Scotland's Energy Strategy - the Heat's On

The Scottish Government's draft Energy Strategy tells a story that Scotland should be proud of. When it comes to renewable generation Scotland is well ahead of the rest of GB and has been out-stripping its own targets in many areas. It's also well placed to lead the next wave of policy thinking and delivery on the journey to a low carbon future, including on heat.

When thinking about heat one of the critical policies that often gets overlooked by Westminster policy makers is energy efficiency. But the Scottish Government have it rightly centre stage in their strategy, building on the investment they have made over recent years and their decision to make it a national infrastructure priority.

Another strength of the Scottish Government's strategy is that it remains open minded about an enduring role for gas and for the investment that has already been made in the networks. It acknowledges the potential role for hydrogen - initially as part of a mix but ultimately potentially on its own. Again, the Scottish Government has been supporting trials which are vital in this new area, and is continuing to press for CCS. That said it perhaps underplays the other opportunities for unconventional gas including biogas, which is already being fed into the system but where more could be done.

The strategy acknowledges the value of district heating in the right location - initially using gas (but with the potential to change to other sources in future). The Scottish Government has kicked off an important debate about the need for regulation of district heating and how it might be funded.

Finally heat pumps get a mention (along with an acknowledgment of the significant impact on the electricity system) as do other new technologies including deep geothermal and energy from waste.

What's missing from this debate - as in many of the discussions around decarbonisation of heat - is a real consumer perspective. There's an acknowledgment that hydrogen could deliver the same sort of instant comfort that gas does now - and which consumers value - but little mention of the need to understand and improve the consumer experience of the different solutions.

In the Fintry project where FDT are installing heat pumps and also looking at use of electric storage heating there is a consumer emphasis. Temperatures are being monitored to understand how quickly homes heat up and cool down depending on the type of property, supported by consumer surveys. But more learning is needed in this area including looking at how to modernise electric storage heating. If storage heating could deliver a better customer experience while at the same time providing flexibility to the system, then it could play an important role going forward.

The Scottish Government envisage an important role for local authorities and cities in developing the roadmap for heat which makes sense given that the right answer will vary by geography and customer demographic. But there remains an important role for the centre in supporting research and development and sharing learning.

Finally, the one other area that the Scottish Government are emphasising but which is neglected at a UK level is community energy. The Scottish Government recognise the value in communities working to balance local energy involving renewables, storage and local demand - with wider benefits in terms of economic regeneration for example. They are providing significant funding for such projects and have also now set targets around the proportion of new generation which is shared ownership.

Of course, there is much more to be worked through but there is a clear ambition here to continue to build on the success of Scotland's historic oil and gas industries, to continue the strong growth that been seen in renewables and to move on tackle the next challenges around transport and heat. It sets a high benchmark for Westminster which is due to publish its own Emissions Reduction Plan shortly.

Maxine Frerk

Maxine Frerk is a regulatory expert with Veitch Cooper Ltd

The Renewable Heat Incentive:

A reformed and refocused scheme

Since its inception in 2008 the RHI has had a faltering start with delays and changes causing uncertainty for government an more importantly investors. When Amber Rudd was appointed Secretary of State at the Department of Energy and Climate change after the election last year she started work right away on the Comprehensive Spending Review and its effect on key policies such as the RHI. Following a long summer of lobbying and negotiations the spending allocation for the RHI was set through until 2021 and for the first time long term certainty for the incentive was in place. The Minister also committed to a substantial reform of the scheme to see it perform better through to 2021. This commitment resulted in a consultation which has just closed and will soon give a much clearer path to allow more confidence in renewable heat system investments for the next few years. We will start to have confirmation of the outcomes of the consultation in May and June with full implementation in time for April 2017. As an "industry insider" I can confidently predict that the changes will be very positive for the UK renewable industry and in particular for those seeking to fund large projects.

Where Next for UK Renewable Investments?

Onshore wind is all but dead, large scale solar PV has also had its day in the sun (sorry), biomass is seeing it's Renewable Heat Incentive funding cut every quarter so what is next? The Feed In Tarrif and the RHI were intended to increase third party investment in low and zero carbon technologies and to an extent they have succeeded but almost inevitably a boom and bust market has been created. So it would be tempting to ask, "where is the next cash cow?" but if the UK is to meet it's legally binding obligations this cannot continue, a more stable market must be built and the government is acutely of this fact. With the upcoming reforms to the RHI a less dash for cash environment will be created and beyond 2021 Amber Rudd has committed her officials to "move away from start stop incentives towards a policy driven environment". What this means is that the question is not "where's the next cash cow?" but rather "how do we utilise the current incentives to build long term and sustainable investment vehicles?"

Chris Davidson, Genius Energy Lab

Business Energy Efficiency

Veitch Cooper is taking part in the Resource Efficiency Pledge

The Resource Efficiency Pledge

The Resource Efficiency Pledgeis a nationwide scheme backed by Scottish Government to help Scottish businesses use energy, water and raw materials more efficiently throughout their operations. Since its launch in 2014, nearly 200 organisations across Scotland have taken steps to save money and strengthen their businesses through the Pledge.

Find out more at:

By signing up to the pledge, we agree to:

Commit to embedding resource efficiency in our own business operations;

Show leadership in driving sustainable growth through our supply chain;

Actively contribute to achieving a low carbon economy for Scotland.

During the next twelve months, we will achieve this with the following actions:

  • Develop environmental policy
  • Assign senior manager responsibility
  • Set senior management agenda
  • Reduce transport emissions
  • Collaborate with other organisations
  • Benchmark resource use

Smart Demand

Demand Side Management - Addressing a new "Trilemma"

Nigel Ellis is a consultant at Dunelm Energy, a Scottish based company that provides advice, assistance and connections to companies and individuals involved in the disruptive changes in the Energy Industry and a link to their Website

However many commentators still pursue old "centralist" thinking in offering solutions which rely on centralized energy provision invariably based on large capital heavy projects such as carbon capture, grid energy storage and district heating etc.

The potential for Demand Side Management and "smart demand" whilst not entirely ignored, is quite often the poor relation when it comes to recognition of potential solutions especially in the short to medium timescale required to address the pressing issues identified as the Trilemma.

To quote a recent UK Energy Research Council publication "Insights on Energy Demand" - September 2014.

"There has been a fundamental reorganization of energy policy in recent years including a departure from free-market principles on the supply side (e.g. Electricity Market Reform) and an intensified reliance on the market to deliver outcomes on the demand side (e.g. Green Deal).

Whilst this recognition of demand side as a solution is welcome, there is still a danger that "centralist thinking" predominates and demand reduction becomes the focus for energy policy.

Perhaps a Demand Side Management "Trilemma" is required to facilitate structured thinking and policy initiatives to encourage progress in this area. There are three existing energy market "drivers" which exist in various sectors of UK energy policy, which everyone will recognize, and are entirely aligned with the need to develop "Demand Side Management" solutions and more importantly "joined up policy" in this area.

  1. Smart Grid-smart meter roll-out is underway but nobody is entirely sure how and what it will deliver to the benefit of supplies and customers.
  2. Innovation-Energy network operators have a license obligation to introduce innovation in to their networks (comments above apply again).
  3. Competition-need to introduce "true competition" and new market models e.g. Demand aggregator businesses?

There is nothing better than a couple of figures which highlight the potential for the demand side to play a significant part in addressing the underlying need (which has always existed) to balance energy supply with demand.

  1. Domestic electric water heating contributes 25% to current UK peak demand - smart?
  2. There is 16GW of domestic storage heating on the UK electric grid - smart?

Watch out for future updates.

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