Scottish Renewables Annual Conference: speech

Thank you, Matthieu, and thanks also to Claire.

In the last year, Scottish Renewables has of course gained both a new Chair and a new Chief Executive. I want to thank the previous postholders - Patricia Hawthorn and Niall Stuart - for their contribution to the renewables sector in recent years. And I also want to wish Rob Forrest and Claire well in their new posts. I look forward to working with both of you in the months and years ahead.

It's a pleasure to speak at this conference – an exciting time for renewables in Scotland. The renewables sector now generates more than half of Scotland's total electricity demand. You employ tens of thousands of people across the country and contribute to our country's energy security, our climate change targets and our economic growth.

So you have become a major Scottish success story.

It follows that the key message I want to get across to you this afternoon is simply this. The Scottish Government recognises and values the contribution all of you make to Scotland. We want the renewables sector to be even more successful in the future, than it has been in the recent past. And we are determined to work with you to achieve that aim.

I hope that that message has already come through clearly in recent months, with the publication of our Climate Change Plan and our new Energy Strategy. We are very grateful to everyone here who contributed to the consultation process for those documents.

The Energy Strategy sets out targets, not simply for electricity use, but for energy as a whole – including transport and heating. At the moment, 18% of our overall energy use comes from renewable sources. By 2030, we are determined that will be at least 50%.

As all of you will know, that's hugely ambitious. It will require major changes to heating and to transport. It involves an ongoing investment in energy efficiency. It will mean more use of battery storage and of technologies such as hydrogen fuel. And it will also, of course, involve a further very significant expansion of renewable energy.

But although our proposals are unashamedly ambitious, they will also be hugely beneficial – to our environment, our economy and our society.

Renewable energy use means that we will meet our climate change targets. Developing and adopting new processes and new technologies will create possibly tens of thousands of jobs. Businesses in all sectors can improve their energy efficiency and lower their costs. And people across Scotland will live in warmer homes and breathe cleaner air. We will become a greener, healthier, more prosperous country.

The renewables sector will be absolutely at the heart of achieving that vision. So this afternoon, I want to set out some of the ways in which the Scottish Government is working with you to promote the sector. I'll then say a bit more about how we will work with you to deliver some of those wider benefits from clean energy.

But before I do that, I do just want to touch – fairly briefly – upon the subject of Brexit. It is, after all, directly relevant to this sector.

If the UK Government decides – not just to leave the EU, but also to leave the single market, which is their stated position at the moment – it is likely to hinder our supply chain and reduce our skills base.

If we find ourselves outside the internal energy market – although I have been encouraged by some of the Prime Minister's rhetoric on this particular subject – it could affect our influence on issues such as energy regulation and cross-border energy flows.

And we could also lose access to EU funding which none of us want to see happen. It is worth remembering that just last year, Scotland benefited from one of the biggest investments ever made by the European Investment Bank – the half billion pounds of funding they provided for the Beatrice offshore windfarm.

It is fair to say that Scotland has also done disproportionately well from EU support for research and innovation in the renewables sector. We want that to continue.

So we want to see the UK Government provide clarity on these issues. Although the overall outlook for this sector is hugely positive, Brexit could potentially harm our supply chain and skills base; diminish our influence on issues such as regulation and energy flows; and reduce our access to funding.

That's why the Scottish Government believes that, if the UK has to leave the EU, it should still say in the customs union, the single market, and the internal energy market.

In my view, if not the best future, then would be the least damaging outcome for Brexit. One that would certainly help jobs and prosperity, not just here in Scotland but right across the whole of the UK.

The other point worth making about Brexit is that, if anything, it increases the importance of getting on with all of our other efforts to develop the low carbon sector.

That's exactly what we're determined to do. We're spending half a billion pounds on energy efficiency measures over the course of this parliament. We've set up programmes such as the low carbon innovation fund – it's currently seeking applications for projects which contribute to our ambitions for low carbon heat, integrated energy systems, and ultra-low emission vehicles.

We continue to support the world leading research on renewable energy and low carbon technology which is undertaken here in Scotland.

We're also trying – in fairly uncertain times – to provide as much certainty for businesses. Our climate change targets; our energy strategy targets; our commitment to remove the need for new diesel and petrol cars by 2032; all of these are intended to provide companies with a very clear direction of travel.

