2016 could be challenging for renewables

Renewable energy in Scotland starts 2016 with some positive numbers, but how green will this year be for the sector?

The latest Department of Energy and Climate Change statistics showed almost half (49.7%) of Scotland’s electricity demand came from renewable sources and Scotland exported 23.7% of what it generated. This means renewables provided 38% of electricity generated – above both nuclear, at 33%, and fossil fuels, at 28%. Scotland has a target of generating 50% of its energy from green sources by 2015.

The sector also made a significant contribution towards tackling climate change. Renewable energy projects including wind farms, hydro power and solar prevented more than one million tonnes of CO2 per month from entering the atmosphere. The reduction is the highest ever recorded in Scotland, and up 119% on 2010. The figure is equivalent to more CO2 than is emitted from every single car, bus and train journey taken over the course of a year in Scotland.

Despite these numbers, wind generator’s are concerned that the UK government tariff review for small scale energy generators could restrict the building of new wind turbines. Scottish Renewables says that, although the new reduced rates for small wind turbines are not too bad, a new quarterly deployment cap hidden away in the 115-page document could lead to the “ridiculous” situation that, dependent on the size of the turbine, just one turbine a month could be built. They said: “While the UK government listened to the industry in relation to FiT rate cuts for solar, the devil is very much in the detail for onshore wind.

A big concern is the impact of the subsidy cuts on community energy schemes. Lesley Riddoch argues in The Scotsman that the latest round of UK government cuts will devastate the community energy sector. She claims the loss of tax relief on investments in community renewables is the last in a series of blows by Westminster that virtually ends new community wind, solar, hydro or biomass projects in Scotland.

The Scottish Government, usually a big supporter of renewables is scrapping the Renewable Energy Generation Relief Scheme (regrs), which currently offers qualifying companies rates rebates of up to 100%. It cost £7.3million last year, more than double the £3.5 million paid out in 2011 at the end of the scheme’s first twelve months.

Scottish Government policy was also criticised at Holyrood’s economy committee, which is conducting an investigation into the renewables industry in Scotland. Economist Tony MacKay told MSPs that the collapse of flagship marine energy companies Aquamarine and Pelamis shows that £35m of public money could have been “better used”. He also said that subsidies have been “far too high”, with profit rates for wind farms in Scotland of about 22%.

It is certainly true that some companies are making money. ScottishPower (Iberdrola) doubled the profits in its UK wind power business in the first nine months of its financial year. Earnings leapt to €301m (£221m) in the first nine months of 2015, from €150m in the same period of last year. The doubling of earnings in the UK renewables business was driven by better wind conditions and additions to the wind farm portfolio. The euro-denominated earnings figure was also boosted by sterling’s appreciation against the single currency.

Overall, renewables again made a positive contribution to energy generation in Scotland and in tackling climate change. However, changes in government policy, UK and Scotland, could make 2016 a much a more difficult year for the sector.

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