Newscast Issue 4

Page 1

NEWSCAST SMITHS GORE IN SCOTLAND THE ENERGY ISSUE

issue 4 AUTUMN 2012

smithsgore.co.uk


It’s the CO2, stupid Toby Metcalfe t: 0131 344 0888 e: toby.metcalfe@smithsgore.co.uk With this play on Bill Clinton’s immortal words, welcome to the fourth edition of Newscast focussing this time on Energy.

Clearly, many governments and bodies agree and have committed to major projects to make their contribution. It is this work that gives rise to the many and varied debates that follow. We agree that all projects large and small need to be subject to rigorous process but, given the urgent need for action, this process equally needs to be much swifter. Look at the length of time projects take to come to fruition or to be rejected. Even small-scale projects can take years rather than months. In our experience, objections to projects are often littered with inaccuracies and assumptions that have time and again been proved to be incorrect or irrelevant. The contention that the problem is not man-made, that it is a natural process, and that we should not overreact is one such. We urgently need a better system that speeds up delivery of renewables projects, not a review that further slows the whole process down. We hope you enjoy Newscast. If I, or any member of our team, can assist you please do get in touch. We will be delighted to talk with you.

1000

Actual 2012 level of 392.41 is only just below worst case figure of 394.6

CO2 concentration (ppmv)

800

600

Best case Worst case

400

200

0 1965

1985

2005

2025

2045

2065

2085

2105

Year

Modern increase in atmospheric CO2 concentration (ppmv) - Mauna Loa Source: Intergovernmental Panel on Climate Change

400

Recent Mauna Loa CO2 August 2012: 392.41 ppm

390

380

370

360

350 CO2 (ppmv) 340

330

320

310

300 1958

1968

1978

1988

1998

2008

Year

Historical CO2 Record from the Vostok Ice Core (ppmv) Source: Intergovernmental Panel on Climate Change

310

290

270

250

230

210

190

170

150 450,000

400,000

350,000

300,000

250,000

200,000 Year

150,000

100,000

50,000

0

CO2 concentration (ppmv)

Just look at the graphs to the right. By any measure these merit not just debate but the action that is being taken by many countries. It is fully recognised that addressing the rising CO2 levels in the world is a complex and difficult issue that will take much more effort and expenditure than was committed to addressing the CFCs issue of a few years ago. The actions taken then it is understood have reversed the damage that CFCs were causing and we now rarely hear anything on the subject. There was little debate at that time about the actions needed – they did not impinge greatly on everyday life, everyone seemed to be in accord with the problem and the need to react. Of course it was clear that the issue was man-made and perhaps, as a result, we acknowledged our responsibility and accepted that it was up to us to do something about it. Conversely the CO2 debate does seem to have become stuck in a vortex on this point. The reason for my provocative headline is to suggest that if we are indeed getting bogged down on this, we are, well yes, missing the point. Whether it is a man-made problem or not, it does seem beyond argument that the impact of rising CO2 levels is significantly more negative than it is positive. This being the case, as with CFCs it is our responsibility to try to address the problem.

Source: Intergovernmental Panel on Climate Change (2001)

CO2 concentration (ppmv)

I am sorry if the headline brings some readers up a bit short. However in all the complex debates about renewables, I certainly feel the need to remind myself every so often of the key driver for the billions being invested every year in them. Rightly this gives rise to many challenges and questions which are both necessary and good, but it then becomes all too easy to get a little lost and at times frustrated by the quality of the debate.

Projected increase in atmospheric CO2 concentration (ppmv) - made in 2001 1200

CO2 (ppmv)


The Challenge for Power – Key Data

Jason Beedell t: 01733 567231 e: jason.beedell@smithsgore.co.uk To put this data set properly in context I think it would be helpful to include as introduction a number of quotes from Scotland’s First Minister, Alex Salmond, from his address at the Low Carbon Investment Conference on 28 September 2010. He said: “As the world moves shakily into the economic recovery phase, I see investment in the green economy as a key to that general world recovery … Current economic difficulties should be a spur and not a hindrance to that effort … I see the current economic difficulties as a spur to getting this green economic revolution right.”