They show that that Scotland is committed to pioneering a low carbon future; and as a result, mark us out as a centre for low carbon investment.

And of course, as part of that aim of making Scotland a low carbon hub, we specifically want to encourage investment in the different renewable energy sectors.

Inevitably, we need to do that in different ways for different sectors, according to the particular powers we have here in Scotland.

In relation to solar, for example, we will look at the energy standards we set for building regulations – something which can affect the adoption of solar technology. Ministers are also, incidentally, currently considering the first large scale solar power application.

If you take Hydro power, that's been very important to Scotland for generations now. In fact a couple of weeks ago, I met the Chief Executive of Liberty House. We discussed the huge investment that they've made in the Fort William aluminium works.

That investment could create around 2,000 jobs directly and indirectly. It is potentially transformational for the Lochaber area. And it is to a large extent based on the availability of large scale hydroelectricity.

So we definitely want to sustain and encourage hydropower. We're currently looking at business rates for the sector. In fact from next week, a 60 per cent relief for smaller hydro schemes comes into effect.

We have now started to review how things such as plant and machinery are assessed when business rates are set for hydro schemes – we know that's a very genuine concern.

The third technology I want to talk about is wind power. Onshore wind is, and in my view will continue to be, central to Scotland's energy mix.

However UK Government policies, at present, effectively stop new developments from having a route to market. That strikes us as being incredibly counter-productive.

So we agree with many people, across the sector, that the UK Government should allow onshore wind to compete in contract auctions against other energy technologies. It's an approach which would be good for consumers and obviously good for the onshore wind sector.

It's maybe also worth saying something about our Planning Bill – I know that quite a few people here will have an interest in it. Our hope and intention is that the Bill will help us to streamline planning procedures, introducing greater flexibility while also encouraging better and earlier discussion and engagement with communities at the start of the process. We believe that this approach can make the planning system work better for everyone. Of course we continue to welcome input into that ongoing work.

Offshore wind has seen some really exciting developments in the last year. In October, I had the huge honour of opening Statoil's Hywind Scotland windfarm – the world's first floating windfarm. It's a genuinely extraordinary set of structures.

One of the reasons why Hywind is based here in Scotland, is that the Scottish Government used our previous powers under the Renewables Obligation. We offered higher levels of support for floating wind than the rest of the UK.

That sort of incentive is unfortunately no longer an option - the UK Government has now ended the Renewables Obligation. We will however, continue to do everything we can to encourage offshore development in Scotland – whether that's through our use of our planning and licensing powers, or by working with the industry to promote innovation and drive down costs.

And as part of that, we will of course work with the UK Government. For example we want to ensure that its sector deal for offshore wind takes proper account of Scotland's huge resources and potential.

There is no reason for it not to do that. If you look back again to last autumn, the Moray East offshore windfarm gained a contract to produce energy for under two thirds of the price of new nuclear power. Its price was less than £60 per megawatt hour; of course Hinkley Point's was more than £90.

It was a further sign that offshore wind in Scotland is becoming increasingly competitive. We are determined to work with the sector to maintain that trend and to maintain that momentum.

The final technology I want to mention is wave and tidal energy. It's an area where Scotland is a global pioneer.

In recent months, Atlantis Resources has been setting world records through their tidal power turbines in the Pentland Firth. They announced last week that they have now delivered over 5 Gigawatt hours of electricity to the grid.

Scotrenewables is currently testing the world's largest tidal turbine at the European Marine Energy Centre in Orkney – a location which has tested more wave and tidal devices than any other single site anywhere in the world.

Projects like that are of course primarily due to the ingenuity and enterprise of businesses and researchers. But they have also been made possible by sustained Scottish Government support. For example, our Wave Energy Scotland programme has supported over 60 projects.

We know that commercial development of marine technology takes time; and that not every venture will go smoothly. But we also understand the potential that wave and tidal power has for Scotland and indeed the wider world. Having gained a position of global leadership in this field, we are determined not to let that go.

Now we're doing all of this partly because for Scotland – as for all countries – moving to a low carbon future is an overwhelming moral imperative.

However it is also a massive opportunity. I always think it's important to stress that fact; and perhaps even more importantly, to persuade people that a low carbon economy will directly benefit them.

