The future of energy in Scotland: Scottish energy strategy

Chapter 1. A 2050 Vision for Energy in Scotland

This is our 2050 vision for energy in Scotland:

• A flourishing, competitive local and national energy sector, delivering secure, affordable, clean energy for Scotland's households, communities and businesses.

This Strategy will guide the decisions that the Scottish Government, working with partner organisations, needs to make over the coming decades.

The energy system described in the Strategy will create economic opportunities for both suppliers and consumers of energy. It will support work already planned or underway to achieve our long term climate change targets, and to address the impact of poor energy provision.

A diverse, well-balanced energy supply portfolio or 'energy mix' will remain essential as we continue to decarbonise our heat, transport and electricity systems – providing the basis for secure and affordable heat, mobility and power in future decades.

The social, environmental, economic and commercial benefits of this new approach depend on our involving of all stakeholders in the transition. We must protect vulnerable consumers and those not able to fully participate in new market arrangements. The Scottish Government and its agencies will work closely with citizen groups, communities, businesses, academic institutions, local authorities and other representative bodies to make sure that no one is left behind.

Our energy system is part of the wider Great Britain and European energy market. The recent UK Clean Growth Strategy and Industrial Strategy show that there is a great deal of common ground between the Scottish and UK Governments. We will continue, and build upon, our existing inter-governmental partnerships to make sure that we deliver the goals and ambitions in this Strategy.

The UK's exit from the European Union ( EU) could have a significant bearing on our future energy system. The impacts of 'Brexit' are amplified in Scotland because of the important role that energy plays in our economy. Being part of the internal European energy market is vitally important, as it safeguards our energy security, means lower costs for households and businesses and helps create jobs and investment.

Legally-binding EU renewable energy and energy efficiency targets have played a defining role in stimulating the huge growth in renewable energy in Scotland, and significant inward investment. The ability to continue trading energy openly and fully across Europe can, if unaffected, play a big part in the progress we make towards our renewable and climate change targets, and the growth of Scotland's low carbon energy sector.

Modernising and transforming our energy system will also depend on us finding ways to communicate and to work more effectively and meaningfully with wider society. We are determined to improve the ways in which we raise awareness and understanding about the choices we face – to allow the strengths, capacities, skills and ideas of consumers and producers of energy to combine and play their part in shaping and delivering Scotland's future energy system.

We will explore, through the development of a Culture Strategy for Scotland, ways that Scotland's culture sectors and creative industries can help communities imagine a green future, and to help us all adapt to the changes and opportunities.

Our vision remains guided by three core principles:

• a whole-system view
• an inclusive energy transition
• a smarter local energy model

A whole-system view

Our Strategy marks an important advance in Scottish Government energy policy. Building on the Heat Policy Statement ^[1] of 2015, it continues to broaden our focus to include heat and transport, alongside electricity and energy efficiency – creating an integrated approach which recognises the effect that each element of the energy system has on the others.

The move to ultra-low emission vehicle ( ULEV) technologies will change both our electricity and transport systems, creating opportunities but also challenges across each. Taking a coordinated approach – involving our existing transport sector and its suppliers, electricity generators, network owners and operators, not to mention consumers – will help us understand and tackle these opportunities and challenges in the best way possible.

Scotland's Energy Efficiency Programme places a renewed emphasis on managing our energy consumption more effectively, consistent with the designation of energy efficiency in June 2015 as a National Infrastructure Priority. This underlines the economic benefits of energy efficiency investment.

The 'whole-system' approach is woven throughout this Strategy. We have set two whole-system energy targets, while our new Strategic Priorities constitute a set of guiding principles involving multiple sectors – underlining the need for continuing and better collaboration between public, community, and private sectors.

An inclusive energy transition

Scotland continues to lead global efforts to decarbonise and tackle climate change, and to be recognised internationally for doing so. Our overall approach to energy is driven by the need to decarbonise the whole energy system, in line with emissions levels set out in the Climate Change (Scotland) Act.

