Draft Energy Strategy and Just Transition Plan

Annex G - Draft marine and solar visions for Scotland

Draft marine energy vision for Scotland

Wave and tidal energy has the potential to support the delivery of a secure and low carbon energy system while providing a new industrial opportunity and being part of Scotland's response to the global climate emergency. The predictability and availability of the marine energy resource off Scotland's coastline, together with Scotland's early lead in the technology, provides an opportunity to build on Scotland's maritime heritage and to secure a substantial share of the emerging global market for marine energy.

Scotland's marine energy achievements to date

Scotland is the most advanced hub in Europe for the development and deployment of marine energy technologies. Scottish tidal stream energy developers including Simec Atlantis Energy, Orbital Marine Power and Nova Innovation have delivered pioneering projects in Scotland which showcase Scotland's innovation strength and supply chain capabilities while demonstrating the reliability of tidal energy and taking this proven technology to the cusp of commercialisation. The outcome of the most recent allocation round under the Contracts for Difference offers the potential for a substantial increase in the installed capacity from tidal stream energy in Scotland over the next five years.

Wave Energy Scotland (WES), established by the Scottish Government in 2014, is the largest dedicated wave energy research and development programme in the world. It is driving innovation in the key systems and sub-systems of wave energy, which is at an earlier stage of technology and commercial development than tidal stream energy. The recent real-sea testing in Orkney of scaled wave energy convertors developed by two Scottish developers under the WES programme, AWS Ocean Energy and Mocean Energy respectively, represents a significant milestone for the sector. Together with the Basque Energy Agency, WES is co-leading EuropeWave, a pan-European programme which mirrors and builds on the WES pre-commercial procurement model to support the further development of the most promising wave energy concepts.

The achievements of Scotland's marine energy sector to date have been underpinned by the European Marine Energy Centre (EMEC) in Orkney, at which more wave and tidal energy devices have been tested than at any single site in the world. With 20 years' experience as a hub for technical innovation and international collaboration, EMEC has a level of expertise in marine energy which is unsurpassed anywhere in the world.

Potential benefits of marine energy

Wave and tidal stream energy are two distinct renewable energy technologies which, as part of a diverse energy mix, can support Scotland's transition to net zero. Tidal energy is highly predictable and can complement intermittent sources of energy, smoothing the overall power supply from renewables. The generation profile of wave energy is out of phase with other renewable sources such as offshore wind, giving it the ability to provide a grid balancing function.

Marine energy technologies have minimal visual impact and are scaleable, with the potential to be integrated with other energy technologies in order to maximise energy output and contribute to net zero ambitions. Scotland also has significant transferrable expertise and facilities from industries such as fisheries, offshore wind, oil and gas, shipbuilding and ports and harbours. This provides an opportunity to support a just transition to a low carbon economy, as well as a home-grown industrial capability to help scale the marine energy sector.

Supply chain analysis by the Scottish Marine Energy Industry Working Group has identified that Gross Value Added (GVA) from UK wave and tidal deployments could range from £4.9 billion - £8.9 billion from domestic deployments by 2050. The Offshore Renewable Energy Catapult has estimated that the tidal stream industry has the potential to support almost 4000 jobs in the UK by 2030.

Projections for global deployment of marine energy technology, from the International Energy Agency (IEA) TIMES model, are for around 180 GW of capacity by 2050. Scotland's early lead could give it a first-mover advantage in this emerging market, with tidal stream technology developed in Scotland having already been exported to countries including Japan and Canada.

Actions to enable further deployment of marine energy in Scotland

The Scottish Government established the Scottish Marine Energy Industry Working Group in 2021 as a forum for the sector to speak with one voice about its priorities and the steps needed to maintain and build on Scotland's competitive advantage.

The industry view is that a strong domestic market for marine renewables is critical for maintaining the current high level of local content and enabling the Scottish sector to play a substantial role in the future global market. It is proposed that further and larger scale tidal stream deployments over the next five years are essential to enable tidal energy to continue along the cost reduction pathway and to embed the necessary skills and expertise in Scotland.

The industry group recommends the introduction of marine energy deployment targets, including at least 40 MW of installed capacity from tidal stream energy by 2027.

The industry group also recommends the provision of continued innovation funding and other financial mechanisms to support further deployment of tidal technology and ensure it is in a position to compete in potential future CfD allocation rounds as it continues the journey towards commercialisation.

The group recommends the continuation of Scottish Government support for Wave Energy Scotland, and suggests that an appropriate target for wave energy could be the testing of up to four wave energy convertors (250 kW each) at EMEC by 2027.

The industry supports, and will actively engage in, the continued development of the consenting, licensing, and connection process, facilitated through Crown Estate Scotland, Marine Scotland, the DNOs, and National Grid.

The industry has also called for a strategic review of existing infrastructure and future requirements for marine renewables. The Strategic Investment Model (SIM) for offshore wind provides an opportunity for marine renewables to strategically develop their supply chain asks alongside those of offshore wind. Activity in this area will help to ensure delivery of a commitment in the Bute House Agreement of August 2021 relating to the development of ports and manufacturing infrastructure needed by the offshore renewables sector.

