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Publication - Report

Draft climate change plan: draft third report on policies and proposals 2017-2032

Published: 19 Jan 2017
Part of:
Environment and climate change
ISBN:
9781786527431

Draft of the climate change plan, the third report on proposals and policies (RPP3) for meeting Scotland’s annual greenhouse gas emissions targets.

175 page PDF

1.9MB

175 page PDF

1.9MB

Contents
Draft climate change plan: draft third report on policies and proposals 2017-2032
7. Electricity

175 page PDF

1.9MB

7. Electricity

The electricity sector covers the generation and wider electricity system for Scotland.

7.1 Where we are now

Figure 4: Electricity generation historical source emissions

Figure 4: Electricity generation historical source emissions

7.1.1 Scotland's electricity generation mix has changed significantly since 1990 - emissions have fallen 33.6% by 2014, to 9.8 MtCO 2e.

7.1.2 The volume of Scottish electricity arising from renewable sources has increased fourfold since 2002, accounting for 42% of Scottish electricity generation in 2015.

7.1.3 Renewables generated the equivalent of 59.4% of Scotland's electricity requirements in 2015, from just over 12% in 2002 - which means we have met the interim target to deliver the equivalent 50% of Scotland's electricity needs from renewables by 2015.

7.1.4 Generation located in Scotland has successfully contributed toward Scottish and UK renewable energy targets, and a large pipeline of projects remains that could continue to provide cost-effective, carbon-free generation to the GB network.

7.1.5 Just over a third of Scotland's electricity supply came from nuclear energy in 2015. This represents an increase from 2007, when nuclear energy represented 25.7% of Scotland's electricity supply.

7.1.6 Fossil fuel powered electricity generation as a whole has decreased from 31.9% in 2013 to 22.0% in 2015. This reflects, in part, the closure of Cockenzie coal-fired power station in 2013. The closure of Longannet coal-fired power station in March 2016 is not captured in the latest emissions inventory or electricity generation statistics.

7.1.7 Scotland has also consistently been a net exporter of electricity over the past decade, exporting 29% of the electricity generated in 2015 to the rest of the UK - up from 24% in 2014.

7.1.8 Emissions from the electricity sector are entirely covered by EU ETS.

7.2 Our ambition

Figure 5: Electricity generation carbon envelopes

Figure 5: Electricity generation carbon envelopes

7.2.1 In 2030, Scotland's electricity system will be wholly decarbonised and supply a growing share of Scotland's energy needs. Alongside lighting our buildings and powering household appliances, electricity will be increasingly important as a power source for keeping our homes warm and our vehicles on the move.

7.2.2 As a result, the total volume of electricity supplied within Scotland will increase to 2032. System security is ensured through a diversity of generation technologies, enhanced system flexibility through increased storage, smart grid technology and appliances and improved interconnection.

7.2.3 Carbon Capture Storage ( CCS) is critical to the delivery of a cost-effective emissions reduction trajectories under the Plan; CCS will also act as a technology capable of playing a central role across the decarbonisation strategies of key sectors such as heat, industry and power.

7.2.4 The United Nations Inter-Governmental Panel on Climate Change ( IPCC), the International Energy Agency ( IEA) and the Committee on Climate Change have all identified Carbon Capture Storage as an essential lowest cost climate mitigation technology. The IPCC fifth assessment report states that it would cost 138% more to achieve a 2°C scenario without CCS.

7.2.5 The successful deployment of this technology, alongside the development of gas from plant material and biomass waste, has the potential to deliver an overall emissions envelope for electricity which removes carbon dioxide from the atmosphere. While technically feasible, additional analysis and testing will be required before such a technology becomes commercially viable.

7.3 Policy outcomes, policies, development milestones and proposals

Policy outcome 1: Scotland's electricity grid intensity is below 50g CO 2 per kilowatt hour, aided by enhanced flexibility mechanisms and powered by a high penetration of renewables, using a range of technologies including onshore wind, offshore wind, hydro, solar, marine and bioenergy.

