Onshore wind policy statement refresh - draft: consultation analysis

Chapter 1: Current Position

When referring to respondents who made particular comments, the terms 'a small number', 'a few' and so on have been used. While the analysis was qualitative in nature, as a very general rule of thumb it can be assumed that: 'a very small number' indicates around 2-3 respondents, 'a small number' indicates around 4-6 respondents; 'a few' indicates around 7 to 9; and 'some' indicates 10 or more but fewer than half of those who commented at any question. Where larger numbers of respondents are referred to, a 'significant minority' is 10-25% of respondents, a 'large minority' is denoted by 25-50% of respondents, and 50%+ is 'a majority'.

1.1. The consultation paper noted that the Scottish Government (SG) expects the next decade to see a substantial increase in demand for electricity to support net-zero delivery across all sectors, including heat, transport and industrial processes. At present, there is 8.4GW of installed onshore capacity in Scotland, which provides 19.5GWh of total electricity generation in 2020. Scotland hosts the majority of operational onshore wind capacity in the UK and intends to increase this further.

1.2. Preparation of Scotland's fourth National Planning Framework (NPF4) is currently underway. This will incorporate Scottish Planning Policy (SPP) which contains detailed national policy on a number of planning topics. For the first time, spatial and thematic planning policies will be addressed in one place. NPF4 will have a stronger role in informing day to day decision making.

1.3. In collaboration with renewable energy developers and local communities, the Scottish Government published Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments and Shared Ownership of Onshore Renewable Energy Developments. This promotes the provision of community benefits at a national level equivalent to £5,000 per installed megawatt per annum, index linked for the operational lifetime of the project. The renewables industry is encouraged to consider, explore and offer shared ownership opportunities on all new renewable energy projects.

1.4. Scotland's onshore wind industry has proved capable of delivering wind farms using alternative mechanisms including the use of Power Purchase Agreements (PPAs), merchant projects and the use of private finance. However, the SG is of the view that the investment cost and risk facing many of the projects and capacity which are needed require a revenue stabilisation mechanism. The proposed reintroduction of established technologies to Pot 1 of the Contracts for Difference (CfD) auction process is welcomed, although it is believed that access to a wide range of financial mechanisms will be necessary.

1.5. The first question asked:

Q1: Does this chapter provide a fair reflection of the current situation faced by Scotland's onshore wind industry?

Summary (Q1)

• Opinions were very split as to whether chapter 1 provided a fair reflection of the current situation; slightly greater numbers of respondents disagreed than agreed.
• Onshore wind was generally thought to have a crucial part to play in increased power generation, with hopes that this would be reflected in the draft National Planning Framework (NPF4).
• Concerns were voiced that there needs to be more on the role of planning, and in particular about the compatibility of the NPF4 with the draft OnWPS.
• Other problems raised concerned the electricity grid, the financing of projects, and a lack of support for community owned energy schemes.
• Criticisms were levelled concerning the lack of mention of the adverse impacts of onshore wind farms and that other ways of meeting climate change goals were being ignored.

1.6. A total of 101 respondents answered the first part of this question. As shown overleaf, opinions were very split as to whether chapter 1 provided a fair reflection of the current situation; slightly greater numbers of respondents disagreed than agreed. There was almost a 50:50 divide within the renewable energy group of respondents.

Q1	Number
	Strongly agree	Mostly agree	Neither agree nor disagree	Mostly disagree	Strongly disagree	No response
Acoustics (3)	-	-	1	-	1	1
Aviation specialist (5)	-	-	-	-	-	5
Communities (18)	1	1	1	4	1	10
Governmental funded bodies & regulators (7)	-	3	-	-	1	3
Legal (2)	-	-	-	-	-	2
Lobby and interest groups (13)	-	2	1	2	1	7
Local authorities & planners (14)	2	7	-	-	1	4
Renewable Energy (43)	3	12	-	12	4	12
Third sector (e.g. Charities and other NGOs) (2)	-	-	-	-	2	-
Other (4)	-	1	-	-	-	3
Total organisations (111)	6	26	3	18	11	47
Individuals (49)	2	10	4	11	10	12
Total respondents (160)	8	36	7	29	21	59

