The future of energy in Scotland: consultation analysis

Executive Summary

Introduction

1. The Scottish Government consultation on a Scottish Energy Strategy: The future of energy in Scotland ('draft Energy Strategy') was one of four consultations in relation to the energy sector published by the Scottish Government in January 2017:

• Consultation on a draft Energy Strategy.
• Consultation on a draft Onshore Wind Policy Statement.
• Consultation on Scotland's Energy Efficiency Programme ( SEEP).
• Consultation on Local Heat and Energy Efficiency Strategies and District Heat Regulation ( LHEES).

2. This report focuses on the draft Energy Strategy only. Separate reports have been prepared on each of the other consultations. ^[1]

3. The consultation document on the draft Energy Strategy set out the vision for the future energy system in Scotland to 2050. The long-term vision set by the draft Energy Strategy is for a modern, integrated, clean energy system, delivering reliable energy supplies at an affordable price in a market that treats all consumers fairly.

4. The consultation asked seventeen questions and covered a range of issues under four chapter headings: Meeting our Energy Needs, Transforming Energy Use, Smart Local Energy Systems and Delivery, Monitoring and Engagement.

5. The consultation ran from 24 January until 30 May 2017.

Respondent Profile and Methodology

6. There were 252 responses analysed in this report: 200 from organisations and 52 from individuals Respondents were assigned to respondent groupings in order to enable analysis of any differences or commonalities across or within the various different types of organisations and individuals that responded.

7. The table provides details of the overall groupings that were applied across the consultation on the draft Energy Strategy. Given the wide range of different organisations categorised under Business / Industry and Network / Professional / Trade, these two categories were divided into sub categories to allow for more in-depth comparison and contrasting of views. Full details of the methodology are available in the Introduction chapter of this report.

Respondent Groups
Main Categories	Number
Academia / Research / Training	17
Community	7
Business / Industry	68
Network / Professional / Trade	48
Local Government	21
Public Sector / Delivery Agency / Regulator	14
Third Sector / NGO	24
Other	1
Total organisations	200
Individuals	52
Total	252

8. The following paragraphs provide a summary of responses to each question. This is followed by a summary of the cross-cutting themes emerging across this consultation.

Meeting our Energy Supply Needs (Chapter 3)

The priorities for energy supply (Question 1)

9. There was broad overall support, across all sub-groups, for the five priorities set out in Chapter 3, with particular support for the whole systems approach taken in the draft Energy Strategy and the flexibility shown to adapt to changes in emerging technologies. However, there were a number of caveats regarding the weight of emphasis on certain priorities, a perceived lack of detail or perceived areas of omission.

10. Only a small number of respondents disagreed with any of the priorities.

11. There were mixed views regarding the extent of support that should be given to the recovery of North Sea oil and gas, with some respondents welcoming continued support for the sector due to its vital importance in delivering reliable energy and economic value, while some others felt there is too much emphasis on this sector given the draft Energy Strategy's focus on decarbonisation.

12. A relatively large number of respondents welcomed the development and commercialisation of Carbon Capture and Storage ( CCS), although they also highlighted perceived technical and / or financial challenges in the development of large-scale CCS on a cost effective basis.

13. A number felt that renewables should be supported as a significant, cost-effective resource and that Scotland should continue to build on its successes in promoting renewable electricity. There were references to onshore and offshore wind, as well as solar thermal energy and pumped hydro storage, as providing competitive cost-effective options.

14. A number of respondents focused on the 2030 renewable target and the relative effectiveness and efficiency of existing and emerging technologies that might contribute to meeting this target.

15. Some respondents felt that Priority 5 (increasing the flexibility, efficiency and resilience of the energy system as a whole) should underpin the other 4 priorities.

16. There were references to the need to give greater recognition of the interdependencies between Scottish and UK energy systems and the role of European Union policy.

17. There were requests for more integration of Scottish Government strategy across planning and energy; and that the full range of devolved policy levers should be closely aligned with the Energy Strategy.

The actions regarding energy supply (Question 2)

18. Many respondents, across groups, simply voiced support for the actions in general or for specific actions; these supportive comments were all brief, along the lines of 'the respondent supports x'.

19. A number also gave their views on actions under each of the priorities (albeit small numbers commented on each) and / or suggested additional actions. These comments and suggestions are outlined in Appendix 2.