There are two policies, four policy development milestones and one proposal which will contribute to the delivery of policy outcome 1.

Policies which contribute to the delivery of policy outcome 1

1) Support the future development of a wide range of renewable technologies through addressing current and future challenges, including market and wider policy barriers.

2) Promoting greater flexibility in the electricity sector, including efficient network management, demand side response and electricity storage.

Policy development milestones which contribute to the delivery of policy outcome 1

1) UK Government delivers a viable route to market for wide range of renewable technologies, including onshore wind in Scotland, and long term funding under the Levy Control Framework.

2) By 2020, at least 1 GW of renewable energy will be in local or community ownership.

3) Successful delivery of Renewable Energy Investment Fund, Community and Renewable Energy Scheme, and Low Carbon Infrastructure Transition Programme.

4) Development of UK Routemap for Flexibility and Smart energy systems.

Proposals which contribute to the delivery of policy outcome 1

1) The Scottish Energy Strategy consultation will explore proposals that increase the level of renewable electricity generation, including new targets, additional measures to support onshore wind, and exploring the role for a government-owned energy company and Scottish renewable energy bond.

Policy outcome 2: By 2030, emissions from electricity generation are negative, providing a net reduction in energy system emissions.

There is one policy, one policy development milestone and one proposal which will contribute to the delivery of policy outcome 2.

Policy which contributes to the delivery of policy outcome 2

1) Encouraging the demonstration and commercialisation of Carbon Capture and Storage ( CCS) in Scotland.

Policy development milestone which contributes to the delivery of policy outcome 2

1) UK Government announcement of CCS Strategy aligned with Scottish energy priorities.

Proposals which contribute to the delivery of policy outcome 2

1) The Scottish Energy Strategy consultation will explore proposals that increase the level of low and zero carbon electricity generation and facilitate increased flexibility in the electricity system, including the assessment of the potential for small scale CCS demonstration across a range of sources including the application of CCS within industrial processes; and the scope to combine bioenergy production and CCS - with a view to maximising the benefits for the energy system as a whole including the potential for negative emissions.

7.3.1 Full details of policies, policy development milestones and proposals are set out in the tables below. The delivery of these will be tracked through the monitoring framework (see section 6).

7.4 Wider impacts

7.4.1 There are wider benefits for consumers and businesses that arise from a smarter, more flexible energy system. The National Infrastructure Commission estimates that a 'smart' system could provide gross benefits to consumers of between £3 billion and £8 billion a year to 2030, consistent with the outcomes of other research in this area. Scottish companies and academic institutions have been active early in the smart sector, and there is the potential to secure economic benefits if the pace of change is maintained.

7.4.2 Demonstration at commercial scale of Carbon Capture and Storage could protect Scottish business against future carbon price rises and could secure economic benefit in the supply chain for knowledge transfer of technology expertise to other businesses in international markets.

7.4.3 Investment to enhance the competitiveness and productivity of Scotland's low carbon electricity generation and network sector will contribute to the Scottish Government's wider objectives of sustainable economic growth and this will ensure that highly skilled employment opportunities continue to be located in Scotland, benefiting all people across Scotland, in both urban and rural areas.

7.4. 4 Today, we are a knowledge hub for energy exploration and production, for power system engineering and a host of modern, renewable energy technologies and systems - placing Scotland at the forefront of the challenge to decarbonise the global economy. We wish to combine the mutual strengths, capacities, skills and ideas of communities, industry, and other stakeholders in shaping and delivering Scotland's future energy system.

7.4.5 The Scottish Government will maximise these co-benefits through working with our public sector partners and industrial trade associations to support the investment necessary for these improvements in the deployment of low carbon electricity supply and storage, and continue to work with the UK Government and Ofgem to promote a flexible, smart energy system that will facilitate the transition to a low carbon economy.

7.4.6 As with any industry requiring significant capital investment, there may be the potential for impacts to arise from the construction, operation and decommissioning of new renewable or low carbon developments (e.g. risks of impacts to air, soil, water, biodiversity and visual impacts to cultural heritage and landscape, displacement of other land or marine users, amongst others). These impacts are considered as part of the planning process.

