Chapter 2: Barriers to Deployment
35. There are a number of barriers to the deployment of offshore wind in Scotland, ranging from technological and administrative to market and regulatory. Our consultation looked for views on how to tackle these, in order to maximise deployment in Scottish waters.
36. Delivering a green recovery and achieving our net zero emission goals will mean that we must find – and implement at reasonable cost – practical solutions to these issues. This needs to happen within timeframes that keep us on course for Scotland's 2045 and interim emissions reduction targets, and securing our 2030 target of meeting at least 50% of Scotland's total energy needs from renewable sources.
37. The Scottish Government continues to believe that a more universal and collaborative approach, capable of looking beyond individual sites and issues wherever possible, can help fully realise the potential of sustainable energy production within the 462,000km2 of waters in Scotland's Exclusive Economic Zone. However, we must seek approaches and solutions which can be delivered at an affordable cost, while protecting our natural environment and maximising low carbon generation.
38. As we face a global recession resulting from the unprecedented experience of COVID-19, and we focus on a green economic recovery, it becomes more crucial than ever that projects which contribute to the Scottish economy, that take us closer to our net zero ambitions and that give consumers access to one of the cheapest form of electricity generation at scale, must not be unnecessarily hindered.
39. We know that comparatively higher levels of transmission charging can have a profound effect on the financial viability of offshore wind projects in Scotland. Some studies have suggested that transmission tariffs have remained relatively steady, due to increases in turbine efficiency and capacity factors, as well as upgrades in cable capacity. However, the dramatic reduction in overall project costs achieved by offshore wind at the last two CfD allocation rounds places more pressure than ever on the costs attributable to the transmission assets and charges.
40. The pressure to achieve greater cost reductions is more acute in Scotland due to the higher transmission use of system (TnUOS) costs faced by generators here, as a result of their greater distance from GB's main centres of demand in the south and south east of England. Developers working or interested in Scottish waters have made clear to us their view, with evidence to support it, that TnUOS charges represent a large and increasing proportion of project revenues, and are essentially a locational signal and disincentive to which they are unable to respond. We have long regarded the system of TnUOS as unfairly hampering the competitiveness of Scottish projects and have repeatedly flagged this disparity to the UK Government as part of our discussions on the subject of the CfD review. Given that Scotland needs to achieve net zero by 2045, and the contribution this will make to the UK 2050 net zero target, it would be in the wider interest of the UK, and in the interest of consumers, for this issue to be addressed by regulators and the UK Government.
41. We have long argued that the transmission charging model was developed to deal with a different generation landscape; and that our increasingly decentralised electricity generation system, the abundance of renewable resource in Scotland, as well as the context of a climate emergency and the anticipated growth of electricity demand arising from decarbonisation, strengthen the case for urgent reform of transmission charges. The Scottish Government believes that processes such as Ofgem's Targeted Charging Review must take fully into account these kinds of effects on renewables project costs, ensuring that they do not present barriers to investment and progress in Scotland – key to us addressing the climate emergency and achieving net zero.
42. Ministers have raised these questions directly with Ofgem on a number of occasions, and will continue to do so – believing that progress in these areas is crucial to the delivery of net zero for both Scotland and the UK. In order to maintain the pressure for action in this area, we will continue to work with developers on compiling and understanding the evidence around the potential impacts of the current approach, as well as the regulatory or technical changes and solutions which can improve matters.
43. The 2020 Committee on Climate Change (CCC) report to Parliament also called for the government to develop a strategy "to coordinate interconnectors and offshore networks for wind farms and their connections to the onshore network, and bring forward any legislation necessary to enable coordination".
44. Some movement is starting to develop on the need for a transmission infrastructure and approach which is commensurate with Scotland's, and GB's offshore wind ambitions. Ofgem's Decarbonisation Action Plan, published earlier in 2020, acknowledged the need for a co-ordinated and improved approach if we're to develop the capacity in the quantity and at the speed which will be essential to achieve net zero and decarbonise our electricity demand.
