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Scottish Government confirms support for industry

23 July 2012

Commenting on news that First Minister Alex Salmond has today (Monday 23 July) confirmed the level of support the Scottish Government plans to offer the onshore wind sector Dr Richard Dixon, Director of WWF Scotland said:

"The Scottish Government has shown very welcome leadership on an issue which was beginning to threaten our renewables revolution. The change in the level of support reflects the fact that the cost of onshore wind is coming down, but is set at a level that will still maintain investor confidence. Scotland's 100 per cent renewable target is a great example of how strong commitment to a low carbon economy builds confidence, cuts emissions and creates jobs. In the coming months we hope to see similar ambition to improve the energy efficiency of our homes.

"The Scottish Government also has the opportunity to show the same leadership on the issue of an emissions performance standard for polluting coal and gas plants, an area where the proposals from the UK Government risk undermining growth in renewables by giving the green light to a new dash for gas."

The First Minister also urged the UK Government to do the same and give clarity to the renewable energy industry.

Commenting on this aspect, David Nussbaum, WWF-UK’s Chief Executive, said:

"Alex Salmond has clearly lost patience with the political games and infighting in the Westminster Coalition and decided that, in Scotland, certainty for investors and relying on the evidence base will take precedent over pandering to a particular political faction favoured by the Chancellor.
"The Scottish Government has a clear and visionary goal to deliver the equivalent of 100% of Scotland's electricity from renewables by 2020, and clearly recognises that policy certainty will be good for Scotland's economy. The contrast with the Westminster government, and George Osborne's current failure to put the national interest first, could not be more stark."

NOTES TO EDITORS:

[1] Scottish Government media release

EMBARGOED: Not for publication before 0001 (BST) Monday July 23

Scottish support for renewables confirmed

First Minister urges UK Government to provide clarity for the sector First Minister Alex Salmond has today confirmed the level of support the Scottish Government plans to offer the onshore wind sector – urging the UK Government to do the same and give clarity to the renewable energy industry.

In a letter to UK Secretary of State for Energy & Climate Change Ed Davey, the First Minister has provided details of the outcome of the Renewables Obligation (RO) Review in Scotland for onshore wind.

Based on existing and published evidence, the Scottish Government intends to provide support for onshore wind generation in Scotland at a level of 0.9 Renewable Obligation Certificates (ROCs) – a reduction of ten per cent, in line with proposals in the recent consultation on this issue. The letter makes clear the Scottish Government is not aware of any evidence for any further reduction.

Confirmation of levels of support to be made available to onshore wind generators in Scotland follows an announcement that the UK’s Department for Energy and Climate Change is to delay its response to the RO review.

First Minister Alex Salmond said:

“Across Europe and around the world, governments, citizens and industry are working to develop a low carbon economy, including big increases in clean energy generation – protecting the environment and creating jobs in the process. The binding targets to which the UK and Scottish Governments have each signed up mean that renewables capacity and investment in Scotland is in the interest of communities across these islands.

“The continuing uncertainty surrounding the outcome of the Renewables Obligation reviews upon which both Governments have consulted risks undermining significantly our ability to meet our shared renewable energy aims.

“DECC’s announcement this week to delay its ROC review decision has caused real anxiety to stakeholders and developers, especially in the light of recent press reports that the UK Government is considering even lower onshore wind support levels than the 10 per cent reduction proposed in the consultation.
“This wholly unnecessary uncertainty is jeopardising future investment – the CBI spoke last Wednesday of millions of pounds of investment now at risk.

“That is why I wish to make clear that the Scottish Government intends to amend the onshore wind ROC band to 0.9 with effect from April 2013, in line with all available evidence.

“We will publish our full consultation response shortly, but the renewable industry requires and deserves a clear statement of intent.”

Background:

The full text of the letter is at the foot of this news release.

The RO creates a market for renewable power by placing an obligation on all licensed electricity suppliers to source an increasing percentage of their sales to customers from eligible renewable technologies. The RO is administered by Ofgem, who issue renewable generators with Renewable Obligation Certificates (ROCs) for each megawatt hour (MWh) of eligible renewable electricity generated. Generators can sell these ROCs to suppliers at a price which is additional to the revenue that they will receive for the related power itself. Suppliers may then use these ROCs to prove that they have met their obligation. They can do this by:

* Presenting the necessary number of ROCs to Ofgem;
* Paying a “buy-out price” to Ofgem, i.e. where they have been unable to source the required number of ROCs; or
* Through a combination of presenting ROCs and paying the buy-out price.

The Scottish Government and the Department of Energy and Climate Change have recently consulted on a review of the number of ROCs earned by various methods of renewable electricity generation. You can read the Scottish Government’s consultation on the issue here:
http://www.scotland.gov.uk/Publications/2011/10/27123530/0

The UK Government has published its draft Energy Bill, which outlines plans to replace the RO mechanism. Under these plans, the RO will close to new generation with effect from April 2017. The Scottish Government is discussing these matters closely with the UK Government, and will take decisions in due course regarding the transition of support from the RO in Scotland to the new mechanism.

The text of the First Minister’s letter is as follows:
July 2012

Dear Ed
I am writing regarding the reviews of our respective Renewables Obligation legislation.

Renewable energy is of vital importance both to Scotland and the rest of the UK. The binding targets to which we have both signed up mean that renewables capacity and investment in Scotland is in the interest of both Scotland and the UK. The continuing uncertainty surrounding the outcome of the Renewables Obligation reviews upon which we have each consulted risks undermining significantly our ability to meet our shared renewable energy aims.

DECC’s announcement this week that its ROC review decision would be delayed until during or after recess has caused real anxiety and unrest amongst stakeholders and developers, especially in the light of recent press leaks that the UK Government is considering lower onshore wind support levels than were originally proposed. This uncertainty is wholly unnecessary, is placing investment at risk – the CBI spoke on Wednesday of millions of pounds of investment now at risk – and needs to be addressed as quickly as possible.

Our Renewables Obligation consultation proposals are based on independently gathered and published evidence on costs and likely deployment. That robust and reasoned analysis and evidence supports an onshore wind band of 0.9 ROCs. I am not aware that any robust and convincing evidence exists to support a change from this proposal. Should there indeed be made available any new and compelling evidence to suggest a different level, then we will of course consider that. However, in its continued absence, and having considered both the existing evidence and the responses to our consultation, I wish to make clear that the Scottish Government’s intention would be to amend the onshore wind ROC band to 0.9 with effect from April 2013.

We had the opportunity recently at the British Irish Council to discuss and agree the importance of proceeding on an evidence-based approach. Since then my attention has been drawn to the new Cabinet Office guidance on consultations which commits the UK Government to proceeding “with a greater focus on robust evidence, transparency and engaging with key groups earlier in the process.”

While we are still considering the wider set of issues raised by our respective consultations, and will publish our full response shortly, I feel that the uncertainty that this particular issue has engendered requires this clear statement of intent. I hope that our making such a statement will help reassure investors that our commitment to the renewables sector remains strong and in line with our statutory obligations.
I am circulating this letter to our key stakeholders and publishing it on the Scottish Government website.

Alex Salmond

Scottish Newspapers