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Scottish Affairs Committee - Uncertainty risks harming growth in Scotland's renewable energy industry

The Scottish Affairs Committee yesterday called on the UK Government to work with the Scottish Government to support future growth of the Scottish renewables industry.

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The Scottish Affairs Committee yesterday published a report into the renewable energy sector in Scotland. The report highlights the great successes that have been made in expanding renewable energy capacity in Scotland. However, the Committee warns that recent changes in Government policy have created uncertainty that could threaten the industry's prospects for further growth.

The Committee found that significant growth of the renewable sector in Scotland in recent years has demonstrated the benefit of a supportive policy environment. Electricity production from sources as diverse as wind, hydro and biomass has attracted significant investment. Growth has been strong enough that it is estimated 21,000 people are now employed in the Scottish renewable sector, which produces almost 30% of the UK's renewable electricity.

There are, however, concerns that recent changes to subsidies for technologies which generate renewable electricity and uncertainty about future support have affected the confidence of investors in supporting the deployment of new generating capacity. The removal of subsidy for onshore wind in particular, one of the cheapest sources of renewable electricity, without consultation with the industry or Scottish Government, is considered particularly troubling.

Electricity generated in rural areas costly to transmit to urban centres

The lack of clarity about renewables policy has exacerbated long-standing concerns in Scotland surrounding transmission costs. Renewables, often located in rural areas or on the Scottish Islands, face inadequate grid connections and high transmission charges to reach the urban areas where electricity is most needed.

The Committee calls on Ofgem to look into levelling connection costs across the UK and calls on the UK Government to take action to support the improvement of infrastructure between the Scottish Islands and the mainland.

Chair's comments

At the report launch, Committee Chair Pete Wishart commented:

"During the course of this inquiry it has been encouraging to see how Scotland has taken to renewable energy, and now produces over a quarter of the UK’s renewable electricity. This is an important sector of Scotland’s economy, and also makes a vital contribution to meeting our commitments to tackle climate change. The sector’s future success relies on a supportive policy framework in both Westminster and Holyrood.

"This report considers several policy changes the UK Government has made to support for renewables — early closure of the Renewables Obligation for solar and onshore wind, cutting support through Feed-in-Tariffs, and delaying the next round of Contracts for Difference — which we found have weakened investor confidence in the renewable sector, and put at risk opportunities for future growth.

"We have urged the Government to clarify the future support which will be available to the renewable sector, and set out how they will work with the Scottish Government to develop a clear, long-term plan that will allow renewable energy to remain a central part of the energy mix.

"Our report was produced before recent changes to the structure of Government — the abolition of the Department of Energy and Climate Change, with its responsibilities moving to a new Department for Business, Energy and Industrial Strategy — but this change indicates a troubling shift in the Government’s priorities. I hope that the Government’s response to our report will go some way to allaying these fears."