Scottish islands wind power subsidy confirmed
- 15 September 2013
- From the section Scotland business
Windfarm developers will be given a cash incentive to build more turbines on Scottish islands, the UK energy secretary has confirmed.
Ed Davey said there would be a higher subsidy for projects in Shetland, Orkney and the Western Isles than on the mainland.
The draft deal would set a "strike price" of £115 per mega watt hour (MWh) for onshore wind.
Mr Davey said it would help unlock the "massive potential" of the islands.
The proposals could lead to hundreds more turbines generating an additional 400 MWh for the grid, he said.
The cost of connecting to mainland markets has held back development on the islands in the past.
Mr Davey said: "People have been waiting for this decision to be taken, no one has taken it before, and we are delivering it.
"We think it's going to be extremely good news.
"It's going to enable them to develop these windfarms, to sell that electricity, that green energy, and they will create jobs and economic activity."
The so-called strike price of £115 is higher than the £100 proposed for the UK mainland in 2014-15.
If the market price for energy is below the level of the strike price, a subsidy system kicks in to ensure the producer has a minimum level of income.
This is the first time that the UK government has announced a different strike price for a particular area of the UK, which it said reflected the unique circumstances and potential of the Scottish islands.
But the strike price only applies to onshore wind developments and will not impact on the marine energy industry.
The proposals were given a cautious welcome by renewables, environmental and local development bodies when they were first outlined earlier this year.
Over the summer, the Department of Energy and Climate Change consulted on the subsidy levels necessary to encourage investment.
Mr Davey was due to announce details of the plan as part of his address to the Lib Dem conference being held in Glasgow.
Speaking beforehand, he said: "This is good news for the future of renewables in Scotland and this unique solution will pave the way for more investment in green energy.
"An independent report showed that the specific circumstances of the Scottish islands required a different approach that breaks the mould of the wider UK strike price mechanism, and we are delivering that.
"This was possible because of a strong partnership between Westminster, Holyrood and the island councils.
"Thanks to consumers across the whole of the United Kingdom, we can offer this special higher strike price, so Britain gets more green energy, so consumers' bills in Scotland are kept affordable and so the green economy of the islands grows."
Mr Davey said it was now "down to investors" to come forward and ensure the Scottish islands shared in renewable technology and UK-wide green growth.
Responding to Mr Davey's announcement, industry body Scottish Renewables said it was an "important step forward" after years of campaigning by the renewable energy sector and the islands' councils.
Chief executive Niall Stuart said: "While the move does not reduce the cost of connecting to the grid for projects in the Scottish islands, which we understand to be six or seven times higher than charges on the mainland, it does at least help new onshore wind developers mitigate against these high costs.
"We will now be working with our members to ensure that the proposed support is enough to make projects on the islands economical and for investments to go ahead.
"However, the announcement gives no certainty to the marine energy industry, whose home is very much in the Scottish islands.
"We will be pushing the Department of Energy and Climate Change to give this exciting sector the level of certainty it needs if we are to get projects built on Scotland's islands - home to the best wave and tidal resources in Europe."