Renewable Energy (Hansard, 21 July 1993)

§ Mr. Lang

Following publication of my Department's discussion document about a Scottish renewables obligation, the report of the Renewable Energy Advisory Group and the recent "Coal Review" White Paper (Cm 2235), I have now reached a conclusion on how to encourage further the exploitation of energy from renewable sources in Scotland.

Government policy is to stimulate development of new and renewable energy technologies where they have prospects of being economically attractive and environmentally acceptable in order to contribute to diverse, secure and sustainable energy supplies, the reduction in the emission of pollutants, and the encouragement of the renewable energy industry.

There is already overcapacity in electricity supply in Scotland. Over 10 per cent. of Scottish demand for electricity is already derived from renewable sources. A number of interests have, however, drawn attention to the potential to develop renewables to a greater extent in the light of certain aspects of Scotland's geography and climate. The extent of that potential is being studied. In the meantime, I have decided that I should introduce a Scottish renewables obligation (SRO) in respect of Scottish Power and Hydro-Electric.

I currently expect the first order under the SRO to be for some 30–40 MW of new capacity. I will review that figure in the light of the quality and cost of the proposals received. I expect the order to comprise a number of technology bands and I am currently considering including wind power, hydro, landfill gas from existing sites, municipal and industrial waste, and energy crops and agriculture and forestry waste.

My current intention is that the first order would, subject to satisfactory discussions with the European Commission, run for 15 to 20 years with effect from November 1994. This should enable Scottish Power and Hydro-Electric to offer successful generators contracts for a similar period. I am considering the mechanism for passing on to electricity consumers the additional costs falling on Scottish Power and Hydro-Electric as a result of the order.

I am discussing certain aspects of my proposals with the Director General of Electricity Supply and with Scottish Power and Hydro-Electric, to which I shall in due course provide further guidance about my initial policy proposals in respect of the first order under the SRO. It is likely that bids for contracts from renewable energy electricity suppliers in Scotland will be called for in the late summer.

To enable interested parties to plan ahead, I am announcing now that I hope that it will be possible to announce two further orders under the SRO, in 1995 and 1997 respectively. These orders are likely to come into effect in 1996 and 1998. Future orders will not necessarily cover the same technology bands as the first one, but are likely to be somewhat larger.

The purpose of the SRO is to create an initial market. I expect all bids to be on a competitive basis. The intention 250W is that in the not-too-distant future the most promising renewables technologies will be able to compete without the need for special arrangements.