Written evidence submitted by (RES0013) Scottish Affairs Committee -- Renewable in Call for evidence – Drax Group submission We welcome the opportunity to submit evidence to the Scottish Affairs Committee’s inquiry on in Scotland. Drax Group plc (Drax) owns and operates a portfolio of flexible, low carbon and renewable assets including the UK’s largest , based at , North Yorkshire, which supplies five percent of Britain’s electricity needs. Drax’s pumped storage, hydro and energy from waste assets in Scotland include – a flexible pumped storage facility within the hollowed-out mountain - and two historic hydro schemes in Galloway and Lanark. Drax is currently pursuing plans for investing in the expansion of Cruachan Pumped Storage Hydro Power Station in Argyll. Cruachan already provides flexibility and long duration storage to the grid supporting the decarbonisation of the electricity sector. At full capacity it can power a city for up to 16 hours. Expanding Cruachan Power Station (Cruachan 2) entails the construction of a second power station within Ben Cruachan which would double the existing plant’s generation capacity. Cruachan 2 is considered a national development under Scotland’s National Planning Framework 3. With electricity demand expected to double over the next three decades, investment in technologies such as pumped storage hydro that can help the system operate effectively and securely will be critically important. A number of pumped storage hydro projects are in the pipeline in Scotland, alongside Cruachan 2. However, such developments are unlikely to materialise without a route to market for this technology. Historically, power plants like Cruachan have been built with public support and to date less than 5% of existing pumped storage capacity worldwide has been built under liberalised market conditions. In today’s market system, existing mechanisms were not developed to support the deployment of projects like Cruachan 2. The absence of a route to market risks compromising the UK’s and Scotland’s ambitious decarbonisation and climate targets as well as side-lining projects that would help reduce costs for consumers while also contributing to the green post-covid recovery of Scotland. There is a unique opportunity for the UK Government to unlock the potential of long duration storage technologies like pumped hydro through a targeted policy change. Potential solutions have been put forward by Scottish Renewables and the Association for Renewable Energy and Clean Technologies (REA), whilst recent research including that undertaken by Imperial College outlines the whole-system value of long-duration . We hope that the importance of long duration energy storage and the policy change needed to support such technologies will be explored by the Committee in the context of its inquiry. 1) Scotland’s renewable energy targets

 How effective has the setting of targets been in achieving ‘net zero’ emissions by 2050 (UK Government) and 2045 (Scottish Government)? The legally binding targets for achieving net zero have been very important in setting a clear direction of travel. Interim targets, such as Scotland’s 2030 target and the UK’s proposed 2035 target are just as effective and powerful. They provide a clear and more near-term horizon for investments and help provide greater clarity in terms of what type of technologies and projects may be needed at what point. For example, it is widely accepted that Scotland’s 2030 target to reduce emissions by 75% is very ambitious. The Scottish Government’s recent Climate Change Plan Update provided a detailed breakdown of the policies that need to come forward to meet this target. This included the acknowledgement that Scotland’s electricity grid needs to operate at zero carbon by 2030. For this to materialise, important investments need to be made not only in renewable generation but also the complementary technologies such as long duration storage technologies, as acknowledged in the plan update. It is therefore clear that for additional long duration storage capacity to exist by 2030, policy changes need to be implemented in the next couple of years to allow projects such as Cruachan 2 to materialise. In turn, this means that a UK Government commitment regarding the need to address the policy gap for enabling investment in long duration storage technologies such as pumped hydro would be particularly welcome in the short-term to provide some level of certainty to operators and investors. The same applies in relation to the UK Government’s proposed target to reduce emissions by 78% by 2035.

 What lessons can or have been learned from setting net zero targets? Net zero targets have been very important in terms of identifying a key ambition and timeframe for delivery of greenhouse gas emissions reductions. However, proposing and agreeing on interim targets is just as important and will help Scotland and the UK as a whole meet our net zero targets. Interim and net zero targets should be accompanied by policy documents and proposals that outline the steps that need to be taken to unlock important investments in technologies. Such plans need to have a clear timeframe, where possible. This will provide further confidence to businesses to put forward and accelerate investment in the solutions needed. Documents such as the Scottish Government’s Climate Change Plan update and the UK Government’s Energy White Paper are critically important in further elaborating how our pathway to net zero will look like and the policy interventions that will be needed.