1. Renewable Electricity Production

2001 10%

2011 35%

2. Renewable electricity capacity in Scotland at various stages of development

2020 100% Up from 80 per cent pre new Scottish Govt

Source: Scottish Government: Scottish Environmental Statistics (2001 figure) Source: Scottish Government News Release, 18 May 2011, Alex Salmond (2011 and 2020 figures)

“We can now commit to generating the equivalent of 100 per cent of Scotland’s own electricity demand from renewables by 2020. By then we intend to be generating twice as much electricity as Scotland needs – just over half of it from renewables, and just under half from other conventional sources. We will be exporting as much electricity as we consume.” Alex Salmond MSP, First Minister, Scotland, May 2011.

(Dec 2011 figures from Scottish Renewables) (revised Sept 2012)

Capacity (GW) Installed capacity

4.4

Under construction

1.1

Consented

2.2

In planning

4.0

In appeal

0.5

In scoping

16.6

Total

28.8

Comment: There is a significant pipeline, with over 70 per cent of capacity in planning, appeal or scoping. Source: Energy in Scotland: A Compendium of Scottish Energy Statistics and Information, March 2012 http://www.scotland.gov.uk/ Resource/0038/00389297.pdf

3. Renewable electricity production (revised Sept 2012)

4. Renewable Heat

Illustrative installed capacity onwards beyond 2020 in GW (total 19.4 [72%] out of 27.1 GW from renewables)

Heat consumed to come from renewable sources

GW

% of renewables

Wind offshore

10.1

52

Wind onshore

6.5

34

Hydro natural flow

1.3

7

Marine

1.0

5

Other renewable

0.5

2

2009 1.40%

2010 2.80%

2020 11.00% target

Comment: Most renewable energy will be generated by offshore wind but over a third will be from onshore wind.

Comment: There will need to be a ten-fold increase in renewables heat production to meet the 2020 target. Heat is estimated to account for approximately half of Scotland’s total energy use. In 2010, biomass accounted for over 80 per cent of renewable heat capacity, and over 90 per cent of renewable heat output.

Source: Scottish Government 2010, Towards a Low Carbon

Source: Scottish Government (2009), Renewable Heat

Economy for Scotland: Appendix http://scottish-schools.gov.uk/

Action Plan for Scotland http://www.scotland.gov.uk/

Publications/2010/03/22115357/11 Energy in Scotland: A Compendium of

Publications/2009/11/04154534/0 Source: Energy in Scotland: A

Scottish Energy Statistics and Information, Dec 2010 http://www.scotland.

Compendium of Scottish Energy Statistics and Information March 2012,

gov.uk/Resource/Doc/933/0110153.pdf

page 39

Note that the 2020 projections for offshore wind have been revised downwards to 10.1 GW (from 11.2)


The Energy Question Views on energy can be both polarized and politically charged. For a balanced response, Toby Metcalfe asked Professor Ian Bryden, Head of the Institute for Energy Systems, The University of Edinburgh for his perspective on our energy future.

Toby Metcalfe: In your view, is increased energy saving as important as increased energy production? Ian Bryden: They are both vital! We need a more joined up attitude towards energy supply and demand. If we are to meet energy demands while reducing CO2 emissions we need every tool available to us. TM: Are the UK’s renewables aspirations achievable, and is the 30 per cent by 2020 EU renewables target high enough? IB: I am more used to answering the question “are they achievable?” than are they high enough! Yes, they are achievable but it will require commitment from government, regulators and consumers. This commitment will probably have to increase, especially through the final years of the decade. Are they high enough? That requires consideration of factors beyond those available to me, or indeed anyone else I am in contact with!