7.4.7 The Scottish Government will continue to ensure that adverse impacts are considered as part of the planning process, and that developments are permitted in the appropriate locations.

7.5 Summary of policies, development milestones and proposals

Policy outcome 1: Scotland's electricity grid intensity is below 50g CO 2 per kilowatt hour, aided by enhanced flexibility mechanisms and powered by a high penetration of renewables, using a range of technologies including onshore wind, offshore wind, hydro, solar, marine and bioenergy.

Table 7-1: Policies which contribute to the delivery of policy outcome 1

Policy

EU, UK or Scottish policy

Public sector partners

Delivery route

Support the future development of a wide range of renewable technologies through addressing current and future challenges, including market and wider policy barriers

UK

Scottish

EU

Local Energy Scotland

Ofgem

Highlands and Islands Enterprise

Scottish Enterprise

Local Authorities

The feed-in-tariff, the Renewable Obligation and Contracts for Difference are UK-wide subsidy schemes that provide a route to market for renewable electricity projects.

To complement UK subsidies, the Scottish Government gives project funding for developing and piloting new technologies, including community models.

Scotland is leading the way across the UK in how it supports community and locally owned energy, providing comprehensive support, available under our Community and Renewable Energy Scheme ( CARES). The main components of CARES are local energy ownership and shared ownership both of which are facilitated through a range of interventions from start-up grants to pre and post planning loans and by bespoke advice and support free at the point of use.

Over the past four years, Renewable Energy Investment Fund ( REIF) has given vital support to most of the major projects deployed in the community energy sector in Scotland. This has entailed Scottish Enterprise working in strong partnership with the CARES contractor Local Energy Scotland, and with other partners, including Social Investment Scotland and commercial lenders, to facilitate deals and streamline diligence costs. REIF has also been vital to the development of the marine energy sector in Scotland, and has been recognised in Europe in this regard as a template for investment. To date, £59 million has been invested through REIF to support over 30 projects, levering in more than twice this amount in private investment.

Under section 36 of the Electricity Act 1989 the Scottish Government determines renewable electricity applications for projects with an installed capacity of over 50 Megawatts. Below this decisions are made by the relevant local authorities under the provision of the Town and Country Planning Act 1990.

The Scottish Government has taken a number of steps through planning policy and the Consenting process to ensure renewable technologies are sited in the correct place, minimising the impacts on environmental and residential amenities.

As offshore wind moves into deeper waters, the introduction of an enhanced level of support under the Renewable Obligation (Scotland) will assist the test and development of this technology both in the short and longer term with the deployment of floating offshore wind.

The Scottish Government's financial contribution to the Offshore Wind Accelerator ( OWA) has assisted the programme to continue to reduce the cost of offshore wind as the sector moves to its target of £100/MWh by 2020.

Wave Energy Scotland ( WES) was established at the end of 2014. WES is fully funded by Scottish Government and delivered by Highlands and Islands Enterprise ( HIE). It provides up to 100% funding for the development of innovative technologies to produce low cost, efficient and reliable components and subsystems.

There are limitations to the Scottish Government's ability to influence the future energy mix as many of the policy levers are reserved to the UK Government.

As a whole, the renewable energy sector faces a challenging future. Current uncertainties over the support for renewables under UK subsidy schemes - including Remote Island Wind, offshore wind (both floating and fixed installation) and wave and tidal under the Contracts for Difference scheme - are now jeopardising the future deployment of renewable electricity technologies in Scotland.

Moreover, the current transmission network charging arrangements (reserved to the UK Government) do not account for the reality that many of the best renewable-energy sources are far from centres of demand.

Promoting greater flexibility in the electricity sector, including efficient network management, demand side response and electricity storage

UK

Scottish

Local Energy Scotland

Ofgem

Highlands and Islands Enterprise

Scottish Enterprise

Strathclyde University

The UK Government and Ofgem currently allows for some demonstrator flexibility projects to be funded through energy bills via the Low Carbon Network Innovation Fund, including projects in Scotland.