45. More recently, in June 2020, the Offshore Wind Transmission Network Review was launched. This initiative is designed to ensure that the transmission connections for offshore wind generation are delivered in the most appropriate way, considering the increased ambition for offshore wind necessary to help achieve net zero. The Scottish Government will be taking a place on the project board for this work, as it identifies and works to implement actions which will help deliver our offshore wind objectives.
46. Technological innovation will also be necessary to develop a system which reflects this decentralised and intermittent generation, and the increase in electricity demand that net zero will necessitate. This also presents opportunities for generators to contribute to the supply of ancillary and other system operability and balancing services. That's why Scottish Government has been taking steps in recent years to support these efforts. Last year, we commissioned ORE Catapult to undertake a project focused on grid and network barriers in Scotland. This project identified the constraints imposed on Scottish offshore wind deployment by existing grid infrastructure, and quantified the cost and benefits of grid upgrades – highlighting the potential for off-grid applications for Scottish offshore wind in general, and for floating wind in particular. It also mapped future leasing areas to suitable grid connections and quantified grid constraints in terms of connection and transmission capacity, taking into account planned upgrades
47. The Scottish Government is aware that potential impact on radar is a significant constraint to offshore developments, and may, if unresolved, place some limits on the sector's ability to contribute to ending Scotland's contribution to global climate change. We asked for comments on this issue through our draft Offshore Wind Policy Statement, and the contributions received were strongly aligned with our established views. The Scottish Government remains focussed on the necessity of a holistic and long-term solution to this issue which reflects our current and anticipated development pipeline as well the future scale of development which net zero ambitions will necessitate.
48. The Offshore Wind Sector Deal, which was published in March 2019, builds on the UK's global leadership in offshore wind and aims to maximise the advantages for industry from the global shift to clean growth. The Scottish Government was supportive of the inclusion of the following wording and commitment in this document
"..the UK is able to meet its national security obligations, and that its radars can operate effectively as the offshore wind sector expands in the coming years. This will include working in partnership with the sector on innovation activity and development of a technical solution".
49. This is a positive move towards collaborative working, intended to deliver effective and enduring solutions. The Scottish Government remains committed to this collaboration, and to working with others to resolve these issues – for example, as part of the continuing focus this issue is given by the Aviation Management Board (AMB). As an AMB member, we will continue to ensure that Scottish interests, including radar issues which affect developments both offshore and onshore, are considered fully and in a way which fits with Scotland's timescales and ambitions.
50. The Offshore Wind Industry Council (OWIC) oversees and drives the implementation of the Sector Deal from an industry perspective, and we look forward to continuing to work with industry on this issue, including through the Joint Windfarm Mitigation Task Force, and the programmes and studies planned as part of this work.
Environmental and Planning Barriers
51. Marine Scotland's License and Operations Team (MS-LOT) is responsible for processing the necessary applications and licences for offshore wind developments in Scottish waters. MS-LOT endeavour to process these applications and licences as openly, thoroughly and efficiently as possible.
52. The Scottish Government is aware that there are several environmental and planning factors that must be considered when considering future deployment off offshore wind projects. These requirements must be addressed through a combination of strategic and project level solutions. The development of the SMP involved a detailed plan-level SEA, HRA and SEIA.
53. The SMP was informed by these assessments and accordingly, has introduced plan-level mitigation measures to alleviate the potential negative impacts of future offshore wind development. The SMP also points to project-level measures that must be employed and/or further assessments that must be completed, to better understand the possibility of negative impact(s).
54. The SEIA identified potential negative impacts on the commercial fisheries, commercial shipping, tourism and recreation sectors, and these impacts were highlighted in the consultation responses, received for draft SMP. Stakeholder feedback has led to revisions to the final SMP and POs to reduce potential impacts on these sectors. The SMP sets out the range of issues which must be considered at a project-level and further spatial-planning within each PO will be required to mitigate potential impacts and the detailed Regional Locational Guidance highlights potential interactions with other sectors.