The proposed target to supply the equivalent of 50% of all Scotland's energy consumption from renewable sources by 2030 (Question 3)

20. There was overall support for this target, although there was a perception from several respondents that this is too ambitious. A small number disagreed with setting targets altogether.

21. There were requests for the target to apply to all low carbon sources of energy, not just renewables; a range of different technologies were cited for inclusion in the energy mix (see Question 4).

22. There were requests for more detail on different aspects of the target - particularly on the effort required in the heat and transport sectors which were perceived to be much more challenging to decarbonise with current renewable technologies.

23. A need was identified for strategic and / or strong leadership, clear guidance and consistent, stable and clear fiscal policy support in order to deliver the 2030 target.

The development of an appropriate target to encourage the full range of low and zero carbon technologies (Question 4)

24. Many of the responses echoed points made under question 3, with several references to the need for any target to be flexible and encourage innovation in emerging technologies which may or may not be classed as 'renewable'.

25. There were suggestions for setting targets for specific technologies, together with interim targets that can be used for ongoing monitoring. Several respondents made suggestions for alternative targets that could be applied.

Ideas on how the onshore wind industry can achieve the commercial development of onshore wind in Scotland without subsidy (Question 5)

26. Respondents outlined a number of key elements needed to create the commercial development of the onshore wind industry without subsidy. These included a more streamlined and consistent consenting and planning process, the use of spatial planning for projects, and continually updated guidance.

27. There were requests for stability in terms of grid connections, grid management and charges.

28. Some suggestions were made for alternative funding options to mitigate against the loss of subsidies. These included Power Purchase Agreements and a route to market under a zero-subsidy Contracts for Difference mechanism. There were also several suggestions for maximising economies of scale.

29. There were suggestions for a number of actions to be undertaken by the Scottish Government including close working with the UK Government.

30. There were several comments on the need for continuing subsidies until the onshore wind sector is established; particularly within remote and rural locations because of a lack of enabling infrastructure and grid connection.

Views on the potential future for Scotland's decommissioned thermal generation sites (Question 6)

31. Respondents felt that a capacity to use the existing infrastructure is a key benefit of Scotland's decommissioned thermal generation sites. Key reasons given for this are that many are in strategic locations, they offer an already skilled workforce, they have existing grid capacity and community support. Respondents also suggested that the existing grid capacity can also be made available to other generators.

32. Only a small number of respondents felt there were disadvantages in using existing sites.

33. There were also suggestions that the existing infrastructure can be used as centralised energy storage to help mitigate against the intermittent nature of renewable energy.

34. There were a number of references to a need for enhanced policy support within the planning system to ensure opportunities for re-purposing these sites were not lost.

Ideas for the role of hydrogen in Scotland's energy mix and the development of hydrogen production in Scotland (Question 7)

35. There was overall support for developing the role of hydrogen in Scotland's energy mix; and a key benefit is the capacity to use the existing gas distribution network.

36. Hydrogen is perceived to be a flexible source of energy in that it can be used across different sectors including transport, heating and power, although there were some suggestions that hydrogen is best suited to the transport sector and / or specific modes of transport.

37. There were suggestions that hydrogen capacity can be set up on sites adjacent to large scale wind energy sources to enable use of surplus energy, although there would also be a need for storage facilities to enable this.

38. Although views were generally positive about the role of hydrogen, there were a number of provisos or concerns noted by respondents, with some requests for hydrogen to be produced from non-fossil fuels. There were also comments that Carbon Capture and Storage ( CCS) is needed to optimise the use of hydrogen but that at present this has not been developed at sufficient scale.

39. There were also many calls for the Scottish Government to be involved in and / or provide support for demonstration projects.

40. It was also felt that there is a need to increase public awareness, engagement and perceptions so that hydrogen can be accepted as a possible energy source.

41. There were also calls for the further development of the UK Hydrogen and Fuel Cell Roadmap, with a number of suggestions for a similar Scottish-based roadmap.

Transforming Scotland's Energy Use (Chapter 4)

The priorities for transforming Scotland's energy use (Question 8)

42. There was overall support for the priorities outlined.

43. A number of overriding themes emerged across the priorities, including:

• a need to create a priority towards a reduction in energy demand as well as increased energy efficiency,
• a need to highlight the importance of behaviour change and public buy-in,
• the potential role for a central agency to deliver Scotland's Energy Efficiency Programme, and
• a need for further integration across policy areas.

