth and Orkney Waters strategic area is where the majority of planned marine renewables deployment over the next decade will take place. The map below shows the 11 development sites leased by The Crown Estate in 2010. There are different forecasts as to what can be practically delivered in these waters by 2020, ranging from several hundred MW to 1 GW.

Recent work commissioned for the Pentland Firth and Orkney Waters Delivery Group demonstrates that while the deployment of the full 1.6 GW by 2020 is theoretically achievable, any deployment on this kind of scale will depend upon project developers and other stakeholders addressing a range of technical, economic, environmental and planning issues; these are set out in the sections below.

Pentland Firth and Orkney Waters Round 1 Development Sites

We also expect projects to go ahead in other areas around Scotland. For example, Scottish Power Renewables, in partnership with Hammerfest Strom, secured consent in March 2011 for a 10 MW tidal array. Meanwhile, the Crown Estate has embarked on a rolling programme of further leasing activity aimed at supporting entrants for the Scottish Government's £10m Saltire Prize.

Marine Scotland will be taking forward development of a Sectoral Marine Plan for Marine Renewables in Scotland's Renewable Energy Zone during 2011. The Sectoral Marine Plan will guide development of marine renewable energy by identifying potential Plan options for development. The Final Plan will form a material consideration to the consenting process for wave and tidal energy projects in Scotland.

Successes to Date

  • The commercial lease awards totalling 1.6 GW in the Pentland Firth and Orkney Waters, as set out above;.
  • The award of £13 million to 5 projects through the WATERS fund to support technology development and deployment - which, when added to the earlier WATES scheme and our investment at EMEC, took Scottish Government support for the sector to more than £30 million over the last decade;
  • The granting of consent by the Scottish Government for Scottish Power Renewables and Hammerfest Strom's 10 MW tidal project near Islay - the largest of its kind in the world;
  • The coming together of industrial and utility investors with technology developers to develop and advance particular technologies and projects, both in the PFOW strategic zone and in other areas;
  • The continued strengthening and growth at EMEC, reflected in the pipeline of full-scale prototypes to be deployed there during the coming year and the recent completion of nursery test facilities;
  • The inclusion of 4 marine renewables projects as part of the UK's application for funding to the European Investment Bank for consideration under the New Entrants Reserve mechanism;
  • Marine Scotland's progress on developing a marine spatial plan process which will underpin the consenting process;
  • The development of a National Renewables Infrastructure Plan, a strategic approach to the development of offshore renewables infrastructure to support manufacturing, construction and deployment;
  • Three confirmed applicants for the Scottish Government's £10 million Saltire Prize.
  • The establishment of key partnership structures to support the successful deployment of commercial arrays, and maximise their regional and Scottish economic impacts.

Case Study - Aquamarine Power Limited ( APL)

Aquamarine Power Ltd ( APL) was established in 2005 to bring its Oyster wave power technology to the commercial market. The company has grown rapidly and continues to expand, now employing over 60 staff. The Oyster technology captures energy in nearshore waves and converts it into clean sustainable electricity. Essentially Oyster is a wave-powered pump which pushes high pressure water to drive an onshore hydro-electric turbine. In 2009 the 315 kW Oyster 1 was successfully installed at the European Marine Energy Centre (EMEC) in Orkney - this has operated successfully over a sustained period. The next generation Oyster 2 is ready for installation at EMEC in summer 2011, with 2 further devices scheduled for installed at the same location in 2012 and 2013.

In March 2010, a joint venture partnership with SSE Renewables was awarded exclusive development rights to an area of the seabed in the Pentland Firth & Orkney Waters as part of the world's first commercial leasing programme for marine energy projects. Additionally, in north west Lewis, the company has secured seabed leases with potential to capture up to 40 MW of wave energy.

In November 2010, Scotland's First Minister opened Aquamarine Power's new offices in Edinburgh and welcomed a new £11m funding announcement involving £3m follow on investment from SSE and a new £8m investment from multi-national engineering company ABB.

The Oyster development has created significant employment and economic benefit opportunities for Scotland. In December 2010, Aquamarine Power awarded a £4 million contract to BiFab to build their second Oyster wave power device at Methil, with planned installation at EMEC in summer 2011. The Arnish fabrication yard in Lewis is manufacturing the foundation piles for Oyster 2 and has been awarded an extension to the contract for the two additional Oyster machines scheduled for deployment in 2012 and 2013.

Sectoral Marine Planning Approach to develop wave and tidal energy in Scotland's Renewable Energy Zone

Marine Scotland has being developing and taking forward marine planning approaches to aid the identification and location of wave and tidal energy developments in Scotland's seas. The emerging Sectoral Marine Plan(s) will form a material consideration to the consenting process for marine renewable developments in Scotland.

The Pentland Firth and Orkney waters were identified in the Scottish Government's Strategic Environmental Assessment of Marine Renewables (2007) as areas of high energy resource for wave and tidal power. To aid potential development and to guide development opportunities, Marine Scotland published draft Regional Locational Guidance and a Marine Spatial Plan framework for the region. This work assessed the energy resource within the sea against environmental and socio­economic considerations.

The Marine Spatial Plan framework sets out a 3 stage process for the development or regional marine plans and regional locational guidance. Stage 1 was the publication of the framework and an assessment of the identified gaps in knowledge. Stage 2 of this work consists of commissioning a set of studies to fill in the identified gaps in knowledge and to determine the likely interaction between future renewables activities, other sectors and the natural environment.

Building upon the work to inform development within the Pentland Firth Strategic Area, Marine Scotland commissioned a Scotland wide study to scope potential areas for wave and tidal development to compete for the Saltire Prize. Published in early 2010, the Scoping Study on the proposed geographic areas to be included in the Further Scottish Leasing Round for wave and tidal energy, identified seven areas as potentially suitable for wave and tidal energy generation - two areas were identified for tidal energy and five areas for wave energy.

Areas were identified using The Crown Estate's Marine Spatial Resource System ( MaRS) to provide a spatial representation of the relative strength of constraints applying to different areas of the sea. Information on the necessary natural resources of wave and/or tidal stream power, was combined with areas where developers had informally expressed an interest resulting in a series of models showing the differences in levels of constraint in different areas. An assessment of the constraints and potential resource allowed a map of potential areas to be developed which formed the basis for the preparation of more detailed regional location guidance for developers.

In response to the comments received on the Scoping Study, Marine Scotland undertook a further, more detailed analysis of the proposed areas and produced a Regional Locational Guidance ( RLG) report. The report investigated the resource and physical characteristics of the seven areas and the potential for interactions with other users and the environment. It concluded that five areas - West of Shetland, Southwest of Shetland, West of Lewis, Mull of Kintyre and Southwest of Islay - avoided the most environmentally sensitive areas and minimised the impact on other users of the sea. The RLG was used by The Crown Estate for the Further Scottish Leasing Round for wave and tidal energy projects to support The Saltire Prize competition.

The Marine Planning approaches utilised in the Pentland Firth and for guidance to support The Saltire Prize are forming the basis for the development of a Sectoral Marine Plan for Wave and Tidal Energy in Scotland's seas. Building upon the work already undertaken, Marine Scotland will develop an Initial Plan Framework which will outline the potential areas for development of wave and tidal energy.

