The world unites again this fortnight in Marrakech to drive forward our commitment to tackle climate change. It remains one of the biggest threats facing the world today, and the UK Government is fully committed to the low carbon future we signed up to in Paris last year. Since 2010, there has been over £52billion of investment in renewables in the UK, and this week we set out proposals for the next steps to phase out electricity generation from unabated coal-fired power stations within the next decade.
There are few nations that could claim to have embraced renewable energy with as much enthusiasm and success as Scotland. Last year over half of Scotland’s electricity came from renewable technologies – a clear example to the rest of the world.
The UK Government is proud to have supported this success. Last year over £800million of UK Government support was invested in renewable projects in Scotland through our subsidy support schemes, including the £2.6billion Beatrice Offshore Wind Farm located in the Moray Firth, one of the largest private investment projects in Scottish history which is expected to deliver nearly a thousand jobs.
This week we gave clean energy investors the go-ahead to compete for contracts for new renewable electricity projects worth £290million a year in our next Contracts for Difference auction. This could result in enough renewable electricity to power around one million homes and reduce carbon emissions by around 2.5 million tonnes per year from 2021/22 onwards. In the last Contracts for Difference auction over 40% of awarded contracts were based in Scotland.
These auctions support developing technologies by guaranteeing companies a price for the energy they produce for a certain number of years, giving investors the certainty they need to take a project from concept to conception. The auctions also help to drive down prices as companies compete to offer the best value for money to secure a contract. For example, the maximum price for offshore wind projects is now 25% lower than was set for the last auction, and a competitive auction could bring that price down even further.
This is important, as the cost of these contracts is passed on to our homes and businesses in their energy bills, and we are absolutely committed to ensuring that we keep those costs down and get the best value for money. This is at the heart of our considerations when supporting clean technologies, and they don’t all cost the same. In fact, some are considerably more expensive than others.
One technology that falls into this bracket is wave and tidal power. There is good potential for this technology in Scotland and the UK Government, alongside other public sector organisations, has provided more than £15million to help fund the setting up of the European Marine Energy Centre in Orkney – the world’s leading wave and tidal demonstration centre. But it is still very expensive, almost three times the cost of offshore wind projects, and we need to see these costs come down before it can really be considered good value for money. It’s for this reason that we didn’t set aside specific funding for wave and tidal technology in our next auction – it would add too much to your energy bills.
We also need to ensure that our support goes to technologies that need it. Onshore wind has been a great success story across the UK, and particularly in Scotland, and the fact that we will have over 12GW of onshore wind online by 2020 is largely down to the financial support that the UK Government gave to this industry when it was finding its feet. But now the cost of building onshore wind farms has fallen considerably and it is only right that when technologies are able to stand on their own two feet they should no longer rely on bill payers for support. That’s why the UK Government took action this year to stop any further funding for onshore wind projects from your energy bills.
A question to have arisen is about wind farms being built on remote islands. There has been a long standing debate as to whether or not this technology should count as onshore or offshore wind. I have listened to partners and parliamentarians in Scotland who have called for it to be considered in a similar way to offshore wind and so that’s why I have this week announced a consultation to determine what support this technology should be eligible for.
The UK Government has committed to spend £730million of annual support on new renewable electricity projects between 2015 and 2020. We are determined to build on our strengths and continue our leadership in offshore wind, while keeping bills down for our families and businesses. My message for renewable technologies in Scotland that can deliver secure, clean and affordable energy is that there is more support from us to come.
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