The Scottish Government Local Energy Challenge Fund ( LECF) supports large-scale low carbon demonstrator projects which show a local energy economy approach linking energy generation to energy use. This includes projects looking to develop innovative energy distribution and storage solutions that have an overall aim of creating more local value and benefit.

The second round of LECF is being developed in partnership with the Low Carbon Infrastructure Transition Programme [36] ( LCITP). The LCITP focuses on supporting the acceleration of projects to develop investment grade business cases allowing them to secure existing streams of public and private capital finance. The LCITP is a working partnership between the Scottish Government, Scottish Enterprise, Highlands and Islands Enterprise, Scottish Futures Trust and sector specialists. This partnership is supported by the new 2014 - 2020 European Regional Development Fund [37] ( ERDF) programme.

Pumped hydro storage ( PHS) is a mature and highly flexible technology, and, as one of the few large scale means of storing energy, could play an even greater role in our future energy system. Pumped hydro storage provides 24 GigaWatt hours of storage capacity in Scotland with a further 1GW of consented PHS capacity.

The recently formed PHS Working Group has published a report into PHS that provides a clear account of the range of benefits that PHS can offer as well as a supportive policy and market framework similar to the "cap and floor" regime for interconnector. The Scottish Government will work with the UK Government and key stakeholders to realise the opportunities and overcome the barriers to deploying new pumped hydro storage capacity in Scotland.

The Scottish Government continues to support the The Power Networks Demonstration Centre ( PNDC) - a unique world-class facility designed to accelerate the adoption of new, 'smart' technologies within advanced power grids, supporting the increased accommodation of renewable energy, electric vehicles and demand side management.

The Scottish Government is working with industry to help them identify and develop viable business models to realise storage solutions, and to identify barriers for storage. The work will aim to develop solutions aimed at promoting a market environment in which storage can compete on an equal playing field, look to identify technology innovation requirements and standards to build confidence in storage solutions and identify and promote the development of a Scottish supply chain.

36 36 37

Table 7-2: Policy development milestones which contriubte to the delivery of policy outcome 1

Policy development milestone

Delivery route

UK Government delivers route to market for wide range of renewable technologies, including onshore wind in Scotland, and long term funding under the Levy Control Framework

The Scottish Government will continue to make the case to the UK Government for a stable, supportive regulatory regime, appropriate support for investment in renewable energy (including remote island wind) and to extend Levy Control Framework beyond 2020/21 to provide greater certainty to investors.

By 2020, at least 1 GW of renewable energy will be in local or community ownership

Community and Renewable Energy Scheme will support Local and Community Owned Energy projects, including through a focus on opportunities for community stakes in commercial schemes.

Successful delivery of Renewable Energy Investment Fund, Community and Renewable Energy Scheme, and Low Carbon Infrastructure Transition Programme

REIF and CARES will continue to build on their success to date and to be ready to adapt to meet emerging priorities and market changes.

By 2018, the LCITP will have supported a large number of projects to demonstrate technologies that will deliver low carbon energy solutions.

Development of UK Routemap for Flexibility and Smart energy systems

During the course of 2017, UK Government and Ofgem will develop a Routemap to a smart, flexible energy system. Scottish Government will contribute to the process and work to secure the right regulatory framework to incentivise flexibility and storage projects in Scotland.

Table 7-3: Proposals which contribute to the delivery of policy outcome 1

Proposal

Delivery route

Energy Strategy will explore the role for further ambitious proposals that will support electricity policy outcomes

The draft Scottish Energy Strategy consultation considers additional proposals to complement existing policies that support policy outcomes for the electricity sector (as well as other sectors in the Climate Change Plan). In particular these are:

  • targets for increased renewable energy generation
  • additional measures to support onshore wind, working with industry to meet the challenge of delivering onshore wind in a subsidy-free market.
  • the development of a whole-system Bioenergy action plan
  • the role of a government owned energy company to support low carbon and community energy
  • the potential for Green Energy Bonds to support ongoing renewables and low carbon development.