The Initial Plan Framework will then be subject to a Sustainability Appraisal process which utilises existing assessment methods in tandem with innovative marine planning approaches - Strategic Environmental Assessment, Habitats Regulations Appraisal, Socio-economic Impact Assessment, public consultation and further scoping to include the extent of Scotland's Renewable Energy Zone (200 nautical miles). The application of the Sustainability Appraisal process will inform the preparation and development of a draft Sectoral Marine Plan for wave and tidal energy. The resulting draft Plan and SEA Environmental report will be subject to formal consultation and if necessary, further assessment. Following completion of the analysis of consultation responses and any adjustment made to the draft Plan, a final Sectoral Marine Plan will be published. The final Plan will guide development of marine renewable energy in Scotland's Renewable Energy Zone by identifying potential Plan options for development.

Challenges to Deployment

WAVE & TIDAL ENERGY
CHALLENGE

The cost of renewables

Ensuring that the market mechanisms in play deliver the right level of support as well as a clear signal that this support will be available in the long term, driving deployment and reducing costs. The future of the RO, and the support for these technologies in the longer term from any replacement mechanism, will be of paramount importance.

Planning and regulation

Need to maintain the work undertaken by Marine Scotland thus far on developing planning advice and guidance tools. The developing Sectoral Marine Plan for wave and tidal energy and the Pentland Firth Marine Spatial Plan Framework will ensure development is taken forward in a sustainable way, which seeks to accommodate and consider sectoral, community and public views.

Secure grid access

Lack of grid access in areas of high resource still an issue. Sector and stakeholders can overcome some of these issues by working in partnership, but key influence in this area lies in outcome to Project TransmiT and a more sensible approach to grid investment and charging issues.

Skills

The Skills Investment Plan for Energy produced by Skills Development Scotland highlights up to 5,300 additional direct job opportunities in marine renewables to 2020. dependent on the level of capacity deployed. The main skill requirements are widely recognised as marine engineers, leadership and management, project managers and divers with opportunities for graduates, apprentices and individuals already in the labour market across the energy sectors and elsewhere.

Supply chain development

Critical that supply chain development keeps pace with and enables marine renewables deployment, and that Scottish businesses are in position to support and benefit from this sector and its huge potential. Key role for Government and development agencies in advising and connecting relevant companies with the opportunities that exist - from device and foundation design, manufacture and installation to electrical design and cabling provision / installation.

Innovation /R &D

Need for ongoing technology support is critical. There is still only a relatively small number of devices at full demonstration scale. These demonstrations, more of which are due to take place over the coming year, will be vital in proving the technologies and beginning to move down the cost curve. Continued public sector support aimed at focused R&D - e.g. reliability, componentry / materials, survivability, installlation techniques, anchoring - likely to be vital.

Public engagement

Public engagement with regard to planning and consenting is critical in order to ensure that development is sustainable and takes into account community and public views, linked to the debate on management of The Crown Estate and its revenues.

Key Actions

The sector needs to continue its progress through the stages of technology proving and deployment, moving from full-scale demonstration (currently taking place) through to the deployment of the first pre-commercial arrays and onwards to commercial development. There is a consensus that, in order to make this progress and transition, the following factors are critical:

  • Market incentives - Scotland has led the UK and indeed the world in recent years through our introduction of enhanced levels of support for wave and tidal stream generation to the Renewables Obligation ( RO). Those bands are presently being reviewed, but in the context of Electricity Market Reform proposals from the UK Government which propose that the RO should be replaced from 2017. These reviews and proposals must combine to deliver a coherent and effective level of support, and a system which is capable of bringing these technologies through the stages identified above and to a competitive and commercial cost basis. Action - Scottish Government to maintain its effective market support for marine renewables technologies, both through the RO and its possible replacement.
  • Grid - the grid transmission charging and underwriting issues identified above must be tackled effectively through project TransmiT. The existing charging regime is a barrier to development; its satisfactory and timely resolution will play a vital role in developing the sector. Action - Scottish Government to continue arguing strongly for a positive outcome on grid regulation and charging issues.
  • Capital support - the sector has stated that the next phase of development - the deployment of small arrays on the 5-10 MW scale - will not take place without significant capital grant support, potentially on the scale of around £20 million per project. Identifying resources to support and enable this - from within Government, the European Commission and potentially the Green Investment Bank, as well as more investment leveraged from private sector capital - remain a key factor. Action - Scottish Government to work with its partners and the sector on costs issues, and to pursue every available option to ensure resources and investment are available on the necessary scale.
  • Innovation support - coherent and co-ordinated action to address issues related to device reliability, survivability, installation techniques, inter-connection and anchoring can play a crucial role in reducing early project costs. Action - Scottish Government to continue its collaborative discussions with public sector partners and agencies and to ensure that R&D support is available, targeted and effective.

Supporting Actions

  • In addition to the actions above, the inclusion of wave and tidal technologies within the EU Strategic Energy Technology Plan - for which the Scottish Government is lobbying alongside British-Irish Council and other EU Member States - could un-lock significant R&D and project finance, and encourage industry collaboration to help drive marine renewables down the cost curve.
  • Marine Scotland to maintain its focus on the simplification and streamlining of marine planning, monitoring and determination of consent applications.
  • Link to wider focus on regulation and management of Crown Estate and seabed in Scottish waters.
  • Undertake review of existing Strategic Environmental Assessment for wave and tidal energy.
  • Maintain focused efforts on supply chain development arising from lease awards and planned activity in Scottish waters.
  • Identify and capitalise on areas where Scotland is strong and has natural advantage.
  • Build on early and positive examples of public engagement such as recent successful events in Caithness and Orkney.

3.4 Renewable Heat

Ambition and Targets

Heat makes up about half of all energy demand and, unlike the so-called "traded" sector for electricity, heat forms a key element of wider EU and UK carbon emissions reductions targets. Use of heat is also integrally linked to our aims to improve energy efficiency. Thus it is right that heat policy should be a high priority for the Scottish Government, and we aim to deliver a commercially viable, diverse, renewable heat industry in Scotland in support of our 2020 renewable energy target and to help tackle climate change.

Our current heat target is to source 11% of demand from renewable sources by 2020.

We are making good progress with 2.8% of heat demand in Scotland being met from renewable sources and we intend to work with industry to explore whether it will be possible to extend our target further, including considering cost-effectiveness and net impact on wider carbon emissions.

We have been working with UK Government to ensure Scottish interests are reflected in the design of the Renewable Heat Incentive and we will continue to do so until its full implementation in 2012.

In particular we need to ensure that the interests of early adopters of renewable heat in Scotland, notably the wood panel sector, are not put at a disadvantage by the introduction of the initiative. Thus we continue to engage with DECC to ensure that impacts on existing users are properly assessed and measures taken to remove any unintended consequences which would put these users at a commercial disadvantage.

We are also working in with DECC and Ofgem on the Heat Partnership Project which will explore the Scottish experience of renewable heat deployment in order to identify barriers and successes and thus create a template for good practice across the UK.

Renewable heat policy should not stand alone. As highlighted above, it is linked to aspirations to improve energy efficiency. As such, renewable heat should also be viewed within a wider policy to make the best use of heat within a low carbon economy. The Scottish Government has taken on this mantle to promote the most efficient use of heat in order to reap the benefits of a low carbon economy - non­renewables as well as renewable. It is only by embracing both forms of heat in the short-term that we can make the ultimate transition towards decarbonisation of the heat network, envisaged by 2050.

