Chapter 1: Current Position
1.1. Net Zero: Legislative Requirement and Targets
1.1.1. The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 commits Scotland to achieving net zero greenhouse gas emissions by 2045 at the latest, and also sets two interim targets to reduce emissions by 75% by 2030 and by 90% by 2040. Meeting these commitments and targets will require decisive and meaningful action over the next 12 months, across all sectors.
1.1.2. The Climate Change Committee (CCC) released its Scotland 2020 Progress Report, which further emphasised that Scotland cannot deliver our net zero targets through devolved policy alone and will require clear and supportive policy from both UK and Scottish Governments.
1.1.3. Following the recommendations set out in the CCC's, 'Net Zero: The UK's Contribution to Stopping Global Warming', published in May 2019, the Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 was passed by Scottish Parliament in September of the same year. This committed Scotland to achieving net zero greenhouse gas emissions by 2045 at the latest, and also sets two interim targets to reduce emissions by 75% by 2030 and by 90% by 2040.
1.2. Current Deployment
1.2.1. The Scottish Government has had a long-standing target to generate the equivalent of 100% of gross Scottish electricity consumption from renewable sources by 2020, with provisional figures showing that Scotland reached 95.9% in 2020. This target, together with our record of strong support for renewables using the powers of legislation available to us over the past two decades, exemplifies our support for onshore wind and belief in its effectiveness.
1.2.2. We must now go further and faster than before. We expect the next decade to see a substantial increase in demand for electricity to support net zero delivery across all sectors, including heat, transport and industrial processes. Some estimates from the CCC suggest that we could expect a doubling in electricity demand. This will undoubtedly require a substantial increase in installed capacity across all renewable technologies.
1.2.3. There is currently 8.4GW of installed onshore capacity in Scotland, providing 19.5GWh of our total electricity generation in 2020. Scotland hosts the majority of operational onshore wind capacity in the UK, and our aim is to maintain the supportive policy and regulatory framework which will enable us to increase that deployment still further.
1.3.1. Preparation of Scotland's fourth National Planning Framework (NPF4) is currently underway. NPF4 will incorporate Scottish Planning Policy (SPP) which contains detailed national policy on a number of planning topics, meaning that for the first time, spatial and thematic planning policies will be addressed in one place.
1.3.2. NPF4 will have the status of the development plan for planning purposes. This is a change to the current position, and will mean that its policies will have a stronger role in informing day to day decision making.
1.3.3. We will shortly lay a draft NPF4 in the Scottish Parliament, and will carry out extensive public consultation at the same time. Further information and updates on progress towards publication of a draft NPF4 can be found online via Transforming Planning webpage. We anticipate producing a final version of NPF4 for approval and adoption around spring 2022.
1.4. Community Benefit and Shared Ownership
1.4.1. The Scottish Government puts communities front and centre when it comes to the development of renewable projects in Scotland – an approach which has led the way across the UK.
1.4.2. In collaboration with renewable energy developers and local communities, in 2014, the Scottish Government published Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments and Shared Ownership of Onshore Renewable Energy Developments. These principles, which were revised in May 2019, have been widely adopted across the renewables industry, providing a benchmark for the sector.
1.4.3. In our revised Good Practice guidance, we continue to promote the provision of community benefits at a national level equivalent to £5,000 per installed megawatt per annum, index linked for the operational lifetime of the project. We also continue to encourage the renewables industry to consider, explore and offer shared ownership opportunities as standard on all new renewable energy projects including repowering and extensions to existing projects.
1.4.4. Community benefits and the benefits flowing from shared ownership of a renewable energy development can help create a real and lasting legacy for Scotland's local communities. As at April 2021, the Community Benefits Register shows that over £22 million had been paid out in community benefits over the past year. Our ambition has been for half of all newly consented renewable energy projects to have an element of shared ownership by 2020.
1.4.5. A recent report from the Energy Saving Trust shows that, as at end December 2020, 115 projects were under discussion for shared ownership, representing 511MW of the 914MW of community and locally owned renewable energy capacity in different stages of development.
1.5. Deployment: Financial Mechanisms
1.5.1. For the past few years, Scotland's onshore wind industry has proved capable of delivering wind farms using alternative mechanisms, including the use of Power Purchase Agreements (PPAs), merchant projects and the use of private finance. However, the Scottish Government has long argued that the investment cost and risk facing many of the projects and capacity which we still need to come forward requires a revenue stabilisation mechanism.
1.5.2. The Scottish Government has welcomed the proposed reintroduction of established technologies including onshore wind to "Pot 1" of the Contracts for Difference (CfD) auction process, although the details underlying this process, and its ability to support the level of deployment necessary, are still to be confirmed. This is discussed in further detail at Chapter 3: Technical Barriers to Deployment and Reserved Matters.
1.5.3. We believe that access to a wide range of financial mechanisms will be necessary to support onshore wind in Scotland, with sufficient access to mechanisms which support a range of development sizes.
1.5.4. The emergence of PPAs has provided a viable alternative for many developers, in addition to giving organisations with a base in Scotland an avenue through which to fulfil their renewable electricity corporate and social responsibilities. This use of an innovative financial solution to achieve mutual benefits across sectors, to support the transition to a net zero economy, aligns well with Scottish Government ambitions.
Current Position - Consultation Questions:
1. Does this chapter provide a fair reflection of the current situation faced by Scotland's onshore wind industry?
2. How can the maximum number of developments be enabled to build-out without finance acting as a barrier?
3. Can more be done to support the use of PPAs/Private Sector Finance? Is there a need for more policy signals from SG, and/or UKG, to provide investment security/surety?
4. This section also underlines the Scottish Government's strong commitment to the role of community energy, and to community benefit and shared ownership. In what ways can we maximise the benefits of these policies as onshore wind development and repowering increases over the coming decade?
5. What more can be done to ensure that financial mechanisms are available to support development at differing scales?