Scottish Renewables Obligation (Hansard, 24 February 1999)

§ Mr. Dewar

I have made arrangements for an order to be laid before Parliament tomorrow requiring the 2 Public Electricity Suppliers (ScottishPower and Scottish Hydro-Electric) in Scotland to make arrangements to secure 150MW DNC of new renewable electricity generating capacity from a range of renewable sources. There has been an excellent response by bidders to the tender invitation for SRO3. This represents a considerable success for our policy of creating an initial market within each of the most promising renewable technologies by encouraging strong competition between various projects. This has allowed me to set a larger order than previously envisaged when SR03 was announced in December 1997.

I am particularly pleased to report that bid prices for SRO3 have been once again reduced, with bids for large wind projects especially low. The cheapest bid was a remarkable 1.89 pence per unit generated making large wind projects by far the cheapest renewable technology 326W available under the order. I have, therefore, decided that large wind projects should make up a sizeable part of the order. A specific band for small wind projects is being introduced for the first time under SRO3. The aim is to encourage small, locally based companies and communities to get involved in electricity generation.

The prices tendered for biomass projects were relatively high compared with wind and waste to energy projects. I have, however, taken account of the wider benefits to agriculture and forestry and to the environment of such projects, and the need to enable the technology to establish itself in Scotland. For this reason, I have decided to allocate almost 9 per cent. of the order to this technology.

A band for wave power was proposed in SRO3 for the first time. Wave technology is very much at a formative stage and I am keen to help the technology gain a foothold in Scotland. I am pleased to report that bid prices were lower than expected and I have, therefore, decided to allocate a small part of the order to wave projects.

I have also decided to include a sizeable number of waste to energy projects and a small number of hydro electric projects in the order.

There are significant benefits stemming from the encouragement of renewable energy. These include a contribution to the Government's greenhouse gas emissions reduction target agreed following the December 1998 Kyoto conference. By making an order for a total of 150MW we are taking a considerable step towards meeting Government's new and strong drive for renewable generating capacity, while also promoting the renewable industry in Scotland.

We are aware of concerns about the possible effects on the environment 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 have made the order after considering carefully the advice of the Director General of Electricity Supply and after consulting the 2 Scottish Public Electricity Suppliers.