The actions for transforming Scotland's energy use (Question 9)

44. Many respondents, across groups, simply voiced support for the actions in general or for specific actions.

45. Reference was made to the need for the energy strategy to match the objectives of the draft Climate Change Plan ( CCP) which sets out an objective of near zero carbon building stock by 2032. Further detail is provided in Appendix 3.

Views on the energy efficiency target to be set for Scotland and how to measure this (Question 10)

46. There was overall support for an energy efficiency target, although several respondents felt this needs to be more ambitious and there were requests for clarification of the baseline year.

47. Many noted the need to align this with the EU ambition to implement an effective energy efficiency target of 30% by 2032.

48. Respondents outlined a number of key elements that are needed for any target. These included for this to be explicit and transparent, to have a clear pathway and to be long term with interim targets based on specific milestones, with regular monitoring and reporting.

49. There were requests that any target should represent the 'whole system' approach of the strategy and include energy efficiency in transport, heat and electricity.

Delivering Smart, Local Energy Systems (Chapter 5)

Views on the priorities for delivering smart, local energy systems (Question 11)

50. Many respondents noted their support for these priorities.

51. A key benefit of smart, local energy systems, identified by respondents, is that they will be more robust and quicker to decarbonise than current energy sources. There were also comments that local projects offer the potential to develop into clusters and regional initiatives.

52. Respondents referred to the need for a whole systems approach which is collaborative in nature, with initiatives that enable local and community projects to be developed, and with regular monitoring and evaluation.

53. There was support for the use of Energy Masterplanning as a strategic approach to bring forward energy projects, although there were comments on the need to ensure the regulatory landscape allows for a decentralised and flexible energy system.

Views on the actions for delivering smart, local energy systems (Question 12)

54. There was overall support for the actions, across all groups of respondents. Only a small number of respondents disagreed with these actions. However, there were calls for available funding sources to be simplified and streamlined.

55. There were suggestions of a need to accelerate a transition from Distribution Network Operators ( DNOs) to Distribution System Operators ( DSOs) to provide the right control of infrastructure investment and grid services to support local systems.

56. There were some comments on the need for collaboration and partnership working to ensure an integrated approach to smart, local energy systems. Further detail on the actions is in Appendix 4.

Views on the idea of a Government-owned energy company ( GOEC) to support the development of local energy (Question 13)

57. Many respondents identified a need for some form of public agency to support an energy transition. There were some suggestions for a centralised energy agency along the lines of the Danish Energy Agency.

58. Many suggestions were made for alternative mechanisms; these included Energy Service Companies ( ESCos), Government and Community-Owned Energy Companies ( GCOECs) and Municipal Energy Companies ( MECs).

59. A number of roles were identified for a GOEC; these included the provision of finance to support community-ownership, shared ownership or the development of energy systems projects; as a supplier of last resort; or information provider.

60. It was suggested that a GOEC would operate efficiently, on a not-for-profit basis and allow for innovative energy systems. This would help to overcome some existing market barriers.

61. A small number of respondents queried the need for a GOEC and several suggested that a GOEC would detract from the existing range of initiatives and activities undertaken by other organisations.

Views on a Scottish Renewable Energy Bond ( SREB) (Question 14)

62. Many respondents, across all respondent groups, expressed support for a Scottish Renewable Energy Bond, although several noted that the Bond should focus on a wider range of energy sectors and not just renewables. Very few respondents were opposed to this concept.

63. Key advantages were that it could be an important delivery mechanism in instances where finance from other sources is a challenge, and that it would allow savers and investors to have a stake in the sector and open up ownership to a broader range of audiences. Respondents cited little by way of disadvantages.

64. Despite the support for a Scottish Renewable Energy Bond, there were several cautionary comments on issues that will need to be considered given that delivering a new project to market would represent a sizeable challenge.

Delivery, Monitoring and Engagement (Chapter 6)

Ideas for how the Scottish Government, the private sector and the public sector can maximise the benefits of working in partnership (Question 15)

65. There was overall support from respondents for the Scottish Government and the private and public sectors to work in partnership, although a wide range of stakeholder organisations were suggested for inclusion in partnership working, so as to maximise use of expertise, skills and knowledge.

66. There was also support for the proposal to refocus the Scottish Energy Advisory Board ( SEAB) on the new themes of the Energy Strategy, and suggestions to extend the composition of this Board.

67. There were also several suggestions that co-operative models of delivery, shared ownership and involvement of local communities in the design and development of projects would be important.