Hence we will shortly publish the results of a study by AEA Technology into the potential to recover "waste" heat from fossil fuel power stations in Scotland and will be considering the policy implications.

Building on the results of the AEA study into the recovery of heat from power generation in Scotland, district heating has been placed at the centre of our strategy for deploying heat, including renewable heat. Ministers are committed to establishing an Expert Commission on the Delivery of District Heating that will advise on the steps we need to take to ensure a major move to district heating in Scotland. Until recommendations and further financial support is established, our recently launched District Heating Loan scheme will be an important resource for taking this forward.

Renewable heat will play an important role in communities and there is a commitment to encourage and support Housing Associations to have greater freedom to develop renewable heat schemes within new and current developments. Local authorities will also receive support through the roll-out of the heat mapping methodology after a successful pilot exercise in The Highland Council region and we have committed funding to initiate this.

Current Deployment

• 1,696 GWh - equating to 2.8% of Scotland's current renewable heat target. This is mainly made up of biomass as illustrated in the following chart:

2010 Total Output (GWh)

Moreover this represents good progress - with a doubling of output in 2 years (as can be seen below), making the Scottish level of renewable heat twice the UK level of demand.

Moreover this represents good progress - with a doubling of output in 2 years

Planned Deployment

  • A further 69 MW of installed capacity and 487,000 MWh are estimated from large projects which are currently under construction,
  • plus around 198 MW of installed capacity and 1,017,000 MWh from large projects in planning.

If all the projects currently under construction, and 50% of those in planning came to fruition, in addition to the known micro and small to medium installations, this could bring total renewable heat output in Scotland to an estimated 2,733 GWh a year, or around 4.5% of forecast Scottish 2020 nonelectrical heat demand.

In other words, in the next two or three years, we should continue to make reasonable progress towards the 2020 target. The key will be to maintain this momentum.

Deployment Potential

As can be seen in Section 1.3, there is potential for Scotland to meet its 2020 target for renewable heat. Progress needs to be made across all scales of installation from microgeneration to large scale industrial -as can be seen from the following projection of deployment from the Renewable Heat Action Plan (2009):

Indicative Level of Heat Usage by Market Sector

Indicative Level of Heat Usage by Market Sector

Successes to Date

  • Publication of Renewable Heat Action Plan (2009), backed up by progress report in March 2011 produced by the Energy Saving Trust on behalf of Scottish Government showing that output from renewable heat sources had doubled in the past 2 years.
  • Successful heat mapping pilot in The Highland Council region. The methodology can be replicated by other local authorities which will help imbed renewable energy at the centre of local strategic planning. We have committed funding to assist in rolling out to other local authorities over the next financial year.
Highland Heat Mapping
  • Committed £2.5M funding for a district heating loan fund which has opened for expressions of interest and which will provide loans for low carbon and renewable technologies in order to overcome a range of infrastructural issues and costs of developing these projects. The loan scheme is due to open by the end of May 2011.
  • Provided funding via CARES & SRDP to support renewable heat installations
  • Supported over 60 projects through the Scottish Biomass Heat Scheme (more information in Bioenergy and Waste Routemap).
  • Published guidance for developers considering new build thermal power stations.

Challenges to Deployment

RENEWABLE HEAT
CHALLENGE

The cost of renewables

Need to ensure that subsidy available under RHI does not adversely impact on existing users, notably the wood panel sector.

The RHI will support district heating but there is no proposed uplift in the initial phase to take account of infrastructure costs. Scottish Government must assess and ensure additional necessary support is in place in order to encourage investment in renewable heat technologies.

Planning and regulation

Need to build on the excellent work produced in the Highland Heat mapping project to assist planning authorities to highlight existing and potential opportunities. There is both a challenge to upskill planners new to heat mapping and to support planning authorities in planning for heat where there is no heat mapping resource.

Developing the findings of the study into the recovery of heat from power generation in Scotland in order to overcome planning and regluation barriers in the deployment of heat. Considering policy position regarding a presumption in favour of connecting to district heating networks where one exists for certain developments.

Working in partnership with DECC and Ofgem to showcase Scottish experience and help develop UK policy.

Source sustainable fuel

Detailed heat mapping will play a crucial role in identifying existing and potential opertunities as well as proximity to fuel sources (including their capacity).

Necessary to find technical and economical way of recovering heat from large scale power generation.

More information on the sustainability of biomass can be found in the Bioenergy and Waste Routemap.

Skills

Renewable Heat Implementation Group ( RHIG) and its skills sub-group should ensure Government is fully informed of skills requirements in the renewable heat industry and identify barriers with options on how to overcome these.

Supply chain development

Heat mapping must incorporate supply chain opportunities.

More information on woodfuel supply change can be found in the Bioenergy and Waste Routemap ( Section 3.5).

Innovation /R &D

Need to build on research already undertaken into the recovery of heat from power generation.

Expert Commission on the delivery of district heating to investigate and provide recommendations on areas that need further development.

Public engagement

Engagement with industry, local authorities, housing associations and other key stakeholders is crucial in delivery of increased use of renewable heat. There is a need to work with DECC, EST, Carbon Trust and other agencies to increase awareness in renewable heat and its benefits.

Key Actions

  • Continue to engage with DECC on RHI to ensure net benefit to Scotland, including mitigation of impact on wood panel sector
  • Undertake Heat Partnership Project with DECC and Ofgem to develop a template for good practice on deployment of renewable heat.
  • Roll out heat mapping pilot to other local authorities
  • Scotland can lead the way in producing a bottom up approach to a national heat map of Scotland with the same level of detail produced in the pilot project. Funding is committed to roll out the methodology to other local authorities. This will include the upskilling of planners to integrate renewable heat into spatial policy.
  • Set up Expert Commission into development of district heating
  • The Renewable Heat Implementation Group and the assessment panel for the District Heating Loan Fund will be used as a starting point for discussions on how the Expert Commission should take its form. Once in place, the Commission will provide recommendations which will ensure a major shift to district heating in Scotland (both renewable and low carbon heat).
  • Build on results of current Study into recovery of heat from power generation in Scotland in order to promote recovery of heat from large scale power stations
  • District heating will play an important role in realising our ambitions on heat. While the study is mainly focussed on the deployment of low carbon heat, lessons learned can be transferrable to renewable heat. Ultimately the creation and extension of district heating networks will provide opportunities for an increase in renewable heat in the future. This area of work will be a priority for the new Expert Commission above.
  • Provide support for renewable heat projects through CARES and district heating loan funds
  • Financial support is essential to stimulate the market and de-risk capital investment in renewable heat projects. We will continue to seek sources of financial support for these projects and continue to recognise the impact investment in this sector can make on progress towards our renewable heat target.
  • Engage with key stakeholders to promote renewable heat and the forthcoming renewable heat incentive and renewable heat premium payment scheme
  • In order for Scotland to fully benefit from the RHI and the Premium Payment Scheme, we must ensure we engage with industry and the wider general public to raise awareness of renewable heat and the support that is available.

