Written evidence submitted by Drax Group (RES0013) Scottish Affairs Committee -- Renewable energy in Scotland Call for evidence – Drax Group submission We welcome the opportunity to submit evidence to the Scottish Affairs Committee’s inquiry on Renewable energy in Scotland. Drax Group plc (Drax) owns and operates a portfolio of flexible, low carbon and renewable electricity generation assets including the UK’s largest power station, based at Selby, North Yorkshire, which supplies five percent of Britain’s electricity needs. Drax’s pumped storage, hydro and energy from waste assets in Scotland include Cruachan Power Station – a flexible pumped storage facility within the hollowed-out mountain Ben Cruachan - 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 energy storage. 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 Climate Change Committee’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