United Kingdom

United Kingdom

Scotland consults on "merchant" projects

UK: The devolved Scottish government has challenged the industry to make the country the first region in the UK to host "subsidy free" onshore wind.

The Scottish government has challenged the industry to develop subsidy-free, or merchant, projects
The Scottish government has challenged the industry to develop subsidy-free, or merchant, projects

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A new plan by the Scottish government sets out how it sees the energy system developing to 2050.

"Although electricity generation energy policy is largely reserved to the UK government, the Scottish government wishes to make full use of its devolved powers to promote investment in appropriately sited onshore wind," the government said in a policy statement.

"With the right regulatory framework, new onshore wind projects can be economically viable without subsidy," the report added.

While the Scottish government is doing all it can to promote development of wind power, it is still the UK government that provides the financial support.

In its report, the Scottish government calls on the central government to "provide greater long-term certainty over regulated renewable support mechanisms — and for greater clarity on the future of the levy control framework, under which the costs of renewables support is currently managed".

The Conservative government, elected in 2015, closed the renewables obligation (RO) support system a year earlier than expected, creating uncertainty for a large amount of onshore wind capacity, mostly located in Scotland.

The scheme replacing the RO support, the contracts for difference system, has also been closed off to onshore wind projects in the second auction round.

Scotland has around 7.5GW of wind projects in the pipeline, most of which will have missed out on subsidies.

"The Scottish government would like to see these projects developed at the earliest opportunity and at the lowest cost to the consumer. Without some method of stabilising prices, developers may not be able to plan and build a viable project," the government report said.


The reports released by the Scottish government also set out the case for providing further support for wind projects on remote Scottish islands.

"These projects can generate high-efficiency low-carbon electricity and deliver significant local economic benefit to some of the most economically fragile areas in Scotland," the report stated.

It highlighted the fact that island projects can achieve load factors 27-57% higher than mainland sites.

However, it pointed out technological barriers remain, including transmission links between islands and the mainland as the local transmission systems are not connected to Scotland's main high-voltage system.

"Individual grid connections for the Western Isles and Shetland could cost £600-700 million (€698-814 million)," the report found.

The Scottish government has called on the UK central government to treat island projects as a separate technology in the CfD auctions. Currently they included in onshore wind allocation, an established technology and therefore unable to compete in the auctions.

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