Ilona Amos: Green power schemes need a boost

The Scottish Government has set out ambitions to decentralise the nation’s energy system, making it “localised”, “robust” and “more distributed”. Part of this involves encouraging communities to set up their own renewables schemes, generating green power and important income to support local people.

A raft of such initiatives have been springing up around the country over the past decade, with everything from small-scale hydro to solar panels and wind turbines.

But cuts in support from Westminster have resulted in a lot of planned schemes being mothballed due to uncertainty over their financial viability. The problem is proving a major stumbling block in the drive to increase the amount of green power going into the mix.

But now a group of leading academics and green energy experts has written to The Scotsman, outlining a new plan that could help some projects get off the drawing board.

They are calling for practical support from the Scottish Government in the form of a loans system, which would provide a safety net for communities investing in local energy without the back-up of subsidies.

The lead signatory, Dr David Toke, an energy policy expert at the University of Aberdeen, has described the idea as a “no-brainer”, claiming it could revolutionise the sector while directly supporting the SNP government’s policies.

Against a background of falling costs for renewable energy developments, he believes projects could now be set up without subsidies if ministers were to provide long-term guarantees – perhaps over 15 to 20 years – based on a the wholesale price of electricity.

He insists a scheme like this would pose little risk to taxpayers but could offer a big boost to communities trying to raise money to fund investments with long-term paybacks.

“If the Scottish Government is really serious about the radical greenhouse gas reduction targets it is proposing, and if it wants ordinary people and not just big companies to get control of energy, then it can take some practical action to this end,” he says.

The group is suggesting a scheme that would guarantee payments for energy generated at the level of current wholesale power prices and give top-up loans if prices dropped. Borrowing would be paid back when prices rallied.

The suggestion has been welcomed at Community Energy Scotland, a charity that helps groups develop their own green energy projects.

Chief executive Nicholas Gubbins says there are great advantages from engaging communities and consumers in energy developments, but highlights the lack of special support measures under the UK system. “So any proposal like this need serious consideration,” he says.

However, he thinks there could be one problem. He fears the current wholesale power purchase price is too low to single-handedly rescue projects. As things currently stand, schemes that connect to the grid sell power to a purchaser for a wholesale price, subject to negotiation.

He says the real prize would come if communities could sell power locally for closer to the retail price– typically about 10p a unit higher – direct to local consumers.

This has not been easy to do in the past due to technical and regulatory constraints. However, there are high hopes that new “smart” systems could provide the key while also benefitting management of the National Grid by matching local power output with demand.