Infrastructure Investment Plan 2015: progress report 2018-2019

Energy

Overview

The Scottish Energy Strategy, launched in December 2017, set out a clear vision for the development of energy systems across Scotland that will create economic opportunities whilst supporting work to achieve Scotland's long-term climate change targets. It is recognised that a well-balanced energy mix will remain essential as we continue to decarbonise Scotland's heat, transport and electricity systems – providing the basis for secure and affordable heat, mobility and power for consumers. The Scottish Government currently supports infrastructure across a number of programmes and initiatives with the aim of developing a decarbonised energy system for Scotland.

Low Carbon Infrastructure Transition Programme (LCITP)
Launched in 2015, the Low Carbon Infrastructure Transition Programme (LCITP), which is co-funded by the European Regional Development Fund, focuses on supporting the acceleration of low carbon energy 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 investment and maximise Scotland's vast potential in the low carbon sector whilst contributing to the positive progress in reducing Scotland's greenhouse gas emissions. Since 2015, LCITP has supported the co-development of over thirty 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 Systems Invitation and has offered over £40 million of capital funding to fourteen low carbon projects. This funding has been matched by equivalent investment from both the public and private sector.

• The Glenrothes Energy Network project is utilising the heat generated by the RWE Markinch combined heat and power biomass plant following the loss of the plant's key heat user as a result of the closure of the Tullis Russell Paper-mill in 2015. The project, which commenced operation in March 2019, has created an ambitious energy centre and district heating network to supply low carbon heat to a wide range of local customers in the centre of Glenrothes. The total capital investment is £24 million with contributions of £8.6 million from the Scottish Government's LCITP, £13.6 million from RWE and £1.7 million from Fife Council.
• The Nova Innovation Tidal Energy Storage System (TESS) is the first project globally to utilise both renewable tidal technology and battery storage provided by Tesla to overcome the challenges of grid constraints and facilitate the improved, uninterrupted, provision of low carbon energy in Shetland. The project has potential for replicability in other small island communities across Scotland. Supported by £273k from the Scottish Government's LCITP, the successful commissioning of the system in October 2018 will enable deployment of additional tidal devices, therefore expanding the generating capacity of the current Shetland Tidal Array.

LCITP launched the £60 million Low Carbon Innovation Funding Invitation in January 2018 offering support for projects in three priority areas – integrated energy systems, low carbon heat and ultra-low emission vehicle infrastructure. Four projects have been offered capital support of £12.7 million in total. Fourteen projects have received offers of development support totalling £770,000 to compile investment grade business proposals, these development projects will be considered for LCITP capital support, subject to a viable business case, in Summer 2019.

Community and Renewable Energy Scheme (CARES)
Our flagship Community and Renewable Energy Scheme (CARES) provides funding (grant and loans) and free advice delivered by development officers based throughout the country to support the growth of community and local energy. A priority for CARES is to support the Scottish Government to reach our community and locally owned targets of 1 GW by 2020 and 2 GW by 2030 and a commitment for at least half of newly consented renewable energy projects to have an element of shared ownership. Work will begin in 2019 to develop a Local Energy Systems Policy Statement, which will set out key principles for developing local energy systems in Scotland.

Since 2013, £35 million has been made available through CARES. CARES support to community and local energy has supported 66 operational community and locally owned projects, mainly onshore wind and hydro, of which 46 were community schemes. Up to £5 million been available through CARES for activity in 2018-19. CARES has directly supported:

• 267 community and locally owned projects which have been installed and which have a capacity of 59MW.
• 30 shared ownership projects throughout Scotland under the current CARES contact (April 2017 to present).
• In total there is now 697MW of installed capacity for community and locally owned projects across Scotland

Energy Investment Fund (EIF)
In the Scottish Energy Strategy, the Energy Investment Fund (EIF) was announced as a successor to the Renewable Energy Investment Fund (REIF) delivered on the Scottish Government's behalf by the Scottish Investment Bank, part of Scottish Enterprise. It builds on the success of the Renewable Energy Investment Fund, providing commercial investment for both renewable and low carbon energy solutions. As well as addressing market failure, a key aim of EIF investment is to leverage benefits both in terms of wider private sector investment and other benefits aligned with Scottish Government policy priorities, including community benefits and maximising community investment in commercial schemes. Over £72 million had been invested, with up to £20 million made available to support EIF activity in 2018-19 and 2019-20. Projects supported include:

• 15 community-owned wind and hydro schemes,
• 7 community investments in commercial wind farms; and
• 11 marine energy projects.

Wave Energy Scotland (WES)
Wave Energy Scotland (WES) was established in 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 and is recognised as a truly innovative approach to pre-commercial procurement delivering both value for money and innovation. To date, the WES programme has funded 86 contracts, invested £38.6 million and been involved with 200 separate organisations, across 13 different countries. The independent expert panel for WES awarded a total of £7.7 million in January 2019 to the two best Wave Energy Convertors (WECs) from within the programme to go forward to real sea testing in Orkney in the summer of 2020. This will deliver devices, sub-systems and components that are integrated in two proof of concept demonstrations.

Saltire: Tidal Energy Challenge Fund
Scotland has tremendous wave and tidal stream energy resources. We have around 25 percent of Europe's tidal stream potential, equivalent to approximately 10GW, Scotland remains world leaders in the development of tidal technology and current estimates indicate a potential value to the UK of £800 million by 2035. In February 2019, the £10 million Saltire Tidal Energy Challenge Fund was launched. The fund addresses immediate funding pressures from the tidal energy sector and will provide funding support for tidal projects to be deployed in Scottish waters by Autumn 2020. The principal aim of fund is to drive innovation and incentivise investment in the Scottish tidal energy sector, supporting a pathway to long term cost reduction.

Energy Efficient Scotland
Scottish Ministers designated energy efficiency as a National Infrastructure Priority in 2015, in recognition of the many benefits, which can accrue from improving the energy performance of Scotland's buildings. This Priority will be delivered through Energy Efficient Scotland (EES), a twenty year programme which aims to make Scotland's buildings zero carbon wherever feasible by 2050, in a way that is socially and economically sustainable.

By 2040, the visions is that all Scottish buildings will be warmer, greener and more efficient. The EES Routemap was launched in May 2018 and sets out the current support in place and the steps we intend to take in each sector. Through EES, we have moved to a more integrated approach so that households, public bodies and businesses can more easily plan and deliver energy efficiency improvements.

We have launched our two-year Transition Programme that will take us to 2020. Alongside the Transition Programme and the support delivered by local authorities, we will be maintaining our current provision with our existing national fuel poverty programmes and existing loan programmes continuing to be available to support households and businesses that are based outside designated area based schemes, and to bodies in the public or private sector, which are developing heat networks.

From 2020, EES will support building owners to make changes to their buildings and heating systems to reach the required energy rating, with more support available depending on the extent to which home owners struggle to afford their heating. We are on track to deliver our 2016 Programme for Government commitment to make half a billion pounds (£0.5 billion) available over the 4 years to 2021 to tackle fuel poverty and improve energy efficiency.