Infrastructure Investment Plan 2015: progress report 2017

Energy

Over the course of 2017 there have been several announcements that relate to accelerating investment in and delivery of community energy and low carbon infrastructure projects.

The key initiatives that support low carbon and renewable energy are the Low Carbon Infrastructure Transition Programme ( LCITP), the Community and Renewable Energy Scheme ( CARES) and the Renewable Energy Investment Fund ( REIF).

Low Carbon Infrastructure Transition Programme ( LCITP)
Launched in 2015, the Low Carbon Infrastructure Transition Programme ( LCITP) is a collaborative partnership led by the Scottish Government, working with Scottish Enterprise, Highlands and Islands Enterprise, Scottish Futures Trust and Resource Efficient Scotland. This intervention, which is co-funded by the European Regional Development Fund, focuses on supporting the acceleration of low carbon infrastructure projects across the public, private and community sectors to develop investment grade business cases to help projects secure public and private capital finance.

The programme aims to stimulate commercial interest and investment and maximise Scotland’s vast potential in the low carbon sector whilst contributing to the positive progress of the Scottish Government in reducing Scotland’s greenhouse gas emissions. Since 2015 LCITP has supported the co-development of over 30 proof of concept and development proposals for low carbon projects. LCITP has also run a number of open funding invitations, including the Transformational Low Carbon Demonstrator Invitation and the Innovative Local Energy Solutions Invitation and has offered over £40 million of funding to 15 low carbon capital projects. This funding has been matched by equivalent investment from both the public and private sector.

Community and Renewable Energy Scheme ( CARES)
Since 2013 £44 million has been made available through CARES (Community and Renewable Energy Scheme to support community and local energy. CARES has supported 66 operational community and locally owned projects, mainly onshore wind and hydro, of which 46 were community schemes.

Renewable Energy Investment Fund ( REIF)
The Renewable Energy Investment Fund ( REIF) is managed by the Scottish Investment Bank within Scottish Enterprise and prioritises investment in community renewables and marine energy. To date (December 2012- February 2017), £70.3 million has been invested in:

• 15 community-owned wind and hydro schemes, mainly in the Highlands and Islands;
• 7 community investments in commercial wind farms;
• 11 marine energy projects; and
• 5 'other' projects (innovative offshore wind, innovative onshore wind and heat, and a small-scale wind turbine manufacturer).

Support for community energy has been particularly important with REIF filling a market gap for significant community projects. The original concept for REIF was to maximise funds for the private sector, and to date REIF has levered in £168.5 million from an investment of £70.3 million.

Atlantis Resources, developer of the MeyGen tidal array project, has successfully installed four turbines in the Pentland Firth and Edinburgh firm Nova Innovation has installed three tidal turbines off the coast of Shetland. Scottish Government support was instrumental in helping both projects reach these important milestones.

Wave Energy Scotland ( WES)
We established Wave Energy Scotland ( WES) at the end of 2014. WES is fully funded by the Scottish Government and delivered by Highlands and Islands Enterprise ( HIE). It funds the development of disruptive technologies that will improve the performance and cost effectiveness of wave energy devices.

To date, WES has supported over 60 projects, engaged 170 organisations from industry and academia, and awarded around £25 million to support innovation.

Scotland's Energy Efficiency Programme ( SEEP)
Scottish Ministers designated energy efficiency as a national infrastructure priority in 2015 recognising the many benefits that are delivered by improving the energy performance of our buildings. SEEP sees us delivering on this priority.

SEEP is a 15-20 year programme; its aim is to make Scotland’s existing buildings near zero carbon wherever feasible by 2050, and in a way that is socially and economically sustainable. By 2050, SEEP will have transformed the energy efficiency and heating of Scotland’s buildings, making our existing homes, shops, offices, schools and hospitals warmer and easier to heat.

SEEP has two key objectives:

• Removing energy efficiency as a driver for fuel poverty. As set out in our recent consultation on a new fuel poverty strategy for Scotland ^[2] we are committed to removing poor energy performance as a cause of fuel poverty. SEEP will be the primary mechanism by which this is achieved.