Supporting Actions

  • Promote RHI premium payment scheme for domestic users
  • Assess levels of investment in renewable heat through engaging with stakeholders and the renewable heat implementation group
  • Update and improve planning guidance and support to ensure renewable heat projects are supported
  • Link to wider actions on skills and supply chain opportunities
  • Engage with DECC to build on and learn from research work they are undertaking on heat mapping and heat strategy
  • Link into and learn from research projects underway. Representative from Scottish Government to act as Advisory Board Member and the Heat in the City research programme run by Edinburgh and Strathclyde Universities
  • Continue to provide support and information on renewable heat technologies through working with the Energy Saving Trust

3.5 Bioenergy and Energy from Waste

Ambition and Targets

Bioenergy and energy from waste both have an important part to play in meeting renewable energy and climate change targets, with biomass expected to make a key contribution to the delivery of the Scottish Government's target for 11 per cent of heat to come from renewable sources by 2020. In 2010 83% of renewable heat capacity, and 91% of renewable heat output, came from installations which used biomass primary combustion or biomass combined heat and power 2.

Given the multiple energy uses to which biomass can be put, the limits to supply, and the competition for that supply from other non-energy sectors, biomass policy and support need to encourage the most efficient and beneficial use of this finite resource. For that reason:

Scottish Government policy supports the deployment of biomass in heat-only or combined heat and power plants, particularly off gas-grid, and to a scale which maximises heat use and local supply.

We also need to ensure that incentivisation of biomass takes into account existing users and does not disadvantage them for the early adoption of this technology. Scotland has a significant timber processing industry, which provides much need employment in rural areas. The wood panel sector is also the major existing generator of renewable heat via biomass. We need to make sure that this sector is not put at risk by the introduction of the Renewable Heat Incentive to the detriment of the economy as well as (perversely) to the renewable heat target itself.

In terms of energy from waste, the renewable fractions of municipal and commercial wastes are eligible for support under the Renewables Obligation Scotland. However, since we want to encourage the development of more efficient technologies, such as combined heat and power, anaerobic digestion or pyrolysis / gasification, only these types of stations are eligible for Renewables Obligation Certificates.

The Scottish Government recognises the benefits of anaerobic digestion ( AD) as a renewable technology which can contribute to its targets for renewable electricity and renewable heat. Moreover it is an example of how we can close the production loop, with the food we waste going back into producing high quality fertiliser, completing the Nitrogen cycle and helping us move towards sustainable farming.

This is why we are looking at separate collections, starting with food waste to ensure the standard AD inputs facilitate the production of high quality digestate. Delivering zero waste policy and meeting future waste targets will require changes and improvements to our waste collection and treatment infrastructure.

Current Deployment

  • In 2010 Biomass primary combustion capacity in Scotland stood at 203 MW (941,000 MWh) of heat 3
  • the heat capacity of Biomass CHP plant stood at 138 MW (Output of 601,000 MWh) 4.
  • Waste treatment (energy from waste, landfill gas & anaerobic digestion) stood at 23 MW of heat capacity (74,000 MWh) 5

The following devices are examples of biomass and energy from waste plant currently operational in Scotland:

  • E.ON's Steven's Croft biomass plant at Lockerbie - 44 MWe and 6 MWth;
  • 20 MWe Biomass CHP plant at UPM's Caledonian paper mill provides half the mill's electricity needs and all of its process steam requirements;
  • 8 MWeCHP unit at Balcas' pellet plant in Invergordon which provides the renewable heat for the pellet manufacturing process, as well supplying 5 MWe to the grid;
  • Scottish Water Horizons AD plant at Deerdykes - 1 MWe and 1.1 MWth;
  • John & Andrew Rennie's 450 kWeAD plant at Gask Farm, Turriff;
  • The Earthtech/Linde AD plant on the Isle of Lewis;
  • Shetland Heat & Power provides heat through a district heating network to over 1000 local properties - including homes, community centres, schools, churches and commercial buildings. The heat used in the scheme is generated at a Waste to Energy plant located on the outskirts of Lerwick; and
  • DERL's energy from waste plant in Dundee.

Deployment Pipeline

The following plant are in the deployment pipeline:

  • RWEnpower Cogen's 50 MWCHP plant at Tullis Russell's papermill in Markinch is scheduled for operation in late 2012;
  • 15 MWe Charlesfield biomass CHP and pelletising plant in Newton St Boswells, with potential to create a local heat suppy network; and
  • NEDL projects at Lochilphead and Dunoon.

Deployment Potential

The biomass resource available will be an important factor in the potential for deployment. The updated Wood Fuel Task Force report indicates that there is currently around 432,000 odt of wood potentially available from all sources of wood fibre in Scotland, increasing to over 1.2 million odt by 2020. The volumes identified could make a substantial contribution to the Scottish Government's renewable heat target but clearly show that we need to make best use of this important resource.

Energy from Waste could contribute approximately 2.0 TWh of useful heat and 0.90 TWh of electricity per year (245 MWth and 112 MWe capacity) according to the Energy from Waste Potential in Scotland Report. The report also found:

  • Heat only plants could meet 6% of Scotland's existing heat needs.
  • Electricity production in energy from waste facilities could meet 8% of Scotland's existing electricity demand.
  • Combined heat and power waste treatment plants could meet 3% of Scotland's total heat and electricity demand.

Successes to Date

  • The £7 million Scottish Biomass Support Scheme ran in the financial year 2007-08 and supported 60 projects with a combined output of 20 MWth. It also helped to establish a supply chain in scotland.
  • The Scottish Biomass Heat Scheme, which has been crucial in maintaining momentum in the sector, has paid out over £2.6 million to 44 projects delivering 10 MW (thermal) of capacity, with annual CO 2 savings of over 10,000 t CO 2-equivalent
  • Recently made it easier for owners of public buildings and businesses to generate energy using technologies such as biomass boilers by introducing permitted development rights (subject to restrictions in air quality management areas).
  • Introduced Thermal Guidance and Biomass Scoping Opinion guidance for large scale plants.
  • Published report on contribution Energy from Waste could make to Scotland's energy needs.

Challenges to Deployment

BIOENERGY & ENERGY FROM WASTE
CHALLENGE

The cost of renewables

Need to ensure that market mechanisms deliver the right level of support. Current incentives driving large scale biomass electricity schemes rather than most efficient use of biomass through CHP or heat only.

Need to ensure that any new incentivation - notably the RHI - does not unfairly penalise existing users.

Planning and regulation

Need to maintain the excellent work undertaken thus far by Scottish Government on streamlining the planning and consent process for biomass and energy from waste developments. Developing joined up strategies between planning & woodfuel producers and waste streams to make best use of resources at local level in heat only applications..

Secure grid access

Restricted grid access in many of gas grid areas. Sector and stakeholders can overcome some of these issues by working in partnership, but key influence in this area lies in outcome to Project TransmiT and a more sensible approach to grid investment and charging issues. Connect and manage will play a part for smaller schemes. Not an issue for bioenergy for heat applications.

Source
sustainable fuel

Scotland has a limited domestic biomas resource. Sourcing sustainable (preferably local) fuel is essential. The Forestry Commission Scotland and the Scottish Government will continue to work on requirements for sustainability in biomass in the UK through the Department of Energy and Climate Change sustainability working group (see Section 2.5)

Skills

The Skills Investment Plan for Energy produced by Skills Development Scotland highlights up to 1,350 additional direct job opportunities in renewable heat. Additional Jobs are expected to arise in biomass fuel supply. More jobs could potentially be created if manufacturing capacity develops in Scotland. Whilst there does not seem to be a gap in the underlying skills base, there will be a requirement for top-up skills and upskilling of the existing workforce. As such, there is a need to develop a more detailed assessment of specific skills demands.