TM: It’s easy to adopt a ‘what’s the point?’ attitude when the UK is a fraction of the whole global challenge to reduce carbon emissions. How would you counter that? IB: We need to lead by example. We cannot dictate to India, China and the USA if we do not show the same discipline we require of them. TM: Is it more important for our farmers, landowners and other rural businesses to be focusing on reducing their carbon footprint, or playing their part in energy generation opportunities, or both? IB: Both, of course! But, for most, it is energy efficiency and carbon footprint reduction that is within their means. TM: A limit has to be set on the amount of subsidy for renewables projects, but if we are to meet the challenge is the pot too small and is the time limit too soon? IB: The limit should be based on practical limits to energy integration. Don’t set the limits higher than the infrastructure can handle.

TM: Is the right balance being struck between environmental impact and renewables development, particularly in relation to wind and large scale solar? IB: This is complicated because of the degree of politicisation of the pro and anti wind lobby. Both are claiming the environmental high ground. TM: Do you think that there are sufficient safeguards in place to ensure that objections to future renewables developments at planning are only considered relevant if based on fact? IB: Not at all, and this needs to be tackled if the energy sector is to advance. TM: Is there a point when Britain’s main energy sources will cease to be gas and coal? IB: Yes, there has to be! TM: How can our governments, both Westminster and Scotland, do more to attract continuing investment into the energy sector?


5

IB: They can create an environment in which private investment in a new energy sector becomes attractive. TM: Are wave and tidal energy technologies now ‘mature’ enough to start to play their part in the overall generation equation? IB: Not yet, but we hope they can be in the coming years. TM: ‘The green energy capital of Europe’ has been used to describe Scotland’s potential. Is that just political speak, or genuinely achievable in your view? IB: It’s achievable but needs continued commitment, including buy-in by the population at large. TM: Consumers will have to buy into The Green Deal for it to work. Do they know enough about it yet to do that? IB: Not yet, and there is a lot of misinformation about, which makes this difficult.

Institute for Energy Systems The Institute for Energy Systems (IES) is one of five multi-disciplinary research institutes within the School of Engineering at the University of Edinburgh. Led by Professor Ian Bryden there are five integrated research areas involving 12 academic staff, 26 research staff and around 40 postgraduate students. IES leads the EPSRC-funded Supergen Marine Energy Consortium, is a partner in the SuperGen FlexNet, AMPerES and Photovoltaics consortia, several Energy Technologies Institute and EU projects. The current research grant portfolio is around £10 million. IES is one of five Joint Research Institutes (JRIs) in the Edinburgh Research Partnership which combines research skills in Edinburgh and Heriot-Watt universities. In addition to PhD-level postgraduate training opportunities, IES runs a wellestablished and successful MSc in Sustainable Energy Systems.


6

Energy efficiency in Scotland’s country houses Killean Houae, Kintyre Peninsular

John Coleman t: 0131 344 0888 e: john.coleman@smithsgore.co.uk New-build property doesn’t appeal to everyone but there is no doubt that modern building standards, standards of heating, and especially renewable or sustainable energy-saving systems, beat the old methods hands down. Up until the mid 17th century Scottish country houses and castles were generally designed to keep people out and the only methods of insulation were thick stone walls and plenty of wolf and deer skins. As we began to build houses to reflect the success of the times, our grand country houses were able to take advantage of modern advancements like gas lighting, but the only form of heating remained open fires. Coal, wood or peat was constantly piled on in an effort to maintain warmth, and the cumbersome and dirty fuel had to be lugged up narrow service stairways to any upstairs rooms that were lucky enough to have fireplaces. Having a bath was something that required planning, and no small amount of effort, to ensure enough hot water for the purpose. No wonder people only bathed once a week. It wasn’t until the 1850s that the radiator was developed for domestic use and hot water was pumped around the house. Although most of our country houses now have mains electricity and some form of central heating, few have been brought up to modern high standards of energy efficiency and cost effectiveness. Estate agents used to joke that if a potential purchaser asked how much it cost to heat a particular country house then he really couldn’t afford to buy it. There is no doubt that one of the most costly aspects of owning a country house today, especially in Scotland, is the fuel to provide hot water and central heating. Why, therefore, don’t more of these properties bring themselves up to date with today’s technology and make their heating more efficient - especially in these times of rapidly rising fuel costs? It is not just a matter of capital outlay but a mixture of cost, disruption, planning restrictions and Historic Scotland. To install a new heating system and improve insulation requires money, albeit there are grants available and the long term reduction in fuel costs will ultimately save money. Some energy systems, for example wind turbines, solar panels or