Next steps

We will continue to engage with industry and other stakeholders to understand the barriers to and opportunities from the further development of wave energy and the commercialisation of tidal stream energy. This engagement, including responses to the consultation questions below, will inform the development of the final version of the marine energy vision statement, to be published as part of the Energy Strategy and Just Transition Plan in 2023.

Draft solar vision for Scotland

Solar has an important role to play, as part of a diverse energy mix, in Scotland's decarbonisation journey. Our aim is to maximise the contribution solar can make to a just, inclusive, transition to net zero. We will support the sector to minimise barriers to deployment wherever possible, and will continue to provide support through our schemes such as Community and Renewable Energy Scheme and Home Energy Scotland.

Solar capacity in Scotland

Currently, Scotland has 411 MW of operational solar capacity, with a further 767 MW of estimated pipeline capacity.^[121] This pipeline of projects, which will increase the current capacity by over 150%, shows the significant appetite for greater solar deployment in Scotland, and shows Scotland is a great place for solar. Our ambition is for solar deployment to go further, faster. Below we have set out the actions we are taking to support this.

Benefits of greater solar deployment in Scotland

We recognise solar has an important role to play in decarbonising our energy system, particularly when combined with other renewables. We see a strong role for solar thermal, as well as domestic and commercial solar PV combined with battery storage systems - which have the potential to help reduce consumer bills.^[122]

Current support for solar in Scotland

Scottish Government Funding - Costs for solar have reduced by 60% since 2010 with support also provided through UK Government schemes.^[123] Scottish Government funding is therefore focused on domestic and non-domestic projects, through a comprehensive range of support schemes for renewable and energy efficiency technologies. Further information on these funding schemes can be found in Annex I.

Non-Domestic Rates (NDR)^[124] – We provide generous NDR relief for renewable generators, including an exemption for solar PV with a capacity of up to 50kW.^[125] On 1 April 2022, we expanded eligibility for the Business Growth Accelerator relief to include solar panels as a qualifying improvement eligible for relief for 12 months after installation.

Community Benefits^[126] - We provide up to 100% NDR relief to renewable energy generators (including solar), who provide community benefit.^[127] We are keen to see the number of solar installations offering community benefits increase and continue to encourage the sector to consider what packages of community benefit it can offer communities local to developments, in line with our Good Practice Principles.^[128]

Actions to enable greater deployment of solar in Scotland

We continue to make considerable progress in lowering barriers that are within Scottish Government competence, to facilitate greater deployment of solar. We will continue to work closely with industry to enable solutions for the sector. Below, we have set out the ongoing commitments we will take to further deliver this:

Solar Deployment Ambition - We are considering the evidence for setting a solar deployment ambition and are consulting on it through this draft vision (see consultation questions in Annex B). We will provide an updated position in our final solar vision in 2023.

Public Sector Buildings – We will encourage solar on public sector buildings through our Green Public Sector Estate Decarbonisation Fund, which provides a number of funding routes for the public sector to install solar energy.^[129] When consulting on regulations for heat and energy efficiency of existing non-domestic buildings, we will highlight our solar vision that additionally signals our strong support for rooftop solar deployment on commercial and public buildings.

Skills - We are aware there are pockets of skills gaps across some parts of Scotland for installation and maintenance of solar PV, and we will explore this further with industry. Our Climate Emergency Skills Action Plan is the framework for creating and supporting the workforce in the transition to net zero and will reflect sector specific skills like these, in the update due by the end of 2023.

Permitted Development Rights (PDR)^[130] - We will bring forward our consideration of new and extended PDR for non-domestic solar equipment from Phase 4 to Phase 3 of our PDR review programme. We intend to consult on Phase 3 proposals early in 2023.

National Planning Framework 4 (NPF4)^[131] – The Revised Draft National Planning Framework 4 signals a turning point for planning, placing climate and nature at the centre of our planning system and making clear our support for all forms of renewable, low-carbon and zero emission technologies, such as solar, and including transmission and distribution infrastructure. The Revised Draft NPF4 was laid in the Scottish Parliament on 8 November 2022. Should Parliament approve NPF4, Scottish Ministers would move swiftly to adoption to allow us to progress onto implementation and delivery.

Scottish Government Research - We have commissioned research on the whole system interactions and impacts on the electricity distribution network of high-volume deployment of domestic and commercial solar PV. This will be completed in early 2023.

New Builds and Building Warrants^[132] – Following the recent publication of the revised standards and guidance for Scottish building regulations we will continue to liaise with industry on the solar aspects. We will also engage with the sector to understand the extent of the current issues experienced with gaining permissions for building warrants.

Biodiversity - We are engaging with stakeholders on the case that future rural support payments might be eligible on land used for solar installations that is also explicitly being used to deliver our Vision for Scottish Agriculture. In the present Common Agricultural Policy model, support cannot be claimed for this type of dual use. Notwithstanding the outcome of this, we will seek to encourage high biodiversity standards on solar farms.

Non Domestic Rates (NDR) – In addition to our already generous NDR reliefs in relation to renewable energy generators, we will introduce a new exemption for plant and machinery used in onsite renewable energy generation and storage. This will be available from 1 April 2023 until 31 March 2035.

Next steps

We will continue to work with the solar sector, conducting wide stakeholder engagement in progressing these actions. Following consultation we will seek to finalise and update our Solar Vision. We expect to publish this in 2023.