Local energy policy statement

Chapter 3: Networks & Infrastructure -Flexible networks can help realise local solutions.

Principles

• All activity should provide a high level of security and quality of supply to all, with an emphasis on considering existing energy infrastructure first.

• The design and operation of energy networks should consider the whole energy system while supporting local, regional and national solutions.

This chapter outlines the role that networks and the enabling infrastructure - electricity, heat, transport and digital will play in the energy transition and Scotland's journey to a net zero future, and what this means for those developing local energy systems projects.

3.1 More flexible than in the past

Scotland should have the capacity, the connections, the flexibility, and the resilience necessary to maintain secure, reliable supplies of energy to all of our homes, communities, and businesses.

Networks allow us to share energy – local networks allow us to share energy locally, and national networks allow us to share energy nationally. Our networks need to evolve in ways that reflect the balance of local and national energy, and the different sources and uses of energy that are envisaged for Scotland. 

Our Vision for Scotland's electricity and gas networks^[12], published in March 2019, states that Scotland's gas and electricity networks delivered around half of all energy used in Scotland in 2017. These networks help to deliver affordable, reliable, and increasingly renewable energy across Scotland - and will be critical in achieving Scotland's net zero emissions target by 2045.

It is difficult to determine exactly what Scotland's future infrastructure needs and requirements will be. For example, the uptake of electric heating and transport on a large scale could place extra pressure on the electricity system, affecting the networks' ability to generate, store and use electricity to meet peak demand.

Scotland's Energy Strategy highlighted two possible future energy scenarios for Scotland.

Scenario 1

An Electric Future

By 2050 electricity generation accounts for around half of all final energy delivered. The sustained growth of renewable generation has helped ensure that we meet our climate change targets.

Scottish electricity demand has increased by over 60% since 2015, and is increasingly supplying transport demand through battery powered electric cars and vans. Space and water heating is largely supplied, where practical, by highly efficient heat pumps, and via a new generation of smart storage heaters. Peak electricity demand has risen significantly, moderated to an extent by smart meters, responsive demand, new national and local market structures, and the changes in consumer behaviour that these have supported.

Scotland retains its pumped storage stations, with new capacity added during the 2020s, and electrical energy storage is widely integrated across the whole system. For example, the EV fleet operates as a vast distributed energy store, capable of supporting local and national energy balancing.

Scenario 2

A Hydrogen Future

By 2050, much of the demand previously met by natural gas has been converted to low carbon hydrogen. This is produced through strategically deployed electrolysers and from SMR plants paired with CCS. The effective transition from natural gas to hydrogen - assisted by Government support and regulation, and by the production of low carbon gas on a scale large enough to transform the energy system. Final energy demand has fallen, but natural gas demand has greatly increased - mainly to produce hydrogen, but also to power flexible electricity generation, with both processes utilising CSS.

The flexibility offered by gas has also enabled the expansion of the gas network into new locations without compromising the sustainability of the energy system.

Scotland has developed electrolysis facilities, meeting a proportion of the overall hydrogen supply. This helps balance renewable generation on the system, and creates demand which ensures that new gas generation with CCS can run in the most efficient way.

New hydrogen transmission pipes link production facilities with the main demand centres, and new and repurposed pipelines take captured CO2 to old North Sea gas fields for storage. The gas distribution network has been converted area by area, starting with the main cities.

However, irrespective of the type of energy system which may emerge, there will need to be significant investment in the management, at all levels, of our networks (including enabling infrastructure). 

There must also be scope for a flexible and open approach to decarbonisation: one that allows and enables local, regional and national solutions. The design and operation of our networks should be able to help deliver these solutions.

Our electricity networks today are based on a wholly national energy picture. There are limited opportunities for local communities to benefit from managing their local energy supply and demand in ways that limit the need for unnecessary network investment. However, the Scottish Government wants that relationship to change, and has established an Energy Networks Strategic Leadership Group. Its focus will include local energy needs and issues, and ways to ensure that energy networks can understand and respond to these.

Electricity policy is largely reserved, which means that persuasion, partnership and collaboration are important parts of our approach. The Scottish Government will continue to work closely with the UK Government, Ofgem, National Grid and Scotland's grid owners to ensure that Scotland's priorities are understood and reflected in any decision making process. 

This will include playing as full a part as possible with Scotland's energy network operators (both gas and electricity), consumer representatives and other stakeholders – in the discussions and debate which will inform the RIIO-2^[13] price control period. The Scottish Government will ensure that network companies reflect the ambitions and opportunities of local energy projects within their business plans.

3.2 Local and National

Local energy will not replace the need to have a flourishing national energy sector – rather, it will enhance it by allowing us to promote and maximise an efficient system and use of the network, as well as value from Scotland's renewable resources. Both are critical to ensuring that Scotland can transition to a net zero future in a way that delivers secure, affordable, clean energy for Scotland. 