biomass boilers, require planning permission - a process which is too onerous for some to contemplate. And some listed houses have problems getting consent from Historic Scotland for double glazing, even though this makes a house warmer and quieter, and reduces condensation, as well as being more environmentally-friendly by reducing the carbon footprint. Apart from houses which are being fully refurbished or internally rebuilt, where the fabric of the property is being changed, most are starting with cold stone floors, lack of cavity insulation, single glazing and no roof insulation. The investment in new energy options takes too long to pay back for some and many owners are reluctant to take the longer term view. This is a shame as there are definite signs now that investment in reducing energy bills and being more eco-conscious with energy saving devices does add considerable value to our larger country houses, not to mention reducing fuel bills and making the properties more enjoyable to live in. A perfect example of a historic building which has benefited from updating its energy systems and improving its heating and insulation is Killean House on the West Coast of the Kintyre Peninsular, which has been completely refurbished over the last ten years with heavily insulated roof spaces, a renewed double-glazed cupola and new twin, gas fired condensing boilers with underground tanks. Plans are also underway to develop the hydro potential on the estate with consent now granted to build a dam and turbine house and grid connection charges paid. The capital cost of the project is estimated at around £400,000 with the 150KV turbine estimated to be paid off over four to five years. The estate has also refurbished an old farm steading and created 10 beautifully finished 2 and 3 bedroom holiday cottages using the highest modern insulation, and double glazed windows, and all are heated by a new ground source heating system. Killean Estate is currently being offered for sale through Smiths Gore’s Edinburgh office for offers over £7.5million. Our Sustanability, Renewables and Energy department would be delighted to advise further on this estate or on any energy issue with regard to a property.


7

Chipping away - opportunities with woodchip and other woodfuels Stuart Mackenzie t: 01620 828960 e: stuart.mackenzie@smithsgore.co.uk Woodchip and other wood based heating systems for farms and estates and local communities are increasing in uptake and switching to wood, particularly where there is ready fuel resource to hand, is a sensible choice. There are estimated to be more than 200 commercial woodfuel systems in Scotland right now with numerous smaller domestic installations also in operation. The Renewable Heat Incentive, the Government grant scheme that pays per thermal kwh produced for 20 years, has also helped to increase popularity of woodfuel based systems and will ensure sustained demand in an emerging, but nonetheless stable, market for many years to come. For smaller heating systems, timber or woodchip supplies can come from woodland management, forest thinnings and prunings or from under-managed woodland on farms and estates. Woodfuel comes in three basic forms – firewood, woodchips or wood pellets. Hardwood logs have a higher calorific value but burn less readily, although they have a longer burn time than softwoods. Burning dense hard woods like oak or elm on their own is not recommended, and it is best if these are burnt alongside other types of timber. Timber for woodfuel, once felled by a contractor or by staff, should be stacked to dry for at least a year by which time its moisture content will have reduced to around 35 per cent. Where the moisture content of woodchip or logs is too high then this can result in corrosion of the chimney and boiler and a less efficient system, with consequential impacts on savings and returns.

If chipped, it is best for this process to feed directly into storage adjoining the boiler’s hopper/feed-in system to avoid double handling. For log-based systems, logs should be between 15 – 50 cms in length, and up to 8 cms in width. Logs larger than this should be split. Consistent log sizes help achieve uniform burning and consequently better output and reliability. This is also where woodchip or wood pellets can have an advantage. For larger operations needing to outsource their woodfuel supply, or those without their own woodlands there are several companies that now supply woodchip. Transport is an important factor, and in particular where a supplier is more than 25 miles away, as woodchip is bulky to carry at 250kg/m3. As a general rule, the further away your supplier the larger your storage capacity should be to reduce the need for frequent loads. Another point to consider is whether your supplier can work well with your storage arrangements, for example tipper trucks are most suitable for underground bunkers. As woodchip use increases, prices will also rise offering a better return for timber grower and supplier. In turn it is likely that increasing prices will make harvesting and management of some borderline sites financially viable. There are opportunities both for those using woodfuel in any form, and for those able to supply it. For farms and estates, once they have accounted for what they need for their own requirements, they should not ignore the potential to join the supply chain and supply their surplus to other users particularly in their immediate locality.