1.7. A total of 123 respondents went on to give reasons for their answer or to make further comments at this question.

1.8. The main key themes emerging from respondents agreeing that the chapter provided a fair reflection were that onshore wind will have a crucial part to play in increased power generation, with hopes that this would be reflected in the draft National Planning Framework (NPF4).

1.9. Larger numbers of respondents pinpointed areas of disagreement; a large minority, mostly consisting of renewable energy organisations, thought that there needed to be more on the role of planning. Comments indicated the need for this to be efficient, with complaints about a lengthy consent process (with an average of 7 years quoted), too many rejections of developments because of visual or landscape impacts, cuts to planning department budgets, a lack of engagement with the process by key consultees and the high cost of application fees. Concerns about the content of the NPF4 were expressed by similar numbers of respondents, again consisting mostly of renewable energy organisations; issues raised were a perceived lack of compatibility with the draft OnWPS, lack of a supportive policy for enabling targets, and the absence of a requirement to develop spatial frameworks.

1.10. Issues were raised regarding the electricity grid by significant numbers of mainly renewable energy organisations; investment in grid infrastructure was perceived to be needed, with problems cited about grid constraints, obtaining grid connections for developments, and in particular grid transmission charging having a significant impact on wind farm operating costs.

1.11. Similar numbers of these mainly renewable energy respondents cited pressures regarding the financing of projects, with some concerned about a hiatus in financial support mechanisms, with the use of Power Purchase agreements (PPAs) perceived as being only a limited fix for this. Smaller but still significant numbers of mainly renewable energy respondents cited other barriers preventing developments including MoD and aviation-related constraints (such as time taken to discharge technical planning conditions such as aviation lighting and surveillance capabilities), and the best sites for wind farms already having been developed.

1.12. Significant minorities consisting mainly of communities' organisations and individuals were concerned about the lack of mention or support for community ownership or shared ownership energy schemes, citing the CfD scheme excluding projects of less than 5MW, and the Feed-in-Tariff (FiT) and Renewables Obligation (RO) schemes having been closed to new applicants. Similar numbers disagreed with the statement about communities being central to developments at 1.4, complaining about a lack of consultation with, and benefits for, communities local to wind farms, with mentions of a lack of regard for residents, the planning system being biased towards developers and applications creating hostility within and between communities. A few respondents noted adverse effects on rural communities e.g. by way of reduced tourism.

1.13. A significant minority, almost entirely consisting of renewable energy industry respondents, said the chapter painted too positive a picture without sufficient room given to the challenges facing the industry; doubts were expressed, again mainly by renewable energy organisations, as to whether the onshore wind (addition of 12GW by 2030) or net-zero carbon (by 2045) targets will be met amid concerns that the scale of the challenge has been underestimated.

1.14. A lack of mention of the adverse impacts of onshore wind farms was cited by a large minority of respondents from a broad mix of sub-groups; these included noise (a clear statement was requested about the status of ETSU-R-97 noise assessments), visual, landscape, cultural heritage, and environmental issues (specifically the removal of peat and protection requirements for flora and fauna).

1.15. Finally, significant numbers of mainly individuals and lobby and interest groups thought there was too much bias in favour of onshore wind and that other ways of meeting climate change targets were being ignored, with suggestions for an overall strategy incorporating onshore wind, offshore wind, tidal, wave, hydro, battery storage, green hydrogen and energy saving methods. Slightly smaller numbers of individuals, lobby and interest groups and communities organisations, advocated a halt to expanding wind farm capacity, noting scepticism as to onshore wind farm benefits or recommending offshore wind as being a more reliable source of energy. Concerns were also expressed about increasing power costs to consumers.