Supply chain
development

Critical that supply chain development matches demand. Enabling long term supply contracts will be a key challenge for all forms of bioeenrgy. Key role for procurement Scotland in developing biomass procurement strategy.

Innovation /
R&D

Will need to work closely with Forestry Commission on energy forestry trials and with Crown Estate on its work looking at marine biomass.

Public engagement

Public perceptions energy from waste and bioenergy can often be negative. It will be important to keep providing factual information through sources such as usewoodfuel and zero waste Scotland and to promote succesful projects through case studies.

Key Actions

  • Review support for large scale biomass electricity only plant under the Renewables Obligation Scotland;
  • Work to influence UK Government Strategy on bioenergy to make case for small scale heat;
  • Work to ensure that existing users of biomass heat, particularly the wood panel, are not penalised by the introduction of the RHI;
  • Raise awareness of opportunities for renewable heat for businesses through supporting the Carbon Trust in encouraging take up of biomass heat, targeting Scottish companies that are high heat users, with a view to getting them to switch to renewable heat and making them aware of biomass support under RHI and through the following mechanisms:
    • Forestry Commission's Fuel good factor campaign
    • Regional biomass forums
    • Ongoing information provision and dissemination through the Usewoodfuel website and other media
    • Support for the Woodfuel Suppliers Group in Scotland
    • Working with Forestry Commission Scotland at a regional level to provide better information on local biomass resources.

Supporting Actions

  • Procurement scotland will continue to develop a National Strategy for biomass procurement;
  • We will seek in particular to expand small scale anaerobic digestion from food and farm waste by introducing separate food waste collections;
  • Work with UK Government to ensure incentives for anaerobic digestion encourage take up of the technology in Scotland, particularly on farm based AD where take up of the Feed in Tariff has been low;
  • Take forward plans to ensure that waste is pre-sorted before it can be used in energy from waste plant;
  • Support more effective harvesting to provide more material for local, small-scale biomass; and
  • The Forestry Commission Scotland and the Scottish Government will continue to work on requirements for sustainability in biomass in the UK through the Department of Energy and Climate Change sustainability working group.
  • Following the publication of the Skills Investment Plan for the Energy Sector future efforts will focus on continuing to work with key partners to take forward the key actions contained in the plan. Specific activities include:
    -Increasing sector attractiveness to young people and job changers;
    -Engaging with business to identify future skills needs;
    -Developing training provision and infrastructure to meet future need. A key element of this will be in identifying the nature and scale of anticipated skills demands and mapping the current supply of skills and qualifications within Scotland in relation to those identified demands.

3.6 Hydropower

Ambition and Targets

Scotland has a proud tradition of generating hydro electricity, and many of the projects installed in the post-war years continue to provide clean and reliable power to Scotland's homes and businesses. The combination of Scotland's location, natural resources, R&D and manufacturing capabilities, creates clear advantages for developing our hydro energy resource.

The Scottish Government recognises the valuable contribution that hydropower generation makes to Scotland's renewables targets, and is seeking to achieve a balance between hydropower development and Scotland's water environment.

Hydro accounts for a significant proportion of our existing renewable output and contributes around 10% to Scotland's total current energy generation. It has a high level of efficiency and has a high level of predictability. Hydro pump storage schemes are a commercially viable way to provide energy storage. Power can be generated when it is required so is therefore very predictable and can be used as a powerful grid management tool.

Most output is produced by large scale hydro schemes. There are, however, an increasing number of proposals for small run of river hydro projects and these projects, together with the continuing refurbishment of the large hydro schemes will ensure that hydro will continue to play its part in Scotland's renewable energy mix and help tackle climate change and contribute to economic growth.

A recent update on the 2008 Hydro Resource Study estimates there could be 1.2 GW of financially viable new hydro capacity across over 7,000 schemes, and highlights the jobs potential from these developments. However, we will need to ensure not only the financial but environmental viability of the schemes.

Micro/Pico hydro schemes can bring economic benefits to communities through incentives including the FIT. Many of the suitable hydro sites in Scotland are in environmentally sensitive areas. However, these schemes can be housed underground or in existing buildings, with little or no visible impact on the landscape or harm the environment.

Current Deployment

Scotland is already home to a significant amount of hydro power over 1.4 GW, some half of current installed capacity. Scotland's Hydro sector is well established, including several large scale run of river which have been operating for several decades, although SSE has proposals for two new major pump storage schemes above the Great Glen. There are also a large number of schemes of schemes of between 100 kW and 1 MW.

Since 2007 the Scottish Government has consented 17 hydro schemes which total 43 MW. Until recently the Scottish Government consented all onshore hydro scheme applications of 1 MW and above. This has changed recently (as of 1 June 2011) and now applications for schemes smaller than 50 MW will be determined by Planning Authorities. The Scottish Government will still determine applications above this.

Below is a table to show Hydro schemes that were licensed by SEPA in 2010.

Hydro Schemes Licensed by SEPA in 2010
Installed Capacity ( kW)Number

<100

37

100

4

>100

18

(of which >2 MW)

(2)

Deployment Potential

The Employment Potential of Scotland's Hydro Resource 2010 study suggests that up to a further 1200 MW of economically-viable, small-scale hydro could be exploited in Scotland. http://www.scotland.gov.uk/Publications/2010/01/19141527/0.

New hydro schemes are likely to be mainly small and micro-scale. Although there maybe an increase in medium sized schemes due to the raising of the S36 threshold.

Successes to Date

  • The 1 MW threshold for hydropower over which applications are dealt with under Section 36 of the Electricity Act was identified as a barrier. SG consulted on proposals to transfer the determination of all onshore hydro scheme applications of 50 MW or less to Planning Authorities. The move brings Scotland in line with England and Wales and seeks to encourage developers to size their scheme appropriately. It also allows planning authorities to recover more of their cost from application fees than they are currently able to. The raising of the threshold was laid in Parliament on 21 February 2011 and will revoke to the previous level of consent to Scottish Ministers to 50 MW. This will take effect from 1 June 2011 onwards.
  • To help support the sector to deal with the challenges of protecting the environment when developing new schemes a couple of publications were created - Run of River guidance by SEPA and hydro guidance from SNH.
  • Two studies were commissioned by FREDS to provide an assessment of the potential for development of hydropower resources within Scotland. The first was The Scottish Hydropower Study which was published in 2008. Following on from the study, further research into potential job creation from micro-hydro schemes was published in 2010 in the Employment Potential of Scotland's Hydro Resource study.

Challenges to Deployment

Hydro power is facing challenges from regulation, securing finance and access to the grid.

CHALLENGE

The cost of renewables

Access to finance has become an issue due to uncertaintycaused by the review of FITS. The Scottish Government, in its previous term, wrote to the Energy Minister to say that they shares the UK Government's concerns that certain developments in the industry may push FITs off trajectory. It also highlighted that we are keen to avoid the confusion and lack of guidance that was prevalent when FITs were introduced and requested that officials at DECC work in partnership with SG officials.

Reform of the Transmission Network Use of System ( TNUoS)charging framework to encourage investment, through Project Transmit.

The sector needs stability and security so that investment can be secured. The uncertainty of the FITs review means that investment has stalled until the outcome is announced.

Planning and regulation

There is a challenge in providing more spatial guidance at local level to indicate where there are the greatest opportunities for
hydro and to handle cumulative impacts.