8

New building further enhances Drummuir Estate log and woodchip heating system Neil Smith t: 01343 823000 e: neil.smith@smithsgore.co.uk Drummuir Estate commissioned its woodchip boiler for the main house in 2009, and subsequently installed a wood-fired district heating system at the estate farm. A converted steading houses two Froling Turbomatic 85kW boilers and two 1,800 litre water tanks. The fuel for this system, plus the logs to feed the boiler for the house, are sourced from the estate’s 3,000 acres of commercial forestry. Currently the district heating system heats the estate office and three rented cottages, but has additional capacity to heat further houses or buildings as they are renovated. Now the set-up and functionality of the Drummuir Estate heating system has been further enhanced through the construction of a new building as a replacement for the existing estate sawmill. This new building houses a wood processing and drying area, a workshop and a small ‘rest room’ for estate staff. Installed are a logging machine and ‘Woodmiser’, and the estate’s owners plan that this building will be at the heart of a future woodfuel business producing woodchips and logs for neighbouring estates and other users as demand increases, as well as continuing to provide fuel for the estate’s own requirements. The new building, designed and project managed by Smiths Gore’s Architects

and Building Surveyors, measures 30m x 18m with a section of lean-to in addition. It is of steel portal frame construction with fibre cement roofing and concrete panels with wood/steel cladding to the walls. The building design is based on the principles of an agricultural building although this has been improved with overhanging eaves/ barge details and the introduction of ventilated ‘pagoda’ detailing to the ridge (in a distillery style). The Smiths Gore team worked closely with the client in the formulation of the design brief and building design. The building was erected by a local contractor at a cost of £161,000 + VAT (ex fees) and has benefited from SRDP grant funding at a level circa £56,000 The woodchip-fuelled boiler serving the Home Farm complex cost £130,000, and was installed by Highland Wood Energy Ltd, with the cost being partly met by the Scottish Biomass Heat Scheme (SBHS). This was before the introduction of the Renewable Heat Incentive (RHI), and the estate is now looking to pay back the capital sum of the SBHS grant, and is applying for support under the RHI going forward. All the timber used comes from diversion of estate grown timber from thinnings. The system has a heat capacity of up to 170 kilowatts.


Changes to Planning fees for Energy Generation

9

Debbie Mackay t: 0131 344 0888 e: debbie.mackay@smithsgore.co.uk Two recent consultations on changes to planning application fees for energy generation may see significant cost increases for the energy industry. The proposed reforms are designed to make planning fees both ‘proportionate and effective’ and are part of a package of measures intended to further improve the planning system. At present, energy schemes under 50MW are considered under the Planning Acts and were previously dealt with under the ‘Plant and Machinery’ category of fees with a current maximum fee of £15,950. The proposed changes mean applications for wind farms and other energy generation projects under 50MW including biomass, energy from waste, and PV schemes could increase to a maximum of £50,000 for Planning Permission in Principle and £100,000 for full Planning Permission. Under the proposed changes the fee regime for single turbines will involve a sliding scale as set out below: Turbine

Size

Fee

Single Wind Turbine

<15m

£500

Single Wind Turbine

>15m and <= 50m

£1500

Single Wind Turbine

>50m

£5000

2 + Plus Turbines

£500 per 0.1ha (Max £100,000)

Planning Permission in Principle

£500 per 0.1ha (Max £50,000)

It is not yet clear how the Scottish Government will deal with the fees for schemes over 50MW, currently considered by the Scottish Government’s Energy Consents Unit under Section 36 of the Electricity Act 1989. Currently fees for electricity-generating stations and overhead line applications vary from £150 to £50,000 dependent on the size and scale of the proposed development. Responses to the recent consultation on Electricity Act have been varied and it is proposed that a group will be set up with industry and public sector representation to consider how best to revise these fees to make sure they are consistent with applications considered under the Planning Acts.