55. The potential negative impact of offshore wind projects on key seabird species, particularly in the east and north east regions of Scotland, has been clearly highlighted as an environmental concern via the SMP, SA and recent consent decisions, as a possible barrier to future deployment of offshore wind technology. Planning and consenting decisions must be based on the best available information and Marine Scotland and its advisors recognise that the scientific uncertainties in the potential biodiversity impacts should be addressed strategically, through a combination of plan and project-level work. Plan-level mitigation measures fulfil our commitment to sustainable development and the protection of our natural heritage, limiting development in certain areas until these uncertainties, namely bird interactions with turbines or presence of key species, can be better understood.
56. The SMP sets out how these uncertainties may be addressed and removed, presenting a realistic picture for the offshore wind industry, thus creating more certainty around future consenting requirements. The formation of an Advisory Group and Ornithology Working Group to lead the process to address potential 'knowledge gaps', and the commitment to keep the SMP under iterative review, will ensure that the SMP is up-to-date and relevant. The SMP also sets out a clear understating and appreciation of the relevant regulations, and acknowledges that other routes to project consent may be available.
57. Our draft Offshore Wind Policy Statement recognised these 'knowledge gaps' in environmental assessments, and asked for specific comment on this issue. We also know that investment in research is required to address a number of consenting questions, particularly in relation to potential impacts on marine mammals, commercial fisheries and ornithological interests, which need to be examined and addressed over the coming years.
58. The importance of this to ongoing development was a clear theme in responses received, and the Advisory Group will form a key role in the Scottish Government effort to understand and tackle this issue. Paul Wheelhouse, Minister for Energy, Connectivity and the Islands, acts as co-Chair of the Scottish Offshore Wind Energy Council (SOWEC), whose "Barriers to the Deployment of Projects and Route to Market Group" is conscious that deployment is critical to delivering a net zero economy. This is why mitigating the impacts that environmental constraints have on deployment remains a key priority for SOWEC.
59. We are also closely engaged with UK Government's Offshore Wind Future Deployment Scenarios project, which will seek to define a range of plausible scenarios for offshore wind development to 2050 and will assess the extent to which deployment levels are constrained by technical, economic, environmental and system factors. The research, part funded by Crown Estate Scotland, will examine the key drivers of costs and how these relate to increased offshore wind deployment, as well as the role of floating offshore wind in overcoming spatial limitations and at what cost.
60. The Scottish Government, including Marine Scotland, is taking part in the Offshore Wind Evidence and Change Programme (OWEC – formerly known as SEAMAP), led by The Crown Estate. OWEC aims to "facilitate the sustainable and coordinated expansion of offshore wind, helping the sector to meet the UK's commitments to the low carbon energy transition whilst supporting action to secure clean, healthy, productive and biologically diverse seas".
61. The OWEC Programme held a workshop in December 2019 with stakeholders, showing a strategic, level, coordinated programme, which would deliver faster progress to net zero without compromising the marine environment. This includes a number of projects, including a UK-wide spatial study to develop theoretical scenarios for future offshore wind deployment. This will add to the evidence base which can inform policy decisions on the use of sea space to deliver on net zero commitments.
Contract for Difference (CfD) Framework and Innovation
62. Our consultation asked a specific question around market stabilisation mechanisms, and how these could promote the development of floating technology whilst still retaining value for money for the consumer. Following the consultation's publication in 2020, the UK Government published its consultation on proposed amendments to the Contracts for Difference (CfD) for Low Carbon Electricity Generation scheme.
63. Our views on the proposals as a whole are set out at paragraphs 14-16 of this document. However, our response to the consultation also included specific comments on the vital need to support innovative technologies, such as wave and tidal generation as well as floating offshore wind. The powerful arguments for using the CfD mechanism to pull these technologies closer to market, and the CfD's potential to support innovation and cost reduction in these areas, are stronger than ever in light of the pandemic and the imperative to deliver a green recovery in the context of a declared climate emergency. The Scottish Government had used its previous powers to do exactly this, through Scottish ROCs, prior to those powers being removed by UK Ministers and replaced by the UK-wide CfD. We believe that the UK Government must be willing to show greater ambition in these areas.
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