There is scope to improve co-ordination between the water licensing and planning consents processes, following the suggested processes outlined in the online renewables planning advice for hydro schemes .

Planning authorities may need support in handling hydro applications at the increased scale up to 50 MW.

A review is being conducted of the UK Technical Advisory Group ( UKTAG) environmental standards to ensure that these standards are representative of the status of Scotland's rivers and do not work in conflict with the Scottish Government's policy on renewable energy.

Secure grid access

The transmission system is becoming increasing constrained in the North of Scotland. This situation will not change until several major reinforcements to the transmission system are completed - including Beauly-Denny. Distribution network operators are obliged to offer a connection date despite the fact that, following a Statement of Works undertaken by National Grid, reinforcement works on the transmission system may significantly impact the original connection date. This is causing delays in many projects.

This is not a devolved matter and is currently subject to review by the Department of Energy and Climate Change and the regulator Ofgem. While the Scottish Government cannot control the outcome of this review, it will continue to lobby for a fairer charging regime.

This is not a devolved matter and is currently subject to review by the Department of Energy and Climate Change and the regulator Ofgem. While the Scottish Government cannot control the outcome of this review, it will continue to lobby for a fairer charging regime.

Key Actions

  • A rapid expansion of renewable energy production by Scottish Water - ( SNP manifesto commitment). Renewable energy projects developed on public land are leaders in the provision of community benefit.
  • Continue engagement with DECC officials on the FIT review to address any Scottish issues to ensure that the outcome is beneficial for Scotland.
  • Continue engagement with Ofgem/National Grid and transmission operators on barriers to access through Project Transmit.

3.7 Microgeneration

Individual households use more than a third of the electricity and more than half of the heat consumed in Scotland. Rising fuel costs are driving more households into fuel poverty. Microgeneration can enable households and other small-scale users to reduce their fuel costs and carbon emissions by generating their own renewable energy.

Microgeneration includes a range of technologies: biomass; biofuels; fuel cells; photovoltaics; water (including waves and tides); wind; solar power; geothermal sources; combined heat and power systems; and air, covering devices with a generation capacity of the device no greater than 50 kilowatts ( kWe) for electricity generation and no greater than 45 kilowatts (45 kWth) for heat.

Ambition and Targets

Our ambition is to see more householders, public sector organisations and businesses generating their own energy from micro-renewables, moving the technology from a niche market to the mainstream.

Microgeneration is integrally linked to energy efficiency as part of our overall policy to move towards a low carbon economy. Microgeneration technologies are most effective in terms of cost effectiveness, carbon emissions reduction and reduced energy bills only when combined with energy efficiency measures, such as insulation. By far the most popular micro-renewable technologies currently in use in Scotland are heat-based - over 90% of current deployment. The heat section of this Routemap also reflects the need to link to microgeneration and energy efficiency.

In order to move towards a low carbon economy, Scotland needs to capitalise on the opportunities offered by Feed in Tariffs, Renewable Heat Incentives and Green Deal. We have made progress, but we must do better. We need to see a step change in our deployment from the current position of 60 MW.

Alongside that, Scotland must also deliver a highly skilled workforce capable of reacting to the increased demand through the up-skilling or re-skilling of an already talented workforce. Consumers need to have confidence in the ability of the sector to deliver cost-effective, well designed installations and in the reliability of information and advice on the available technology choices.

By the end of 2011, we will produce a Microgeneration Strategy for Scotland.

We think this is necessary given the wider policy in which microgeneration operates. It will complement the Renewables Routemap, but provide more details on how we will support microgeneration sector towards 2020.

Successes to Date

  • 1,322 microgeneration installations in Scotland have benefitted in the first year of the Feed-in-Tariff delivering 7.5 MW (electricity) of capacity, following on from over 2,500 microenewables installations, mainly for heat, previously grant aided by SCHRI and Energy Savings Scotland householder grants.
  • Permitted development rights introduced for most micro renewables on domestic properties in 2009 and 2010. This lifted or reduced the requirements for planning permission for most domestic microgeneration technologies.
  • A range of permitted development rights for micro renewables on non-domestic properties was introduced this year.
  • Sponsored the Construction Licensing Executive ( CLE) to become a Scotland-based certification body for the Microgeneration Certification Scheme ( MCS).
  • Energy Saving Trust's highly successful Solar Thermal hot spot campaign was run in partnership with Fife Council and EcoWarm Heating Ltd. This resulted in 41 Solar Water heating systems being installed in Fife.

Current Deployment

Current deployment is estimated to be around 60 MW. This is made up 7 MW* electricity and 53 MW** heat.

(*Source: OFGEMFIT register, **Source: Renewable Heat in Scotland, 2010, Report by Energy Saving Trust)

Microgeneration in Scotland

Deployment Potential

It is difficult to estimate potential deployment. In the coming years, the data provided via the FIT and the proposed RHI register will provide a data source on which to base estimates.

Challenges to Deployment

MICROGENERATION
CHALLENGE

The cost of renewables

Initial capital costs are high, offset by fuel cost savings and financial incentives. Consumers need clear and reliable information on costs, savings and payback to have the confidence to invest in microgeneration.

Planning and regulation

Permitted development rights have made uptake of microgeneration more straightforward. Concerns over noise for micro-turbines and heat pumps need to be addressed before permitted development rights can be extended and widespread deployment of small biomass heating systems in urban areas may negatively impact on local authority air quality targets.

Secure grid access

Can grid accommodate influx of small scale microgen technology exporting onto grid?

Skills

All installers of microgen technology must be fully accredited through MCS. A lack of accredited installers to meet demand may be a barrier to uptake. CLE now agreed as accreditation body in Scotland by UKAS (installers of technologies above 50 kWe and 45 kWth do not, as yet, need to be accredited).

Public engagement

Consumers are faced with a varied technology choice, not all of which will be appropriate for their circumstances. Poor choices may result in increased energy bills or system failures, reducing consumer confidence. Clear signposting and awareness raising of information avaialble from EST, CT and other bodies such as SBSA is essential.

Others

Microgeneration technology can help address fuel poverty in the most vulnerable section of society. Adoption of microgeneration needs to be available to all. Links back to uptake costs and general consumer awareness. Landlords in both the public and private rented sector can benefit from FITS and RHI and greater awareness of microgeneration opportunities required.

Opportunity to build on Scotland's record of success in developing microgeneration in schools as part of wider activity on climate change reduction - for instance over 98% of local authority schools now participating in the international Eco-Schools programme, and School Estate Strategy commits national and local government to creating a more sustainable school estate which contributes to meeting the Government's climate change targets.

Key Actions

  • Publish a Microgeneration Strategy.
  • Maximise take-up of RHI premium payments scheme and FIT in Scotland.
  • Provide online planning advice for renewable technologies.
  • Equip Scots with Green skills by delivering 500 dedicated apprenticeships for energy and low carbon and build capacity with networks of providers through regional skills academies.
  • Increase number of accredited installers in Scotland, with accreditation now available in Scotland through CLE.
  • Strengthen links between energy efficiency and microgeneration.
  • Signpost available information on costs, incentives and regulations.

3.8 Emerging Technologies and Energy Storage

Introduction

This section refers to both emerging and existing technologies which have yet to make a substantial impact on the energy landscape in Scotland but which have the potential to play a significant role in our energy future.

We have identified Energy Storage, Hydrogen and Fuel Cells, and Geothermal Energy as being particularly important for Scotland.