The principle of who should pay for the planning application process is subject to debate but it is clear that the Scottish Government is intent on going ahead with significant changes to the planning fee regime in Scotland to bring it more in line with fees in England. They are seeking to make this move more palatable to the development industry by creating a stronger link between fees and performance. Notwithstanding the pros and cons of fees increases a number of changes proposed could have significant impacts such as: 1. The proposal to increase fees year on year in line with the retail price index. 2. The proposal to impose a 50 per cent charge for a repeat application made within one year. These are currently free. 3. The proposal for a fee of 50 per cent of the original planning fee for the renewal of planning permissions which have not yet lapsed. In the case of 2 and 3 above, our view is that these proposed new fees are not proportionate to the work involved in dealing with the applications, particularly given current standard 3 year planning timescales where the original information submitted is likely to still be up to date. The industry has anticipated that fee increases would arise in due course given the situation in England and the tightening of public sector budgets. However, the scale of the increases and the onerous fees proposed for repeat and renewal applications runs against the grain of Scottish Government’s avowed support for renewable energy schemes in particular. It is only to be hoped that their current consideration of the responses to these consultations will result in a more temperate approach. It is anticipated that the final proposed changes to fees under both regimes will be laid before Parliament in January 2013 with commencement happening in April 2013. It is therefore well worth considering submitting applications in advance of April 2013 to avoid these significant increases.


Some of our current renewables projects

This map sets out the breadth and range of our involvement across Scotland in ‘renewables’ schemes from project feasibility, scoping, planning, contract negotiations and project delivery.

1 2

6 7 8

5

3

Fochabers

4

11 12

13

9 10

14

16 15

17

18 19 20 21 22

23

Perth

24 26 Edinburgh 27

25 Haddington Berwick

Key Hydro Photovoltaic Biomass Micro wind sites AD Current windfarm option and lease negotiations Office Locations

28 29 30

31

36 37

33

32

35 34

Dumfries

1.

Wester Ross, 2.5MW hydro power

14. Inverness-shire, Run of river hydro scheme

2.

Wester Ross, 470 kW hydro power

15. Argyll, 500 kW hydro

29. Dumfries & Galloway, 4 kW ground mounted photovoltaic scheme

3.

Ross-shire, 2 x 2.5 MW hydro scheme

16. Perthshire, 50 kW wind

30. Dumfries & Galloway, 500 kW wind turbine

4.

Highlands, 2MW hydro power

17. Perthshire, 100 kW run of river hydro scheme

31. Dumfries & Galloway, 50 kW hydro

5.

Moray, 48 kW farm based photovoltaic scheme

18. Perthshire, 300 and 200 kW biomass heating systems for commercial premises

32. Dumfries & Galloway, 15 kW farm based run of river hydro scheme

6.

Moray, 500 kW farm based AD scheme

19. Perthshire, 800 kW turbine

7.

Moray, 195 kW biomass district heating system

20. Perthshire, 10MW PV

33. Dumfries & Galloway, 60 kW run of river hydro scheme

Moray, 46 kW farm based photovoltaic scheme

22. Perthshire, 3x10 kW micro turbines

8. 9.

Moray, 35 kW run of river hydro scheme

10. Moray, 26 kW run of river hydro scheme 11. Moray, 43 kW run of river hydro scheme 12. Moray, 47 kW run of river hydro scheme 13. Inverness, 100 kW hydro