 To what extent does the UK Government’s latest white paper – Powering our net-zero future – ensure that renewable energy targets will be met in the UK. The UK Government’s Energy White Paper ‘Power our net-zero future’ outlines an important number of actions for meeting the UK’s climate and decarbonisation targets. To accelerate the deployment of clean electricity generation through the 2020s, the UK Government is proposing a number of high-level targets such as aiming to have 40GW of offshore wind deployed by 2030, including 1GW floating wind, alongside the expansion of other low-cost renewables technologies. The Energy White Paper also states that ‘by 2050, low-carbon options, such as clean hydrogen and long-duration storage, [will] satisfy the need for peaking capacity and ensure security of supply at low cost’. However, there are no clear actions for supporting the deployment of these critically important long duration storage technologies not only for security of supply but to ensure the stable operation of the national transmission system. Specifically, very little information is provided regarding the UK Government’s commitment to support technologies such as pumped hydro. This is a mature and cost-effective technology proven to reliably store energy for long periods and provide a host of ancillary services to support a system increasingly reliant on intermittent and non-synchronous generators such as wind and solar. Technologies such as pumped hydro provide the electricity grid with much needed stability and flexibility to ensure the lights stay on when the wind is not blowing, and the sun is not shining. The importance of this flexibility has already been highlighted in the ’s 2020 Progress Report to the Scottish Parliament as one of the two major challenges facing the electricity grid in Scotland: The challenge for the next decade is to accelerate the decarbonisation of other sectors of the economy, much of it via electrification and to increase flexibility in the power system to help meet the challenge of operating a system using large amounts of energy from renewables. (p.11, emphasis added) The Scottish Government has also previously supported the role of pumped hydro in addressing the stability challenge of Scotland’s electricity grid and to this end, remains supportive of further deployment of pumped hydro given its ability to provide synchronous generation. Providing a clear commitment to bringing forward a mechanism to address the barriers for long duration storage technologies such as pumped hydro is an opportunity to accelerate the deployment of intermittent renewables. In July 2020, the Department for Business, Energy and Industrial Strategy confirmed that it would consider the barriers to deploying storage at different levels, including large-scale, longer-duration storage such as pumped hydro storage. The publication of this update is expected in Spring 2021. The barriers to long duration storage technologies, particularly pumped storage hydro, have been outlined in previous reports and more recently by Scottish Renewables and the REA, where a number of policy solutions were also proposed.

In line with these reports, Drax considers that a call for evidence on longer-duration storage alongside the forthcoming update to the Smart Systems and Flexibility Plan is needed to address barriers for deployment in a timely manner. Such a call for evidence could include the following elements:  Seeking input from National Grid ESO, the wider industry, and academia on how much electricity storage will be required in a Net Zero energy system across different timescales;  Looking into the challenges of capital-intensive, large scale flexibility projects with long construction periods and exploring possible options to enable their deployment;  Assessing how existing barriers to wider deployment of longer duration energy storage can be removed and an appropriate market framework put in place.

We hope that such a call for evidence as well as other Energy White Paper proposals on storage can be pursued with the urgency required in order for the electricity grid to have available the additional long duration storage capacity needed by 2030 and thereafter. 2) Renewable energy sources

 What variables have contributed toward wind energy providing more energy to the grid than any other renewable source?  Why does account for such a small proportion of the total energy output of renewables in Scotland?  What is being done to develop and research other forms of renewable energy in Scotland such as wave/tidal energy and carbon capture usage and storage (CCUS) energy or others? We hope that the Committee’s inquiry will also explore the role of flexible technologies particularly in terms of long duration storage. This is a key ingredient to Scotland’s decarbonisation journey, in addition to the importance of renewable generation and CCUS. In its 2020 report, Jacobs estimates that given the UK Government’s 2050 net zero target, there is a ‘compelling case for developing a further 40 GW of long-term storage, with a storage capacity of some 5,000 GWh, primarily for balancing the proposed 90 GW of intermittent wind generation planned to be in place by 2050’. The same report notes that ‘pumped hydro is still clearly the lowest cost technology for both long-term and medium-term storage’ (i.e. storage greater than four hours). Investing in these technologies will enable the grid to operate safely and securely with an increased level of intermittent renewables in the coming decade. It will also enable us to make this transition in the most cost-effective way. This is in line with the UK Government’s commitment for a clean electricity system that ‘retains [its] essential reliability, resilience and affordability’. Imperial College London has estimated that 4.5GW (or 90GWh of storage) of new long-duration storage would save up to £690m per year in energy system costs by 2050. The study, which focussed on Scotland, stated that 75% of these cost savings would come from avoided spend on more expensive forms of low carbon technologies which will otherwise be needed to meet carbon targets and security of supply. Furthermore, it would reduce the need for up to 2GW of additional transmission between Scotland and England. 3) Employment in renewable energy sector In 2010 the Scottish Government said there was a potential for 130,000 jobs (Scottish Government, A low carbon economic strategy for Scotland, November 2010, p.10) in the low carbon renewable energy sector.

 What policy decisions do the UK and Scottish Governments need to make to increase the number of jobs in the renewable energy sector?  How effective has the renewable energy sector been in producing careers for Scottish people?  What UK and Scottish Government support would facilitate the growth of jobs in this sector?  What do the UK and Scottish Governments need to do to achieve a ‘just transition’ for workers in the oil and gas industry to successfully redeploy to the renewable sector or other sectors? We would like to highlight that in addition to the job and investment potential of renewable generation projects, a significant number of jobs could be generated by pursuing the development of other enabling technologies such as pumped hydro. Drax’s Cruachan 2 project would create over 200 jobs during the 5-6-year construction period in rural Argyll. 4) Intergovernmental relations

 How effective have the Scottish and UK Governments been in harnessing Scotland’s renewable energy potential?  How effective has consultation between the two Governments been on the development and design of renewable policies?  What discussions took place between the Scottish and UK Governments in preparing the Energy White Paper?  How will the Energy White Paper affect the renewable energy sector in Scotland?  How can the UK and Scottish Governments work together effectively to achieve their respective targets of net zero by 2050/2045? We hope to see joint action, not just for the 2050 and 2045 net zero targets but also for the 2030 and 2035 interim targets. The Scottish and UK climate targets are mutually dependent and given the commitment of both governments to tackling climate change, the acceleration of efforts in this field will be needed. Energy policy is an important policy lever and one where the support of the UK Government will be fundamental to achieving Scottish decarbonisation particularly in the context of the 2030 target and the ambition to operate a zero carbon electricity grid as outlined in the Scottish Government’s Climate Change Plan update. May 2021