Publication - Progress report
Infrastructure Investment Plan 2011 - Updated Programme Pipeline (January 2015)
Update to the Programme Pipeline as at January 2015.
ENERGY
| Programme | Capital value (estimate) | Timetable for delivery | Finance and delivery | Strategic links and progress update |
|---|---|---|---|---|
| Renewable Energy, including district heating Implementation of the Scottish Renewables Routemap |
The SR2011 identified spending on renewable energy of over £200 million over the Spending review period. In addition the agreement by the UK Government to release the Fossil Fuel Levy funds will mean an additional £103 million over that period. |
Spending Review period The REIF budget was re-profiled in the 2013 budget to extend funding to 2015-16. |
A range of projects will be supported, including:
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In addition the £12 million District Heating Loan Fund which has support £7 million of district heating schemes since 2011 will be part of driving these policies forward. This is helping to maximise the replacement of traditional heating with low carbon and renewable heat in order to meet our target of 11% of heat demand from renewable sources by 2020 and help to reduce carbon emissions. In addition to this, we aim to maximise the benefits for communities from access to locally produced and affordable renewable and low carbon heat. The extension of REIF to 2015-16 is in response to market uncertainty largely caused by electricity market reform, and will allow more time for projects in emerging sectors, particularly wave and tidal energy, to develop. |
| Grid upgrades Scotland faces significant challenges in grid capacity constraints and infrastructure development requirements, underpinned by a regulatory regime that needs to change to encourage a broad energy mix. |
In January 2012 Ofgem announced fast-tracking of £7 billion of investment in Scotland's grid by the two Scottish Transmission Owners ( TOs), Scottish Power Energy Networks and Scottish Hydro Electric Transmission, who are now upgrading their transmission networks across Scotland. | The £7 billion approved by Ofgem covers the period from 2013 - 2021. Some reinforcements are already delivered; some are underway; and some are longer term projects. |
Detailed funding and technical work is being taken forward by the Scottish TOs who will invest in and build the grid upgrades. In addition the Electricity Networks Strategy Group and a range of other groupings including the Scottish Government led ISLES project are assessing wider strategic reinforcement options. NPF2 identified onshore and offshore grid reinforcement upgrades which are underway or at various stages of development. There are other grid connection plans for the main island groups, e.g. the Western Isles link which could cost around £700 million. Plans are being developed for links to connect Shetland and Orkney to the Scottish mainland. |
Good electricity grid connection is essential to the social and economic wellbeing of communities. Scotland's grid system needs significant reinforcement to ensure that Scotland delivers its energy potential, maintains security in our energy supply to homes and businesses, and meets our renewable energy and climate change commitments. The Government's goal is to deliver secure and affordable low carbon electricity supply which achieves the greatest possible economic benefit. It also aims to ensure that renewable and small generators do not face significant connection delays, unnecessarily high costs or administrative burdens in applying for or obtaining connection to electricity networks. |
| Development of carbon capture and storage infrastructure Scottish Enterprise, in partnership with the Scottish Government, key industry players and leading research bodies, is developing a detailed Carbon Capture and Storage ( CCS) Cluster Investment Plan to drive forward the development of CCS opportunities in Scotland. |
Previous studies such as the 'Central North Sea CO2 Storage Hub' report published in August 2012 support the view that Scotland is well positioned to play a leading role in the deployment of CCS - Scotland has an abundance of CO2 storage potential in the Central North Sea, existing pipeline infrastructure which can be utilized, multiple opportunities for CO2 capture from power and industry sources and the necessary engineering and offshore experienced workforce to make CCS happen. A further study carried out by Element Energy on behalf of SE was completed in November 2013 building on the CNS report and the Cluster Investment Plan published in September 2011 provides a more detailed analysis of the strategy for CCS and sets out 12 key recommendations to advance the case for CCS in Scotland. | Peterhead CCS project (Gas) and White Rose project (Coal) in Yorkshire are the two preferred bidders in the Department of Energy & Climate Change ( DECC) £1 billion CCS Competition. DECC has concluded the negotiation process for both the White Rose project (in December 2013) and the Peterhead project (February 2014). The two projects are now in the Front End Engineering and Design ( FEED) phase and scheduled to be in operation by 2020. Summit Power's project in Grangemouth (Coal Gasification) is not a preferred bidder, however, negotiations for a Contracts for Difference between the project and DECC are continuing. |
Most of the investment in infrastructure is expected to be met by the private sector. Any public sector contribution to the overall costs of a CO2 hub are still not quantified - this study should help to identify what may be needed beyond private sector investment to bring the business case together and de-risk the proposals sufficiently for investment to take place, particularly in the initial stages. Scottish Government officials are working with SCCS to identify EU Member State partners to collaborate with in the preparation of a bid for funding* a 'Project of Common Interest' for cross boundary CCS. * This is under the Energy Infrastructure Package funding - bids to be in place by 2015. |
The economic opportunities for the development of a CCS-based industry are considerable and it is estimated a whole new industry could emerge in Scotland, which could support up to 10,000 new jobs in the next 10 years. Global market potential is estimated to be worth around £5,000 billion. CCS will be a key global tool in the fight against climate change, given that some 40% of global emissions are associated with coal. |
| National Renewables Infrastructure Fund ( N-RIF) The £70 million National Renewables Infrastructure Fund ( N-RIF) was created by Scottish Enterprise ( SE) to strengthen port and manufacturing facilities and supply chain provision for manufacturing offshore wind turbines and related components. |
The National Renewables Infrastructure Plan ( N-RIP) Stage 2 Report, published in July 2010, highlighted that £223 million investment in key port and landside infrastructure could support an offshore wind sector manufacturing 750 complete offshore wind units per year, creating c. 5,180 manufacturing jobs and an annual economic impact of £295 million per year. | The fund will be operational to 2015, with applications judged on their merits on an ongoing basis. Support from the fund is potentially additional to Regional Selective Assistance or European Selective Assistance, subject to state aid rules on overall levels of assistance. | The Scottish Enterprise Board will dedicate up to £70 million of funding for advancing N-RIP over the next three years. The funding will operate in line with N-RIP, and the first phase will focus on targeted investment in port and near-port manufacturing for offshore wind turbines. Specific expenditure on an annual basis will depend upon proposals received, timing of funding requirement and factors including the level of market interest associated with each site. N-RIF aims to offer a flexible approach to funding these projects. This could be in the form of grant funding or preferably, as joint investment funding. |
N-RIF should help secure Scotland's place at the forefront of the global offshore wind industry. The fund is expected to leverage significant private sector investment in the next three years and help deliver an estimated 28,000 jobs and £7.1 billion in value to Scotland's economy over the coming decade. |
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