• Reducing greenhouse gas emissions through more energy efficient buildings and decarbonising our heat supply. Our Climate Change Plan ^[3] sets out our targets to reduce greenhouse gases. These ambitious targets will see emission reductions in the residential and services sectors of 23% and 53% respectively by 2032 on 2014 levels. By 2050 emissions in Scotland will have to fall by at least 80%. To achieve this, all buildings in Scotland will need to be near zero carbon by 2050. In achieving these objectives we are delivering multiple benefits.

Investment in improving the energy efficiency of Scotland’s buildings will:

• put more money in people’s pockets by cutting the cost of heating their homes – supporting our ambitions to eradicate fuel poverty
• improve business competitiveness by making sure every of pound spent on energy is maximised in productivity
• substantially reduce greenhouse gas emissions contributing to meeting our ambitious climate change targets;
• boost GDP, research shows that a 10% improvement in the energy efficiency of all UK households will sustain GDP expansion of around 0.15%.
• help create a substantial Scottish market and supply chain for energy efficiency services and technologies. Every £100 million spent on energy efficiency improvements in 2018 is estimated to support approximately 1,200 full-time equivalent jobs across the Scottish economy ^[4]
• deliver health and early years improvements through warmer homes;
• help regenerate our communities through upgraded building stock.

The Scottish Government has committed to £500 million for SEEP over 4 years to 2021. Overall, the programme is estimated to be £10 billion worth of investment over its lifetime. We have made significant progress in improving the energy efficiency of our buildings to date but more needs to be done if we are to achieve our vision and maximise the benefits. In May 2018 we will publish a detailed routemap outlining how we will take SEEP forward.

Carbon Capture Storage ( CCS)
Scottish Government policies view the development of CCS systems as an important part of our decarbonisation infrastructure with the flexibility to adapt over time to play a central role across the decarbonisation strategies of key sectors such as heat, industry and power.

We are not alone is pursing CCS, there are sixteen large CCS demonstration plants operating throughout the world including Norway's Sleipner project which has been operating for twenty years and has stored 17 million tonnes of CO2 deep beneath the Norwegian North Sea.

The UK Government have committed to the development of a new policy framework for CCS and we will work with UK Government to encourage that and look for Scotland to host any future investment including demonstration projects.

In October 2015 the Scottish Government signed a grant offer of funding of £4.2 million for the Summit Power project. The funding, £2.5 million from Scottish Government and £1.7 million from the UK Government, is allowing the Summit Power Group to undertake substantial industrial research and feasibility studies for their proposed Carbon Capture Storage Clean Energy Project in Grangemouth.

The feasibility study is now concluded and a final draft is with the Scottish and UK Governments for consideration.

Oil and Gas
A successful oil and gas sector is a key component in the transition to a more resource efficient, lower carbon economy. Whilst this sector is currently facing a range of challenges, it continues to support employment opportunity across Scotland. At this challenging time, it is essential the correct policy framework is in place to support continued capital investment in the sector.

The Scottish Government launched the Decommissioning Challenge Fund ( DCF) in February 2017 and have successfully implemented the fund through 2018-18. The DCF supports infrastructure upgrades and improvements at Scottish ports, improving capacity, and innovation projects across the supply chain seeking to improve on approaches to decommissioning to give Scotland a competitive advantage in this developing sector.

Scottish companies have already been successful in winning offshore decommissioning work, such as high value plugging and abandonment work, but investment has been required at Scotland’s ports and harbours to increase our capture of dismantling and disposal contracts.

The DCF to date has made grant offers to 13 projects and is expected to have paid out over £2.5 million in grants by the end of the financial year. This funding is expected to leverage a further £3.4 million from private funders and other sources, helping to support an estimated 200 jobs across the Scottish Economy and has accelerated studies for projects that expect to deliver £112 million of further port development. The DCF also aligns with cost reduction efforts related to retrieval and disposal activities led by the Oil and Gas Authority ( OGA) and the Oil & Gas Technology Centre ( OGTC).

Hydrogen
In March 2017 the SG provided £3 million funding to Aberdeen council to contribute to a doubling of the fleet of zero-emissions hydrogen fuel cell buses to 20 vehicles. The additional 10 buses are being procured under the EU funded JIVE programme and are expected to be deployed in 2018. This initiative will position Aberdeen as operators of the largest fleet of hydrogen buses in Europe.