We need the transition to a low carbon economy over the coming decades to happen in a way that tackles inequality and poverty, and promotes a fair and inclusive jobs market. The Scottish Government will work with partners and colleagues, both within the UK and internationally, to better understand the energy transition. We will make sure that we have the infrastructure and skills needed to make this work, and that we support 'high carbon' communities through the transition. The Scottish Government will establish a Just Transition Commission to advise Scottish Ministers on how to achieve this.

We know that the precise make-up of the future energy system is highly uncertain. Our ability to store and control energy is changing dramatically, driven by growing demand for storage, technological innovation, smarter networks and the growth of the digital economy. Scotland's energy future will be, and needs to be, much more flexible than in the past, with far more choice for domestic and business users.

New and smarter ways to generate and store renewable energy can also open up fresh opportunities for consumers – allowing them to explore and install applications and technologies which can help them to reduce both their carbon footprint and their energy bills.

Investing in energy efficiency, allied to consumer education which promotes behaviour change, helps to tackle fuel poverty by improving living conditions and providing more affordable energy for consumers.

Improving the energy efficiency of Scotland's businesses is a necessary part of promoting innovation in our energy system. It can increase productivity and competitiveness, since the cost of energy is a major driver of unit costs in some key sectors. It can also create opportunities to strengthen supply chains and growth across the Scottish economy.

There is an exciting opportunity to capture the economic benefits of developing and pioneering these approaches, here, in Scotland. However, there is a danger that the benefits of the transition may not be evenly spread. Over the coming years, our approach to consumer advocacy and advice – in tandem with the regulatory framework enforced by Ofgem – will need to respond quickly to the changing landscape. This will ensure that investment in our energy infrastructure and technologies doesn't worsen inequalities.

This principle of an inclusive energy transition will be further supported by our ambition to establish a new energy company. Our aim is that this company will support economic development and contribute to tackling fuel poverty, as well as being publicly-owned and run on a not-for-profit basis.

A smarter local energy model

Our Strategy proposes a smarter, more coordinated, approach to planning and meeting distinct local energy needs. This will link with developments at the national scale, creating a flexible and proportionate response to the challenges raised by the transformation of Scotland's energy system.

Supporting and delivering local solutions to meet local needs, linking local generation and use, can help create vibrant local energy economies. Heat, electricity, transport and energy storage technologies – planned and deployed on an area-by-area basis – can transform both rural and urban communities.

Scotland already leads the way in developing these local energy systems. The shift to renewable generation in areas with little or no spare grid capacity has led to innovation in business and network management – with Scotland's communities and islands playing an increasingly active part alongside the private and public sector.

We will continue to support the development of local energy economies. These are a central part of our response to the challenges presented by the transformation of Scotland's energy system.

However, we know that not all innovative projects will succeed; the next phase of our approach will consolidate the lessons learned from the pilot projects we have supported so far. In doing so, we will support the roll-out of technologies that work most effectively, and which present good value for money.

This will be helped by a new framework for Local Heat & Energy Efficiency Strategies ( LHEES) ^[2] , creating a strategy to guide investment in energy efficiency and heat decarbonisation at a local level. Led by local authorities, working closely with their communities, this will set out a long term prospectus for investment in new energy efficiency, district heating, and other heat decarbonisation programmes.

ScotRenewables SR2000 floating tidal turbine at Hatston Pier
(Credit: Paul O'Brien)

Navigating the Scottish Energy Strategy

We conducted an open consultation ^[3] on this Strategy, which drew 254 responses, with over half from businesses and representative organisations. Those responses, as well as feedback from the Scottish Energy Advisory Board, have helped shape, inform and influence our approach.

This Strategy sets out our vision for 2050. It includes two indicative scenarios of how that future system might look ( Chapter 2), a focus on our priorities and near-term actions ( Chapter 3) and a review of the economic opportunities for Scotland ( Chapter 4).

We know that setting a vision is only just the beginning. Our 2050 energy system will depend ultimately on how we, society, businesses, the UK and international community, respond to challenges and opportunities along the way.

We need to work on this together, right across Scottish society. All stakeholders and actors in the system – local government, organisations, regulators, individuals, businesses and others – will have a part to play in getting Scotland to the vision we set out above. Chapter 5 looks at how we intend to make this happen.