However, we anticipate that other technologies will emerge over time, and that a clearer picture will develop as to which options are best suited to complement and enhance the growth of renewable and low carbon energy in Scotland.

Energy Storage

To achieve our target of meeting the equivalent of 100% of Scotland's electricity demand from renewables by 2020 we will need to increase the deployment of energy storage systems alongside interconnection and demand-side response. Energy storage can help to overcome many of the challenges associated with accommodating high levels of intermittent generation from renewable sources onto the grid, and can allow us to harness our renewable resources more efficiently. In addition, small-scale decentralised energy storage offers a number of potential benefits, such as avoiding or deferring the need for grid upgrades.

There are a wide range of energy storage options, at varying stages of development. AEA's Energy Storage and Management Study for the Scottish Government, published in October 2010, summarised the various technologies and assessed their applicability to Scotland (available online at http://www.scotland.gov.uk/Publications/2010/10/28091356/0). Currently Scotland has two hydro pumped storage schemes, and a number of small scale hydrogen-based energy storage systems.

Key Actions

  • The Scottish Government will continue to press for incentivisation of storage to be a key consideration in the design of the Capacity Mechanism proposed under the UK Government's Electricity Market Reform, given the important role it can play in addressing capacity constraints.
  • Intelligence gathering, e.g. modelling and analysis to understand characteristics of peak flows; exploration of the potential for heat storage; exploration of the support needed for small decentralised storage.
  • Exploration of funding options for energy storage demonstration projects.

Hydrogen and Fuel Cells

As an energy carrier, hydrogen could play a significant role in Scotland's energy landscape. Potential applications include hydrogen storage to increase the effectiveness and penetration of intermittent renewable generation, and as a fuel for sustainable transport. While hydrogen can be produced from a range of different sources, Scotland's vast renewable energy resource and the Scottish Government's ambitious renewables targets make the production and use of 'green hydrogen' a strong proposition.

Fuel cells convert a fuel source such as hydrogen into electricity, heat and water. There are a number of different types of fuel cell, offering highly efficient fuel conversion and the potential for low or zero carbon emission energy across a range of applications including stationary power generation, vehicles, and portable power systems, such as consumer electronics.

Scotland has a dynamic hydrogen and fuel cell sector, which includes world-leading R&D and academic expertise, as well as a small number of market leaders operating commercially. The sector has a strong and coherent voice in the form of the Scottish Hydrogen and Fuel Cell Association ( SHFCA). The Scottish Government and its agencies will continue to work with industry and relevant partners to build on the sector's achievements to date, some of which are outlined below.

Successes to Date

  • Hydrogen Office A state-of-the-art demonstration and research facility in Methil, which is supporting the development of hydrogen and fuel cells, and showcasing the role energy storage can play in Scotland.
  • PURE Energy Centre A pioneering project on Unst which demonstrates how energy needs can be met through a combination of renewables and hydrogen technology. The first community owned project of its kind in the world, it also included an electric/fuel cell hybrid car. PURE provides a wide range of renewable energy services, including engineering consultancy, project management, R&D, and training courses.
  • Lews Castle College / Hydrogen Lab - a teaching and research Hydrogen Lab with 80 fuel cells at a range of scales. By September 2011, a second hydrogen lab will be operational. It operates alongside a major facility in the Outer Hebrides to demonstrate the benefits of small scale renewables and the workings of the technology. A range of devices has been gathered in a compact area called the Renewable Energy Croft, which includes six wind turbines, four PV arrays, a ground source heat pump, and a range of solar collectors. A micro-hydro scheme is under construction on the stream running through the facility. Load generated on the croft is balanced by a large battery bank, hydrogen storage, and, as a last resort, a backup biodiesel generator which uses fuel processed on site. The project has demonstrated that it is possible to deliver a reliable supply from variable sources of energy.
  • H2seed - The Hebridean Hydrogen Seed ( H2seed) project created a renewable hydrogen production, storage and distribution facility at Creed Enterprise Park just outside Stornoway. The H2seed Facility produces renewable, or "green", hydrogen by water electrolysis using excess power available from the bio-gas combined heat and power unit at the Comhairle's Integrated Waste Management Facility; the bio-gas is produced by anaerobic digestion of the organic matter contained in municipal waste. The hydrogen is compressed and stored in readiness for dispensing. Between June and August 2010 the Facility supplied renewable hydrogen to Royal Mail Group's trial of a hydrogen Ford Transit delivery van operating on regular delivery routes served by the Stornoway Delivery Office. During the six week trial the H2seed Facility performed 24 successful refuelling operations supplying a total of 71 kg of hydrogen as the vehicle clocked up 723 miles operation using hydrogen.
  • H2Growth - The project aims to demonstrate hydrogen applications in a wider range of domestic and industrial contexts including transport and heat and power generation. The project will establish hydrogen fuel cell electric vehicles as pool vehicles for Comhairle nan Eilean Siar staff and establish a low carbon vehicle workshop facility at Lews Castle College to provide local training opportunities to support the regional deployment of battery electric and fuel cell electric vehicles. The project will continue the development of the H2seed Facility and install a hydrogen fuel cell system to increase the supply of renewable electricity to the Comhairle's Integrated Waste Management Facility.
  • Logan Energy A fuel cell systems integrator with its HQ in Edinburgh, which has delivered a large number of commercial fuel cell projects worldwide, including a system which provides electrical energy, heat and cooling for Transport for London's Palestra building.

Key Actions

  • Raise awareness of the benefits of hydrogen and fuel cells; demonstrate how the application of these technologies will complement and enhance the growth of Scotland's renewables sector.
  • Work with industry and regulators to overcome the barriers to commercial deployment in Scotland.
  • Explore funding opportunities to ensure Scotland plays a leading role in the emerging European market.
  • Engagement with stakeholders to explore existing and emerging hydrogen transport technology and capacity to deliver emissions reduction through the use of renewables.
  • Establish exemplar projects in appropriate locations to gather data to inform H2 infrastructure development.

Geothermal

Deep geothermal energy may represent a substantial and almost entirely untapped resource in Scotland. In particular, it could help realise our ambitions on renewable heat and given that it is naturally aligned with district heating and heat networks, there is the potential to improve fuel security and combat fuel poverty in deprived areas. Deep geothermal could also significantly contribute to our renewable electricity targets. In other policy areas, there is scope to regenerate brownfield sites, particularly disused mining sites, and there are obvious economic and job creation opportunities.

We recognise that commercial interest will depend upon a licensing framework being put in place (to protect exploration); clarity in planning; and high-level mapping of potential, and we are working towards ensuring all of these requirements are met:

  • We are actively exploring the scope to license extraction in Scotland, including the demarcation of reserved/devolved responsibilities.
  • We are also responding to the call for clarity in planning by including a new section on deep geothermal energy in our revised online planning guidance on renewables.
  • Further research is still required to gain greater clarity on Scotland's geothermal potential and we will be commissioning a research programme in order to identify the next steps necessary in order to take forward the commercial exploitation of deep geothermal heat.

This is in line with recommendations set out by the International Energy Agency in their latest Technology Roadmap on Geothermal Heat and Power, where they called for national governments to step up research and development of geothermal energy if the technology is to become commercially viable.

