Funding Green Energy

Green energy has received considerable public subsidy. Is this just a short term start up, or will it be necessary in the long-term?

The Scottish Government has announced that twelve projects aimed at creating local, green energy solutions have been awarded a total of £2.6m through a Scottish government support scheme. These include district heating schemes and projects in remote areas. Dr Sam Gardner, acting director at WWF Scotland, said: “A transformation in how we heat our homes and offices, how we travel to work and school, and how we power our industries will generate many social and economic benefits.”

Ofgem has also announced that ScottishPower will get regulatory funding (which means the consumer pays)  to upgrade the existing grid to cope with new technologies. It comes as electric cars are increasing in popularity, with forecasts that by 2025, one in six cars sold will be an electric model. With the Scottish and UK governments also pledging to phase out the sales of new petrol and diesel vehicles, it has sparked concern that the existing electricity infrastructure could be overwhelmed.

Scottish Renewables argues that green energy is delivering significant economic and social benefits north of the border. They point to 7,500 jobs linked to wind energy. UK Government figures show new onshore wind projects would be cheaper than new gas plants, and almost a third cheaper than the price agreed for the new Hinkley Point C nuclear power station. That means using a mix of renewable technologies, including onshore wind and solar power, is the cheapest way of modernising our energy system.

There has been no shortage of Scottish Government planning support. Two-thirds of wind farm developments, which are rejected by local councils, have then been pushed through by Scottish ministers on appeal. A total of 17 applications were refused by local authorities over the past year, but 11 of these decisions were then overturned by ministers.

The drive for localised community wind schemes has slowed down on financial grounds. Cuts in support from Westminster have resulted in a lot of planned schemes being mothballed due to uncertainty over their financial viability. The problem is proving a major stumbling block in the drive to increase the amount of green power going into the mix.

A group of Scottish academics argue that falling costs for renewable energy developments, means projects could now be set up without subsidies if Scottish ministers were to provide long-term guarantees, over 15 to 20 years, based on a the wholesale price of electricity. They claim this would pose little risk to taxpayers, but could offer a big boost to communities trying to raise money to fund investments with long-term paybacks.

However, the real boom is in offshore wind, which is winning the big contracts at a price 10% below the cost of Hinkley Point nuclear plant. Although there is some doubt how many will actually be built. The problem is that these contracts are being awarded to the big energy players, further concentrating energy in the hands of the few.

Onshore wind is now an established technology, the same cannot be said for wave power. Research from the University of Strathclyde says plans to exploit wave power as the energy of the future has been undermined by a string of “failures” despite £200 million of investment. Matthew Hannon said: “The report’s findings are aimed primarily at government and industry in a bid to help improve the effectiveness of future wave energy innovation support in the UK and accelerate the technology’s journey towards commercialisation.”

Hannah Smith, from Scottish Renewables, called on government to “provide a viable mechanism to ensure the sector’s continued development”, adding failure to do so “would risk losing Scotland’s lead in this global industry”. In other words, this technology does need financial support.

The UK government has also snubbed an application to provide support for the expansion of the MeyGen tidal development off northern Scotland casting the future of the project into doubt.

In this context the authors of a new TUED working paper argue that inadequate levels of investment in renewable energy across the world are a major obstacle standing in the way of the transition to a new, renewables-based energy system. They argue that  we must deal with the systemic and institutional roots of low investment. These roots trace back to the privatisation and liberalisation of electricity markets that began in the UK in the 1980s, became EU policy in the 1990s, and have since come the dominant policy approach in many parts of the world.

In short, the market alone will not deliver the green energy future we need to meet our climate change obligations.



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