This balancing and combination of local and national needs and capabilities will need to play a key role in providing both a secure supply and greater resilience across our networks from the bottom up. This will mean local and distributed energy, and demand-providing-services, will help ensure that the national network can operate securely and safely in an increasingly decarbonised system.

3.3 Must meet the needs of all consumers

Any changes must be designed to meet the interests of all people and businesses. Above all, this means ensuring that decision-making starts from the impact of change to all consumers - in particular, reflecting the needs of vulnerable consumers across Scotland.  

Today's energy networks provide a high level of security and quality of energy supply to all. Local energy projects can (and must) help retain and deliver these high levels, and have the potential to reduce the cost of doing so. For example, local generation or local energy balancing can defer the need for expensive reinforcement of the network while maintaining a high quality supply. 

3.4 Integration with other Scottish Government policies/ programmes

There are other related policies, providing enabling infrastructure, that are essential in our shift towards decentralised renewable generation. 

The key areas are:  

• The promotion of ultra-low emission vehicles (ULEVs) and the associated infrastructure that will be necessary to achieve our targets. We have invested over £30 million since 2011 to establish the comprehensive ChargePlace Scotland charging network, the largest in the UK outside London in support of our ambition to phase out the need for new petrol and diesel cars by 2032. Since 2017 we have provided financial support to install over 3500 domestic chargepoints at people's homes and almost 400 at workplaces to support business switching to ULEVs.
• The transition to renewable heat, and the extent to which the pathways for this transition will comprise low/ decarbonised gas or a major shift to electric heating – the latter in particular could have major implications for investment and growth across the lower voltage distribution networks. 
• Our commitment to world-class, future-proof infrastructure that will deliver digital connectivity across the whole of Scotland. 

ULEVs, Electric Vehicle charge points and energy system integration

On 29 August 2019, a new Strategic Partnership was announced between Scottish Government, Transport Scotland, Scottish and Southern Electricity Networks, and SP Energy Networks. It will deliver and improve coordination between Electric Vehicle (EV) charging infrastructure and electricity networks in Scotland. 

The £7.5 million partnership includes Scottish Government funding of £5 million and at least an additional £2.5 million from the network companies to deliver trial projects, aimed at demonstrating the benefits of coordinated planning in electricity and EV charging infrastructure.    

Through the Strategic Partnership a demonstrator project will be undertaken across Lanarkshire in 2020/21 by SP Energy Networks. This aims to evaluate the efficiency of an electricity Distribution Network Operator-led model for delivery of public EV charging infrastructure at scale.  Scottish and Southern Electricity Networks are also working with Transport Scotland to understand the impact of seasonal growth in EV tourism on the local electricity grid. Taking a 'use case' approach and focused on a number of tourist locations in the northern half of Scotland, this work is intended to enable flexible solutions to be identified that will be of benefit to consumers and minimise unnecessary investment in electricity network assets.    

Realising Scotland's Full Potential in a Digital World: A digital strategy for Scotland

Realising Scotland's full potential in a Digital World^[14] sets out our plans for ensuring that digital is front and centre of future plans – in the way in which we deliver inclusive economic growth, reform our public services, and prepare our children for the workplace of the future.

It's a strategy for Scotland, not just the Scottish Government. It recognises the profound challenges that digital poses for the nature of work, for society and for both the world and domestic economies. It also accepts that no single organisation can hope to have the answers to these questions and, therefore, looks to create a culture and environment of partnership where collective action is taken to ensure that nobody is left behind and everyone remains safe, and secure and confident about the future.

3.5 Using our powers

Where the Scottish Government has devolved powers, we will use these to maximise the   impact of the opportunities around technological and digital innovation, and their application to energy.  Adopting an integrated approach across different policy areas will help to ensure that the necessary enabling infrastructure is in place.  Examples include:

• Our role in planning and consenting new energy infrastructure.
• Supporting the deployment of enabling infrastructure to increase the take-up of ULEVs.
• Our Digital Strategy, which aims to provide high quality connectivity across the whole of Scotland.
• Our Vision for Scotland's electricity and gas networks.
• Our CARES programme, which provides a wide-range of free advice and support, as well as funding to support solutions that both generate and use energy locally, often to overcome infrastructure constraints.

However while the Scottish Government will do all we can within our devolved powers, the UK Government needs to take action to ensure that the policy and regulatory environment keeps up with the pace of change required to cope with an energy system based on significant renewable generation.  We will continue to engage with the UK Government on this matter. 

We Will

• Ensure the Energy Networks Strategic Leadership Group, whose membership includes regulatory bodies, including DNOs, NG and Ofgem, considers local energy as part of its remit. 
• Ensure  provision within the next CARES contract period, to start from 1 April 2021, to support community groups in their dealings with DNOs and other infrastructure providers.