Renewable Energy Update
Total Page:16
File Type:pdf, Size:1020Kb
SUSTAINABLE DEVELOPMENT COMMITTEE: 8 FEBRUARY 2011 RENEWABLE ENERGY UPDATE Report by Director of Development PURPOSE OF REPORT To update Members on the latest position with regard to Renewable Energy matters in and around the Outer Hebrides and to recommend a course of action in respect of Transmission Charging review and Crown Estate reform. COMPETENCE 1.1 There are no legal, financial or other constraints to the recommendations being implemented. SUMMARY 2.1 The report provides an update on Renewable Energy matters in and around the Outer Hebrides. The proposed 450MW Radial Connector between the Main Interconnected Transmission System (MITS) at Beauly and the Outer Hebrides is discussed and the impact which prohibitive Transmission Charges (current and forecast) are having on the Radial Connector project is outlined. 2.2 OFGEM’s Project TransmiT review of Transmission Charges is covered with a recommendation that the Comhairle continue to push for an equitable outcome for the Scottish islands from this process. 2.3 The potential of marine Renewable Energy around the Outer Hebrides is discussed and this leads into an account of the Comhairle’s efforts, along with other island Local Authorities, to progress reform of The Crown Estate for the benefit of island communities. 2.4 An update is provided on the Stornoway Wind Farm and Beinn Mhor Power projects, both critical to the delivery of the Outer Hebrides Radial Connector, and the report concludes with an overview of the current status of the ISLEPACT and ISLES projects. RECOMMENDATIONS 3.1 It is recommended that the Comhairle agree to: a) continue lobbying the UK Energy Minister, DECC and OFGEM with a view to achieving an equitable outcome from Project TransmiT insofar as the Scottish islands are concerned; and, b) continue lobbying UK Government Ministers with a view to achieving reform of The Crown Estate to ensure the retention of a more equitable share of Marine Estate revenues in island coastal communities. Contact Officer John Cunningham, 01851 709397 Appendix 1 None Background Paper None BACKGROUND 4.1 Progress with the development of renewable energy in and around the Outer Hebrides continues to be constrained by lack of Grid connectivity and prohibitive Transmission Charges. Although 462MW of renewable generation is now operational, consented, in planning or in advanced development, there is no provision to export this electricity to Grid. 4.2 Comhairle nan Eilean Siar continues to vigorously lobby UK Ministers, OFGEM and DECC for parity of Transmission Charging which will, in turn, allow developers to underwrite the cost of the proposed 450MW Radial Connector and extend the Grid to the islands. 4.3 Notwithstanding short term connectivity issues, the marine renewable energy sector is beginning to move with 50MW of seabed leases issued by The Crown Estate in recent months. This should allow the deployment of demonstrator units by 2014, building up to full scale commercial deployment by the end of this decade. POTENTIAL GENERATION CAPACITY 5.1 A total of 462.2MW of renewable electricity generation is now operational, consented, in planning or in advanced development in the islands: • Arnish Moor Windfarm 3.9MW (operational) • Pentland Road Windfarm 15MW (consented and in procurement) • Beinn Mhor Power 140MW (consented) • Stornoway Windfarm 150MW (in advanced planning) • Pairc Windfarm 78MW (in planning) • Seven Community Schemes 21.3MW (mostly consented) • Siadar Wave Energy Project 4MW (consented) • Marine Leases 50MW (in development) 5.2 This represents a total of 462.2MW, more than the 450MW capacity proposed for the initial Radial Connector which should be installed and energised by October 2015. Scottish Hydro Electric [Transmission] Limited (SHETL) have sought consent from OFGEM for the installation of a second, parallel 450MW cable over the land section between Beauly and Little Loch Broom to obviate re-excavation of a highly designated land environment. With the straightforward addition of a submarine section at a future date, this effectively doubles the potential capacity of connection to the Outer Hebrides. However, it should be noted that this second cable will represent a convenient connection point for future onshore schemes in the North of Scotland or offshore schemes in the North Minch. One offshore windfarm of 100 turbines can now account for 600MW of electricity transmission. INTERCONNECTION 6.1 As stated above, SHETL, as Transmission Owner for the North of Scotland propose to instal a 450MW (upgreadeable to 900MW) Radial Connector between the Main Interconnected Transmission System (MITS) at Beauly and Gravir on the east coast of Lewis with a subsea spur to Arnish Point, Stornoway. Since this Radial Connector is classified as non-MITS ‘Local Works’, the private developers who propose to use it are required to underwrite its £400m cost in full. 6.2 While Transmission Charges remain at their current, prohibitive level (see section 7 below), the viability of island projects is threatened and local developers are reluctant to confirm underwriting. It has been estimated that, under the current Transmission Network Use of System (TNUoS) regime, a 150MW windfarm in Lewis would be charged a £15m per annum levy for export to Grid of its electricity. This compares to a £4m levy for the same windfarm in Skye and a ‘negative charge’, or subsidy, for generators in the South East of England. 