1.16. Question 2 of the consultation then asked:

Q2: How can the maximum number of developments be enabled to build-out without finance acting as a barrier?

Summary (Q2)

• Instigation of shorter or more streamlined planning and consenting processes for developments was the key theme.
• Ensuring that policies impacting upon projects do not undermine their financial viability was also a concern, in particular perceived outdated limitations on the use of larger turbines which can generate more electricity.
• A further issue identified was costs and constraints on development incurred from requirements for grid reinforcement works to increase capacity, connections and access.
• An important enabler was deemed to be more financing of community energy developments including shared ownership.
• The reintroduction of CfD auction rounds was welcomed.

1.17. A total of 104 respondents made comments at this question. The most often quoted theme was instigating a shorter or more streamlined planning process for developments, as stated by a large minority of respondents, almost all of whom were renewable energy organisations. Requests included adjusting the planning system balance to address climate change rather than visual impact, solving planning department resource issues and a renewed focus on the content of NPF4. Concerns were also noted about the need to take technological developments into account and the perceived restrictiveness of Landscape Capacity and Sensitivity Studies. The need for a shorter consenting process or increasing the time length of consents were also cited as a means to increase developers' confidence. A specific issue also raised by these respondents was that of perceived outdated limitations on the use of longer or larger turbines which can generate more electricity, given that the technology is constantly evolving such that the production of turbines of less than 180m is being discontinued.

1.18. More generally, there was a desire by a large minority, again dominated by renewable energy organisations, to ensure that policies impacting upon projects do not undermine their financial viability, with references to a lack of policy clarity and consistency and rising regulatory costs relating to public local inquiries, appeals and planning fees.

1.19. A large minority, including many communities' groups and renewable energy organisations, cited a need for more financing of community energy developments including shared ownership. Support from the Community and Renewable Energy Scheme (CARES) and the Energy Investment Fund was regarded as insufficient, and developments were regarded as less attractive with the ending of the FiT scheme. Advantages from these schemes were pointed out including community empowerment and Just Transition enablement. Ideas for financing were put forward including a Community Energy subsidy, capital grants, low interest loans and support from the Scottish National Investment Bank (SNIB). A significant number of mainly renewable energy organisations did however welcome the reintroduction of CfD auction rounds as a reliable route to the overall onshore market, with requests for more frequent rounds and onshore wind to be included in 'Pot 1' of the process. Suggestions for rebalancing the CfD process to support the UK supply chain, increased deployment caps and lengthened deployment windows were also made.

1.20. A significant minority from a broad range of respondents commented on the negative effects of costs and constraints on development incurred from requirements for grid reinforcement works to increase capacity, connections and access; many of the same respondents urged a change to network charges, citing high Transmission Network Use of System (TNUoS) charges making projects unviable and noting these are lower in England putting Scottish projects at a competitive disadvantage.

1.21. A few respondents from a broad range of respondent sub-groups made the following points:

• Scotland lacks powers over financial support mechanisms or to regulate electricity markets.
• Development costs (e.g. fabrication, installation) are declining, making investment more effective, with suggestions that better collaboration between developers, agencies and planning authorities can help reduce these further.
• Other suggestions of financial support for onshore wind included tax incentives, a National Energy company, Scottish Government funding, enterprise company loans and community bond or share schemes; albeit other respondents saw funding capital as being readily available with the prime need being for economically viable projects.
• A perceived need for a revenue stabilising mechanism, with energy price fluctuations seen as a disincentive to investment.

1.22. Small numbers of mainly individuals and lobby and interest groups thought there should be no need for further financial support and that the industry should stand on its own merits.

1.23. There were also reiterations of views, mostly from individuals, against the expansion of onshore wind, urging attention to be paid to the opinions of communities, and perceiving a need for a whole energy system approach.

