Coal may be declining, but renewables are being held back

Last Friday was probably the first time the UK has not used coal to generate electricity since the world’s first public coal-fired generator opened in 1882 in London. That is undoubtably a notable milestone towards a low carbon energy system, but it doesn’t mean an end to fossil fuel electricity generation.

There may have been no coal generation last Friday, but less than a quarter came from renewables. Around half of British energy on Friday came from natural gas, with about a quarter coming from nuclear plants.

The number of workers in Scotland employed in the low carbon and renewables sector has risen to 58,500 according to the latest figures, generating a turnover of £10.5 billion. 48% of all UK employment, and 53% of all UK turnover, in onshore wind was north of the border. In low carbon electricity generation, Scotland represented 33% of all UK employment, and 28% of turnover.

However, industry body Scottish Renewables warned its members were expecting their workforce to shrink by 16.9% over the next 12 months. Jenny Hogan, Scottish Renewables’ policy director, said one of the main problems was the UK Government refusing to allow onshore wind and solar energy to bid against fossil fuel companies for long-term contracts to supply electricity. She said:

“These results show that changes to and closures of support schemes are having an impact on our members and on the numbers of employees within their businesses. Onshore wind and solar are the two cheapest forms of electricity, but ministers are refusing to allow them to access long-term contracts for power, which will result in a marked slowdown in investment and a decrease in employment.”

If renewables are going to play a larger role in Scotland’s generation mix then we need more storage. In the longer term batteries may play a role, but for now the proven technology is pumped hydro. However, the industry argues that a lack of certainty around long-term revenue is holding back growth.

SSE senior policy manager, Kate Gillingham, says her company’s planned new facility at Coire Glas, near Loch Lochy in Scotland, is “a major infrastructure investment, with large upfront capital costs and significant lead times. However, the current market conditions do not provide sufficient revenue certainty to enable investment decisions on a new build project”.

This view is supported by ScottishPower whose head of UK hydro at Scottish Power has said there needs to be “some way of unlocking investment” to help fund projects like the upgrade of the Cruachan hydro pump scheme. Ross Galbraith said:

“We’re really keen work on and look at how we can support and mitigate the risks of large-scale investment associated with pump storage. Depending on the option we choose, Cruachan 2 will cost somewhere between £300 million and £500 million. The lead-time for construction is significant, so we need to find a framework to mitigate the risk of that investment.”

So, coal generation may be in decline, but UK government policy and the daft energy market is holding back clean renewable energy.

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