6.3 Providing local developers confirm underwriting by the summer of 2012, SHETL will proceed with procurement of the cable(s) and, allowing three summers for build, the new Radial Connector will be commissioned in October 2015. If underwriting fails for any reason, the islands face the real prospect of no Radial Connector, no commercial renewable energy development and a greatly reduced socioeconomic impact. 6.4 The Comhairle continues to work with the major developers and National Grid to ensure that the conditions exist for delivery of the Radial Connector. One small victory in this respect was the agreement in principle of National Grid to review their underwriting formula to reduce the initial liability of island developers by a factor of ten. While this is helpful, developers will still decline to underwrite while excessive Transmission Charges threaten the long term viability of their schemes. TRANSMISSION CHARGES 7.1 Largely due to pressure from the Scottish Islands, OFGEM agreed to review the entire system of Transmission Charges during 2011. The current system is cost reflective and ostensibly reflects the capital cost of providing Grid infrastructure in different areas of the country. However, with a Transmission Charge almost four times that of the North of Scotland mainland, the islands are effectively disadvantaged and the Comhairle has relentlessly lobbied for parity of treatment in respect of these charges. 7.2 Project TransmiT, OFGEM’s review of Transmission Charges, is moving slowly to a conclusion but, despite extensive lobbying at all levels, there is little to suggest that the island situation will improve. Through Project TransmiT modelling, the mainland North of Scotland charge has dropped by 60% but the Outer Hebrides charge has dropped by only 20%, opening the differential between the two areas from a factor of four to a factor of seven. Comhairle representatives have, nevertheless, received assurances from UK Energy Minister, Charles Hendry MP, that the island situation will be resolved and, on 13 January 2012, Comhairle representatives contributed to an influential discussion session on island Transmission Charging convened by the Scottish Energy Minister. Officers will now liaise with colleagues in the Scottish Government, Highlands & Islands Enterprise, Shetland Islands Council and Orkney Islands Council to develop a solution for the islands for presentation to OFGEM, probably based around a ‘network sharing discount’ for intermittent generators. A less satisfactory fallback might be intervention by the UK Secretary of State for Energy & Climate Change who is empowered under Section 185 of the Energy Act 2004 to ‘adjust’ Transmission Charges in areas where they are demonstrably blocking renewable energy development. 7.3 Given the growing political pressure for a solution, officers are reasonably confident that Transmission Charges for the islands will reduce, enabling local developers to underwrite the cost of the Radial Connector. MARINE RENEWABLE ENERGY 8.1 During 2010, Marine Scotland undertook an extensive Regional Locational Guidance (RLG) exercise in order to identify optimum deployment areas for the Scottish Government’s £10m Saltire Prize programme. The Saltire Prize will go to the first team to continuously generate - over a two year period ending in 2017 - the highest level of electricity, over a minimum hurdle of 100GW/hr, from the power of the sea. Marine Scotland’s RLG mapped the area around Scotland’s coast using multiple layers to reflect wave resource, tide resource, environmental constraints, defence safeguarding, commercial shipping, leisure activity, aviation / weather radar, fishing, wrecks, cable routes and so on. The result of this mapping was the identification of two areas as preferred sites for Saltire Prize deployments – West of Hebrides and West of Shetland. This designation has accelerated the level of interest in the Atlantic resource west of Lewis with several global companies now scoping in the region. 8.2 The Crown Estate, who are partners in the Saltire Prize programme, have since granted seabed leases to