HC Deb 13 March 1997 vol 292 cc314-5W
Mr. Gallie

To ask the Secretary of State for Scotland if he has made a decision on the second order under the Scottish renewables obligation; and if he will make a statement. [20609]

Mr. Kynoch

I have today laid before Parliament an order requiring the two public electricity suppliers—PESs—in Scotland to make arrangements to secure 112 MW of new renewable electricity generating capacity from a range of renewable sources. There has been a good response by bidders to tender invitation for SRO2, and average bid prices have been much lower this time round. This represents a considerable success for our policy of creating an initial market within each of the most promising technologies through strong price competition between projects. This has allowed me to set a larger order than originally envisaged when announcing SRO2 in November 1995.

In order to meet their obligations arising from the order, I understand that Scottish Power and Scottish Hydro-Electric expect to sign contracts with 26 project developers. These are expected to be nine waste to energy projects making up 55 MW of capacity seven wind projects totalling 44 MW, nine hydro projects totalling 11 MW and one biomass project of 2 MW.

We are aware of concerns about the possible effects on the environmental and landscape of the development of renewable energy projects and expect developers to give particular care and attention to these sensitive issues. Successful developers will need to obtain planning permission for their projects if they have not already done so; award of a contract as a result of the order does not confer any special advantage in the planning process and approval must be sought in the usual way. I know too that there are concerns about the need to strike the right balance between the visual impact of wind farms and the need to safeguard the scenic value of large parts of the Scottish countryside. For this reason, we have decided that wind projects, while being allocated substantial capacity within the order, should not form a disproportionately large part of it.

As far as waste to energy projects are concerned, I was very pleased that the overall level of bid prices for this technology had fallen as much as it has done since SRO1. In view of the environmental benefits which such projects can deliver, I have decided to increase the size of the allocation for waste to energy projects beyond that originally envisaged, to cover landfill gas, tyre incinerations and municipal waste incineration projects.

We are aware of concerns in some quarters about the potential impact of new hydro schemes on fisheries. I understand that at least one of the hydro projects likely to be awarded a contract as a result of the order will include the installation of a new fish pass to assist salmon to gain easier access to spawning grounds. I have asked my officials to liaise closely with the project developer on the fisheries aspects. All hydro projects do of course require consultation with the local district salmon fisheries board before being granted permission to proceed.

On biomass, although the prices tendered for projects were comparatively high, we took account of the wider benefits to agriculture and the environment of such projects, and the need to enable the technology to establish a foothold in Scotland. For this reason we decided to allocate a small part of the order to this technology.

By making an order for a total of 112 MW, we are taking a considerable step towards meeting Scotland's share of the Government's overall aim of achieving 1,500 MW of new renewable generating capacity by the year 2000. I will make a further announcement in due course about the next steps that we propose to take under the SRO.

I have made the order after considering the advice of the Director General of Electricity Supply and after consulting the two Scottish PESs.