1.24. The next question, which was in two parts, asked:

Q3: Can more be done to support the use of PPAs/Private Sector Finance? Is there a need for more policy signals from SG, and/or UKG, to provide investment security/surety?

Summary (Q3)

• The largest numbers of respondents agreed that more can be done to support the use of PPAs or private sector finance. Support for project competitiveness was the main action proposed. It was however noted that PPAs can be an additional route to market, but the viability of long term PPAs decreases with both increasing project cost and increasing penetration of renewables.
• A number of adjustments were recommended including corporate PPAs or direct PPAs from the Scottish Government or public bodies.
• Policy signals recommended were a need to involve or streamline the planning system, a need to help community owned or shared ownership projects, reductions in grid charging and improved ease of obtaining grid connections and widening PPA opportunities.

1.25. A total of 84 respondents answered the first part of this question, with the largest proportion agreeing that more can be done to support the use of Power Purchase Agreements or Private Sector Finance, or that there is a need for more policy signals from the Scottish and UK Governments, albeit with nearly as many answering 'don't know'. Renewable energy respondents who responded were almost unanimously in favour.

Q3	Number
	Yes	No	Don't know	No response
Acoustics (3)	-	-	2	1
Aviation specialist (5)	-	-	-	5
Communities (18)	1	1	6	10
Governmental funded bodies & regulators (7)	1	-	-	6
Legal (2)	-	-	-	2
Lobby and interest groups (13)	1	2	-	10
Local authorities & planners (14)	2	-	10	2
Renewable Energy (43)	20	2	1	20
Third sector (e.g. Charities and other NGOs) (2)	-	-	-	2
Other (4)	2	-	-	2
Total organisations (111)	27	5	19	60
Individuals (49)	10	12	11	16
Total respondents (160)	37	17	30	76

1.26. Sixty-five respondents proceeded to elaborate on actions to support the use of PPAs or Private Sector Finance; the greatest number of these responses – a large minority consisting of mainly renewable energy respondents – cited support for project competitiveness, in particular ensuring that policies impacting upon projects do not build in unnecessary costs. In a related point again made mainly by renewable energy organisations, it was noted that PPAs can be an additional route to market but the viability of long term PPAs decreases with both increasing project cost and increasing penetration of renewables.

1.27. Similar numbers of mainly renewable energy respondents said that Corporate PPAs can provide revenue stability, but several cited the caveat that finding corporates in Scotland with sufficient long-term buying power and credit ratings to make these bankable was a problem; a few respondents therefore suggested that the Scottish Government and/or public bodies with sufficient demand could commit to buying 100% renewable energy from Scottish projects through direct PPAs.

1.28. A significant minority of mainly renewable energy organisations suggested a number of other adjustments to, or broadening of, PPAs to support or increase their usage as follows:

• Encouraging the use of cross-border PPAs.
• The Scottish Government taking on an aggregator role whereby they bring together smaller corporates into a framework to increase the Corporate PPA market.
• A levelling up between mainland PPA or merchant schemes which may be viable and island PPA or merchant schemes which are not.
• Carrying out an investigation as to whether PPAs for domestic consumption are feasible at scale.
• Providing credit guarantees for corporate off-takers thereby increasing the pool of potential buyers that could enter into long term PPAs.

1.29. Small numbers of respondents particularly consisting of renewable energy and communities organisations suggested or reiterated other forms of (mainly financial) support as follows:

• Reductions in project development phase costs (e.g. planning delay costs, grid connection issues).
• Support for community wind projects, with suggestions that these need a specific financing scheme.
• Measures to mitigate revenue and pricing instability to help reduce risk.
• Advocating the CfD scheme as the best mode for delivery of developments, as the security for investors is not seen as matched by PPAs.
• The removal or alleviation of other financial barriers, particularly grid transmission charges and business rates.
• Other alternative financing suggestions including joint ventures by local authorities, private investors and crowdfunding, and Renewable Energy Guarantee of Origins (REGO).