Policy outcome 2: By 2030, emissions from electricity generation are negative, providing a net reduction in energy system emissions.

Table 7-4: Policies which contribute to the delivery of policy outcome 2

Policy

EU, UK or Scottish policy

Public sector partners

Delivery route

Encouraging the demonstration and commercialisation of Carbon Capture and Storage ( CCS) in Scotland

Scottish

UK

Scottish Enterprise

Oil and Gas Authority

The near-term demonstration of small scale projects leading to the medium and large-scale deployment of Carbon Capture Storage ( CCS) will be critical for cost-effective decarbonisation of heat, power and industry.

However, efforts to realise the commercialisation of Carbon Capture and Storage ( CCS) in Scotland have suffered a set-back as a result of the UK Government's decision to remove £1 billion worth of funding to a ground breaking project. There is now an urgent need for strong inter-governmental collaboration and the Scottish Government will continue to press the UK Government to offer a renewed CCS strategy to mobilise CCS activity and secure a demonstrator project in Scotland.

Scotland has the existing pipeline infrastructure and CO 2 storage capacity to support the development and deployment of commercial scale CCS. If managed and planned effectively, Scotland could have strategically located CCS decarbonisation systems across the country. This could be achieved by for example:

  • ensuring Scotland's competitive advantage in CCS is maintained by protecting our legacy oil and gas infrastructure and the extensive CO 2 storage potential in our depleted oil and gas fields for repurposing for use in a future CCS system
  • supporting the transition efforts of Scottish oil and gas firms and domestic supply chain companies to deploy their expertise and skills to develop future CCS industrial opportunities
  • building on Scotland's world-renowned academic and research reputation, including the links between the Scottish Government and European projects proposed in the North Sea Basin in Norway and the Netherlands, and applying the learning from the collaborative CCS research work being developed in Guangdong Provence in China

Table 7-5: Policy development milestones which contriubte to the delivery of policy outcome 2

Policy development milestone

Delivery route

UK Government announcement of CCS Strategy aligned with Scottish energy priorities

The Scottish Government will seek to influence the UK Government's CCS strategy so that it is aligned with Scottish energy priorities; including securing a CCS demonstrator project, building on the conclusions of the Scottish and UK Government funded research into CCS the retention of existing critical infrastructure, including key oil and gas pipelines suitable for use with CCS.

Table 7-6: Proposals which contribute to the delivery of policy outcome 2

Proposal

Delivery route

Energy Strategy will explore the role for further ambitious proposals that will support electricity policy outcomes

The forthcoming draft Scottish Energy Strategy consultation considers additional proposals to complement existing policies that support policy outcomes for the electricity sector (as well as other sectors in the Climate Change Plan). In particular these are:

  • assess opportunities for small scale CCS demonstration and CO 2 utilisation projects in Scotland across a range of sources including the application of CCS within industrial processes
  • explore the scope to combine bioenergy production and CCS - with a view to maximising the benefits for the energy system as a whole

Table 7-7: Policy outcomes 1 and 2 over time

Policy outcomes 1 and 2

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

Electricity Sector carbon Intensity falls to less than 50 grams of CO 2 per kilowatt hour, and then becomes negative from 2030 onwards.

Less than 50 grams of CO 2 per kilowatt hour

Carbon intensity of Scottish electricity generation becomes negative, providing a net emissions reduction to the Scottish energy system.

7.6 Progress since RPP2

Table 7-8: Progress since RPP2

Summary of progress

RPP2 set out the ambition to have a largely decarbonised electricity system with a grid-intensity of 50g CO 2 per kilowatt hour of generation by 2030. The carbon intensity of Scottish electricity generation has reduced from 318 grams of carbon dioxide per kilowatt hour in 2010, to 196 grams of carbon dioxide per kilowatt hour in 2014. The closure of Longannet coal fired power station in 2016 will reduce this figure considerably, to close to the RPP2 target level.


Contact

Email: Kirsty Lewin

Phone: 0300 244 4000 – Central Enquiry Unit

The Scottish Government
St Andrew's House
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