Successes to Date

  • Shettleston, Glasgow: Residents in the Glenalmond Street estate in Shettleston, a traditional inner-city area in Glasgow's East End, are utilising geothermal heat in their homes. A borehole of 100 metres depth is used to extract water at 12°C from flooded coal mine workings. The water is increased to 55°C using a heat pump and circulated to 16 newly built homes. The scheme has been successfully operating since 1999.
  • Planning guidance: Web based renewables advice for planners was recently produced and now includes a section on deep geothermal energy. The advice will be regularly updated. ( http://www.scotland.gov.uk/Topics/Built­environment/planning/National-Planning­Policy/themes/renewables/Deepgeothermal)

Key Action

The Scottish Government will commission a research programme to identify the next steps that are necessary to take forward the commercial exploitation of deep geothermal heat (including the scope for licensing).

3.9 Community Renewables

Ambition and Targets

We wish to maximise the benefits for communities from renewables and to transform the level of opportunity for local ownership of energy. Our ambition is for all Scottish communities to share in the rich rewards of our next energy revolution.

Scotland is already leading the way across the UK in how it supports local ownership of renewable energy projects which provide wider community benefits.

We can achieve:
a new target of 500 MW community and locally-owned renewable energy by 2020.

To reach this challenging target will require concerted action from Government and industry, building on established policy.

Over the last year we have:

  • Revamped our CARES grant scheme, to put in place a more sustainable financial model by offering loans in place of grants. We will learn from this to engage with investors to establish a new Scottish Green Equity Fund for communities.
  • Led by example on how we maximise community benefit opportunities from renewable projects being developed on the public estate. Achieved a leading edge community benefit rate of £5,000/ MW per year. We will continue to push industry to offer these rates.
  • Led by example by making it a requirement of our loan scheme to have in place a binding legal agreement on community benefit, payments to begin when a project becomes operational, and continue for a period of 20 years.
  • Consulted on how development of renewables and low carbon energy can be supported ( http://www.scotland.gov.uk/Publications/2010/11/26094907/0).

With the introduction of the Feed-in Tariff scheme in April 2010, we have seen a significant increase in interest from communities wishing to develop their own renewable projects, but there is still no "one size fits all model" for engagement and it is not for Government to tell communities what is right for them. Our role is to work with all parties to deliver a system that is simpler and which encourages the growth of the sector.

What we do need to ensure however is that there is clarity and transparency for communities seeking to derive benefits from commercial schemes. Our consultation above set out options to improve transparency, including setting up a public register for commercial community benefit payments and looking at the scope to include planning guidance on community benefits rates and methods, without subverting wider planning principles. We will follow up this consultation as a priority.

Current Deployment

There is no official record which captures all community renewables projects installed in Scotland, but it is clear that most community-owned schemes to date have been mostly very small scale:

  • The FIT register, operated by Ofgem, records new community electricity projects in Scotland from 2010 as 1183.338 kW, mainly wind, as illustrated in the following pie chart:
FIT capacity (kW)' Communities
  • The Scottish Government's Community and Renewable Energy Scheme ( CARES) has assisted 105 electricity generating projects over the last 2 years which will result in an installed capacity of 53 MW. The wider and social impact of these projects is estimated to generate on average £2M over 20 years to local communities.

The wider geographical spread of projects established over the past decade has been informally mapped (see following page) by Community Energy Scotland ( CES), a charity that has helped to deliver support to community groups over a number of years. CES have identified 800 community-owned projects.

The vast majority of these projects are very small scale heat schemes, located in off gas grid areas, and designed to mitigate fuel poverty for community-operated facilities such as village halls Innovative deployment of resources include "wind to heat" designs in Shetland, exploiting high wind capacity factors, and overcoming lack of local resource for other forms of heat such as biomass.

Overall the historical rationale for such community installations has been to go green and save money and carbon. With the introduction of the FITS and the forthcoming Renewable Heat Incentive, the opportunity for local communities to make money, as well as to go green and save carbon is being keenly grasped, with the prospect of huge benefits for local regeneration. The Scottish Government's Climate Challenge Fund has helped to create a pool of communities ready to exploit this opportunity to local benefit.

All Community Energy Projects in Scotland

Deployment Potential

A report carried out for the Scottish Government by the Scottish Agricultural College and Community Energy Scotland in 2010 suggests that if risks could be reduced for the pre-planning stage of renewables projects proposed by communities and the rural sector, then there may be potential to provide up to 900 MW of renewable electricity and around 80 MW of renewable heat over a period of 5 years. Such scale of development would require a structured approach by planning officers to mitigate any potential issues around cumulative impact.

Link to Report: http://www.scotland.gov.uk/Publications/2010/10/01105500/0

Deployment Pipeline

As highlighted above, most of the community renewables schemes installed to date are very small scale heat based projects, but this should not be taken as an indication of deployment trends, given the transformative potential offered by FITS and RHI.

Work is in hand to construct a database to provide a clear baseline for development of locally owned energy schemes in Scotland. Community Energy Scotland estimate that there is potential for about 180 MW installed capacity of community owned renewables schemes currently under different stages of development.

Successes to Date

  • Launched a £7.75 million Loan Fund for communities, focusing on pre-planning costs of developing renewable projects that will maximise local ownership of energy and secure wider community benefits. Over 280 expressions of interest have been received to date.
  • Forestry Commission Scotland, leading the way on the public estate. Achieved a leading edge community benefit of £5,000/ MW per year. Local communities also given opportunity to invest in scheme.
  • Published a Community Renewables Toolkit to help communities develop and own renewables projects to secure maximum benefit.

Challenges to Deployment

CHALLENGE

The cost of renewables

To put in place a long term, sustainable funding mechanism to address pre-planning risk and any market failure in terms of equity funding post-planning.

Secure grid access

To ensure any barriers to grid access are removed.

Skills

Individual communites' capacity to develop renewable projects is varied across Scotland. Important to ensure that we do not create a environment where commuities are either renewable rich or poor. Through CRIG and other government means important to address the needs of all communites across Scotland to engage in renewables.

Public engagement

Community renewables cover a wide spectrum of interests; the challenge will be to enusre that all support is integrated and streamlined to ensure a simpler system for all.

Planning

Challenge around maintaining clear advice for planning authorities in respect of community renewables / community benefit ( SPP support for community renewables but community benefit not normally a material consideration (unless it meeets the tests set out in Circular 1/2010 Planning Agreements).

Challenge of addresing potential cumulative impact issues arising from increased volume of community-scale schemes.

Key Actions

  • Secure the establishment of a new Scottish Green Equity Fund for Communities. In order to achieve our target of 500 MW of community owned electricity by 2020, we will identify a long term funding mechanism which will give communities the certainty and confidence to take forward projects. We will learn from the CARES loan fund in progressing this action.
  • Deliver a simpler system for developers and communities. We recently consulted on how the development of renewable and low-carbon energy can be supported, while ensuring that Scotland and its local communities enjoy long-term returns from the assets on their door steps. Key to that will be to deliver a simpler system.
  • Ensure renewable projects developed on the public land are leaders in the provision of community benefit. Forestry Commission Scotland is leading the way on the public estate. Achieved leading edge community benefits of £5,000/ MW per year. We will use this as a benchmark for other developments on the public estate and to push industry to offer this rate.
  • Develop an agri-renewables strategy to ensure that agriculture businesses are able to benefit from the renewables revolution and simplify the planning process to help achieve this. The Scottish Government will also consider the creation of local energy co-operatives.