1.30. A few comments were made by mostly individual respondents who disagreed with extra support for the use of PPAs or Private Sector Finance; most of these thought that developments should be self-financing or felt that the benefits go to foreign companies or landowners. A small number thought that little more support was needed as the PPA market was felt to be robust and competitive.

1.31. Forty-nine respondents made comments in response to the second part of the question regarding a need for more policy signals from the Scottish or UK Governments to provide security or surety; most of these reflected the same areas discussed at the first part of the question including a need to involve or streamline the planning system, a need to help community owned or shared ownership projects, reductions in grid charging and improved ease of obtaining grid connections and widening PPA opportunities. There were also a small number of comments urging more allowance for energy technology flexibility (e.g. encouraging the use of battery storage and hydrogen production technology by removing payment of constraint payments when wind farm operators are paid to switch off).

1.32. Small numbers of mainly individual respondents were against the need for more policy signals, perceiving generous help already being available in the form of subsidies or constraint payments. It is worth noting that both subsidies and constraint payments remain reserved to the UK Government.

1.33. Question 4 then went onto ask:

Q4: This section also underlines the Scottish Government's strong commitment to the role of community energy, and to community benefit and shared ownership. In what ways can we maximise the benefits of these policies as onshore wind development and repowering increases over the coming decade?

Summary (Q4)

• There was a broad desire for support to be given to community wind and local ownership of developments, and that renewable energy projects should benefit local communities, with requests to increase community benefit funds and provide flexibility and variety in the use of community benefits.
• Among suggestions for helping to mobilise community or local wind farm ownership were increased community collaboration with developers and better access to expertise for communities.

1.34. A total of 119 respondents chose to respond to this question. An overarching theme expressed across all respondent sub-groups was a broad desire for support to be given to community wind and local ownership of developments. A majority of respondents sought encouragement for these with suggestions of providing incentives such as an increase in community benefits, more involvement from local authorities and suggestions that all new developments should be obliged to provide an opportunity for community ownership. There was also a consensus that renewable energy projects should benefit local communities, with a focus on alleviating fuel poverty and enabling a Just Transition. A few respondents stated that there was a need for an increase in commitment to the aforementioned aims generally.

1.35. Other suggestions for helping to mobilise community or local wind farm ownership were made by a large minority of respondents from across all sub-groups and these included the following:

• Adopting a collaborative approach between communities and developers (albeit it was noted that current FCA rules do not allow developers to promote opportunities).
• Adopting a statutory minimum percentage of any development to be in community ownership (as in Denmark).
• Provision of clear guidance or reviewing current Scottish Government guidance (e.g. provision of a community power 'toolkit').
• Easy access for communities to financial and professional support.
• Analysing other possible enablers such as alternative financing mechanisms (e.g. support from the Scottish National Investment Bank (SNIB), incorporating the supply of green hydrogen into developments, encouraging self-build, and use of the proposed Scottish Guaranteed minimum export rate).
• Supporting specified programmes which promote community energy (e.g. Local Energy Scotland (LES), Resource Efficient Scotland Small and Medium Enterprise Loan (RES SME loan), Low Carbon Infrastructure Transition Programme (LCITP), Energy Investment Funding (EIF/REIF), Community and Renewable Energy Scotland (CARES), and Scottish Enterprise assistance).

1.36. A small number of mainly renewable energy organisations and communities' organisations noted concern over the loss of FiTs as making growth in community energy projects more challenging. Similar numbers pinpointed CfD schemes as holding back community ownership expansion as these exclude projects of less than 5MW. A lobby and interest group wished to see "a requirement in a CfD contract that community benefit payments and energy subsidies to the nearest residents are a mandatory requirement."

1.37. A large minority of respondents across all respondent types were in favour of increased community support to enable more projects and community capacity building. It was put forward that ongoing support to foster a legacy of employment and expertise would be advantageous though caution was also advised due to a lack of community skills or time to handle benefits within communities.