Monitoring delivery of the Energy Strategy (Question 16)

68. Respondents welcomed the commitment to publish an Annual Energy Statement although it was felt this would need to be accessible, provide an appropriate level of detail, encompass a whole energy system and provide a robust monitoring and evaluation framework, with interim targets and milestones against which to measure progress.

69. There were also requests for a clear process for parliamentary scrutiny of the Energy Strategy.

70. Respondents felt that all stakeholders should be involved in setting targets, and that targets should be SMART (specific, measurable, achievable, relevant, timebound), consistent across sectors and allow for co-ordinated implementation.

Views on the proposed approach to deepening public engagement (Question 17)

71. Respondents welcomed the commitment to greater public engagement, with only a small number disagreeing with the suggested approach.

72. There were suggestions of a need to include a wide range of groups, such as local community organisations, in helping to deepen public engagement.

73. Respondents focused on a need to ensure a consistent, well developed, co-ordinated and long term national awareness campaign, using a range of different media channels.

Cross cutting themes

74. Across the questions asked in this consultation paper, a number of key themes emerged. The draft Energy Strategy was perceived as a high level document and, as such, there were a number of requests for greater detail and depth of information across various elements of it. The following paragraphs highlight the key themes.

The need for recognition of the interdependencies between the Scottish and UK energy systems

75. There was reference to the need for greater recognition of the interdependencies between the Scottish and UK energy systems, despite the perceived divergence in some areas of Scottish, UK and European policies and strategies.

76. Given that many issues relating to energy are reserved matters, respondents noted the need for the Scottish Government to work with the UK Government and other organisations such as BEIS, Ofgem and the National Grid. There was also some reference to the need for the Scottish Government to adopt a stronger influencing role towards the UK Government.

The need for integration across devolved policy areas

77. Respondents noted the need for integration across different devolved policy areas within the Scottish Government in order to provide a holistic approach to the Energy Strategy, with some respondents defining a need for more clarity on how the different policy areas will interact. Additionally, there was specific reference to ensure the final Energy Strategy aligns with the Climate Change Bill.

78. Respondents also focused on the need for consistency in the Scottish Government's approach to regulatory support. This includes a consistent approach for the planning system, non-domestic rates and building standards to help deliver various proposed aspects of the Energy Strategy, albeit that flexibility is required to allow for the development of innovative technologies.

Maintaining a flexible approach towards local energy systems

79. While there was broad support across all respondent groups for harnessing the benefits of a decentralised, low carbon energy sector, there were comments on the need for flexibility to ensure that differing local needs can be met.

80. Furthermore, although there was broad support for deeper involvement of local communities and community-owned projects, there was also a preference from many for national co-ordination and support for a centralised body that could provide funding, advice and resources on a consistent basis across Scotland.

81. When considering rural energy issues, there were some requests for a greater focus on better energy provision in rural off-gas grid areas of Scotland. There was also a perception from some respondents of the need to simplify Scottish Government funding and deliver mechanisms, particularly given the need to engage community groups to a greater extent.

Supporting a range of technologies within Scotland's energy mix

82. While there was support for energy from renewable sources and / or for hydrogen to be part of the energy mix in Scotland, many respondents noted that a range of technologies will be required in order to maintain security of supply in the future.

83. There were also calls to ensure a suitable infrastructure across these technologies, in particular grid management, grid improvement and additional connection to the Scottish Islands.

Need for a clear roadmap and decision points

84. There are a number of requests for a clear roadmap for the direction of travel and to clarify when decisions will be made at a national level for key sectors and for rolling out new energy choices. This should support the investment required to deliver the energy transition and deliver Scottish Government targets for 2030 and the long term vision expressed in the draft Energy Strategy.

Greater focus on innovation, investment, skills, resources and workforce matters

85. Many respondents referred to the importance of the Strategy to give certainty to investors about the economic value from the energy sector, and to continue to enhance the Scottish supply chain with respect to energy.

86. Respondents referred to the need for ongoing business-led innovation and demonstration projects across the energy sector; again noting the need for flexibility in offerings so that when innovative technologies are further developed, these can be incorporated into Scotland's energy mix.

87. Throughout the consultation respondents noted the need for a greater focus on skills, resources and workforce matters to ensure the industry is well-supported and equipped to deliver the Energy Strategy vision. Some respondents thought the industry were facing challenges in this area; particularly in light of Brexit.