And there are two sides to that I want to touch on this afternoon.

The first is that we need to ensure that consumers and the public get a fair deal. That's one reason why we have pledged to establish a publicly owned energy company – we believe it will benefit consumers. It's also why our energy strategy places a strong emphasis on consumer protection.

In addition, we have encouraged the growth of community benefit schemes and community ownership of renewable energy – we believe it is important and desirable that communities benefit from their own natural resources.

And we have also established a Just Transition Commission to provide advice to the Government. We're determined that the shift to a low carbon economy won't just make Scotland a wealthier country, it will also make us a fairer one.

And secondly – and this is of course inextricably linked to the wider issue of public benefits – we need to maximise the impact of renewables on skilled jobs and sustainable growth.

One hugely important part of doing that is to improve our supply chain capabilities.

With a relatively new industry, that's not always going to be straightforward. The situation at Bifab demonstrates that very clearly, although I am optimistic about a good outcome being reached.

But we are already seeing a growing supply chain in Scotland for renewable energy, demonstrated by businesses such as Balfour Beatty, CS Wind at Machrahanish, Global Energy at Nigg, and many more. For some marine energy projects – such as Nova's tidal array in Shetland – more than four fifths of the supply chain is based in Scotland.

So renewable energy is already providing significant levels of skilled employment – often in relatively rural or remote areas. I think it's fair to say all of us want the supply chain to develop further.

I'm confident that can and will happen. If you look at the oil and gas supply chain, that sector's success wasn't immediate. But that supply chain is now globally renowned. It employs more than 100,000 people in Scotland, and it exports to countries across the world.

We now want to create – as rapidly as possible – a similar success story for renewable energy.

That's why we're investing in infrastructure, supporting ambitious growth companies, promoting research and development, and ensuring that people have the right skills. We want our renewable resources to provide skilled employment, as well as sustainable energy, for communities across the country.

And the final point I want to make is that achieving this aim fits perfectly with the our wider economic mission as a country.

I've said on several occasions that we must see Scotland's economic future as being founded on innovation. It is often said that Scotland invented the world that we live in today. We must take the opportunity of being a country that is similarly shaping and inventing a world that our children and grandchildren will inherit. That means we must aspire to develop, design and manufacture the technologies and products of the future – not just be content to be a country that uses these technologies.

That's why, in the Programme for Government last year, we put such a strong emphasis, not just on protecting the environment, but also on innovation. Because in my view the two can go absolutely hand in hand.

Our support for innovation includes an increase of 70% in government support for business research and development.

We are also establishing a new national manufacturing institute for Scotland – to enable research and encourage collaboration in advanced manufacturing. The renewables sector is one of several sectors that could benefit from that.

And last month, the implementation plan for the new Scottish National Investment Bank was published.

I know that the bank has aroused great interest. I know Scottish Renewables have been particularly interested about the potential for the Investment Bank.

We are making almost £500 million available over the next three years for the Bank.

Now I can't give guarantees about what projects the bank will support – it depends on what ideas businesses propose.

But we have made it very clear that the National Investment Bank will be mission-led. It will provide patient finance for companies, innovations and infrastructure which meet the key challenges our country faces. There's no doubt whatsoever that one of those key challenges is the move to a low carbon economy.

So I believe there are good grounds for hoping that the Bank will become a cornerstone of the low carbon, high tech economy that all of us want to create.

If we succeed in that mission, as I believe we can, it will of course be hugely beneficial for our country's future. However it will also in many senses be in keeping with our past.

We led the world into the industrial revolution. Through inventions such as James Watt's improvements to the steam engine and many others, we helped to create the carbon economy.

My hope, and our collective ambition, is that we can once again use our capacity for innovation, to help lead the world out of the carbon economy into the low carbon age.

Few countries are better placed to fulfil that role. We have vast renewable energy resources; an international reputation for engineering excellence; a world class research base; and a completely committed public sector.

So, if we build on those strengths, I believe we can achieve the ambitions set out in our energy strategy. We can harness and develop clean technologies for the future. And in the process we can create jobs and prosperity in every part of the country.

The work all of you are already doing – and the progress you have already made – provides some idea of just how much is possible. So I look forward to working with you so we can achieve even more in the months and years to come. There's no doubt in my mind that is within our grasp.