1.38. A large minority, again across all respondent types, requested increases to, or full realisation of, community benefit funds. £5000/MW or less was regarded as too little, as well as benefits claimed to be often falling short of those pledged, though there were also cautions that any increases would impact wind farm financial viability through increased costs or reduced revenue. There were also suggestions that community benefit funds need to be contractually bound and have better standards of governance.

1.39. More flexibility by way of a variety of other forms of community benefits were suggested by a large minority of respondents from across the sub-groups; these included community education, training, local infrastructure improvements, community endowments, meeting local economic and social needs, creation of community spaces, biodiversity / nature-related visitor centres, broadband connectivity and EV charging facilities. In particular there were a few mentions urging benefits to go to those who are most affected by wind farms in the form of free or subsidised power, and also ensuring community benefits via making planning permission decisions contingent (in part) on securing these.

1.40. A significant minority of mainly individual respondents were against community benefit funds, stating these can be viewed as "a bribe" for not opposing neighbouring wind farms, or a cause of divisiveness both within communities and between different community areas where wind farms straddle these.

1.41. A small number of mainly individual respondents noted increased opposition if communities feel overwhelmed by the number of developments in their area.

1.42. The final question in regarding the Current Position section of the consultation asked:

Q5: What more can be done to ensure that financial mechanisms are available to support development at differing scales?

Summary (Q5)

• Reiterating previous points, support for shared ownership of community energy was recommended as well as for small and medium-sized developments more generally, though larger schemes, being regarded as cost competitive, required more in the way of policy support rather than financial support.
• Subsidies were suggested as well as maintaining the Community and Renewable Energy Scheme and minimum power pricing amongst other mechanisms.

1.43. 80 respondents answered this question; in similar vein to the previous question the dominant theme noted (by a large minority of respondents from across all groupings) was a need for support of shared ownership or community energy; financial mechanisms were suggested including subsidies, maintaining the existing Community and Renewable Energy Scheme, EIF, local authority investments or PPAs and help with the governance of financing.

1.44. Suggestions for financial mechanisms were also made for small or medium-sized developments more generally; these included FiT certificates payments similar to the ROC scheme, minimum power pricing (e.g. obligatory buying of small-scale renewables at an administered price to compensate for lack of economies of scale), and a low interest or interest free loans scheme. A small number of requests were made for CfD to support smaller (<5MW) wind farms.

1.45. Regarding larger schemes, a very small number of mentions were made that policy support was needed rather than financial mechanisms, as these developments were regarded as cost competitive and already benefit from merchant and PPA finance opportunities. However, there were a few mentions of more frequent CfD auctions being needed for large scale or repowering projects.

1.46. Other financial mechanisms were recommended, each by small numbers of respondents, without pertaining to any particular type or size of development, as follows:

• Joint public / private investment (e.g. via a state energy company or in association with local authorities).
• Capital grants.
• Tax incentives (e.g. on capital expenditure, removal of VAT on renewables, supportive business rates).
• Risk reduction or underwriting support (e.g. government guarantees).
• Support provision from the Scottish National Investment Bank or a Scottish Renewable Energy Bank.
• A more holistic approach to focus financial mechanisms on other renewable energy sources where appropriate (e.g. hydro, battery storage).
• An area-based approach (e.g. City Region Deals or Regional Economic Partnerships).

1.47. Support to reduce costs was mentioned by a few respondents, including grid charges, grid upgrade and connection works, planning costs, radar mitigation costs and instrument flight procedure (IFP) assessment costs.

1.48. Other non-financial support measures were proposed by a significant minority of respondents across all groups, chief amongst which were long term pricing visibility and policy stability to provide certainty to invest in projects, and simplification of the planning regime.

1.49. A few individuals and communities' organisations were adamant that no more financial support or mechanisms should be needed as taxpayers already contribute an environmental subsidy.