21. Perthshire, 700 kW run of river hydro scheme

34. Dumfries & Galloway, 16 kW photovoltaic farm based scheme

23. Fife, 50Kw wind

35. Dumfries & Galloway, 4 kW photovoltaic scheme on private house

24. East Lothian, 500 kW wind

36. Dumfries & Galloway, 10MW PV

25. Midlothian, biomass district heating system

37. Dumfries & Galloway, 400 kW biomass heating system for private house

26. Midlothian, 3x15 kW wind turbines 27. Midlothian, biomass district heating system 28. Ayrshire, 50 Kw wind


Renewable Energy Financial Incentives Update - Autumn 2012 Thomas McMillan t: 0131 344 0888 e: thomas.mcmillan@smithsgore.co.uk Hamish Milne t: 0131 344 0888 e: hamish.milne@smithsgore.co.uk There have been quite a few recent changes to the Feed-In Tariffs, Renewable Heat Incentive and Renewable Obligation Certificates. These are likely to affect the viability of renewable energy schemes moving forward. Key changes have been summarised below and for further information please see the links provided or contact one of our Sustainability and Renewable Energy (SRE) team. 1. Update on the Feed-in Tariffs (FITs) 1.1 Non-PV Technologies On 20 July 2012 the government revealed new support levels for small scale wind, hydroelectric, anaerobic digestion, and micro combined heat and power (CHP) systems under the feed-in tariff incentive scheme. These revised levels will apply from 1 December 2012 onwards. Support for wind generation falls across the board, with losses greatest for turbines rated up to 1.5kW, where tariffs drop from 35.8p/kWh to 21p/kWh. Hydro remains largely unchanged, but Technology

Hydro

Wind

AD

Micro CHP

includes a rise for schemes between 100kW and 500kW, with support levels rising from the proposed 12.1p/kWh to 15.5p/ kWh in this newly created band. AD support remains largely unchanged, while micro CHP levels rise from 10.5p/kWh to 12.5p/kWh. The SRE team is finding that healthy returns can currently be achieved on hydro installations because of the favourable and unchanging FIT rates. However, there is an onerous permitting and planning process which can cause long lead-in times and can discourage development in this area. The biggest loser from the review does appear to be the small wind sector. The tariff for wind projects in the 1.5-15kW category has been reduced by 25%, and that of sub-1.5kW projects by over 40%. These reductions have prompted comparisons to the cuts made to solar support and could have consequences for the financial viability of wind projects at the smaller end of the scale.

Band (kW)

Current generation tariffs (p/kWh)

Consultation tariffs from Oct 2012 (p/kWh, 2012 prices)

Final tariffs from 1 Dec 2012 (p/kWh, 2012 prices)

Community energy tariff (p/kWh)

15

21.9

21

21

21

>15-=100

19.6

19.7

19.6

19.6

>100-=500

12.1

12.1

15.5

15.5

>500-=2000

12.1

12.1

12.1

12.1

>2000-=5000

4.9

4.5 (2.2 from April 2013)

4.48

4.48

1.5

35.8

21

21

21

>1.5-=15

28

21

21

21

>15-=100

25.4

21

21

21

>100-=500

20.6

17.5

17.5

17.5

>500-=1500

10.4

9.5

9.5

9.5

>1500-=5000

4.9

4.5 (4.1 from April 2013)

4.48

4.48

250

14.7

14.7

14.7

14.7

>250-=500

13.6

13.7

13.6

13.6

>500-=5000<>

9.9

9

8.96

8.96

2

10.5

12.5

12.5

12.5

Source: http://www.decc.gov.uk/en/content/cms/news/pn12_085/pn12_085.aspx


12

1.2 Solar PV Changes to tariffs for solar PV were announced on 24 May 2012 and took effect from 1 August 2012. In general the reductions are less than expected – see the table below and the following link for further information: http://www.decc.gov.uk/en/content/cms/ news/pn12_066/pn12_066.aspx

Band (kW)

Standard Generation Tariff (p/kWhr)

Multi installation Tariff (p/kWhr)

Lower Tariff (if energy efficiency requirement is not met) (p/kWhr)

4kW (new build)

16

14.4

7.1

>4kW (retrofit)

16

14.4

7.1

>4-10kW

14.5

13.05

7.1

>10-50kW

13.5

12.15

7.1

>50-100kW

11.5

10.35

7.1

>100-150kW

11.5

10.35

7.1

>150-250kW

11

9.9

7.1

>250kW-5MW

7.1

N/A

N/A

Stand-alone

7.1

N/A

N/A

Source: http://www.decc.gov.uk/en/content/cms/news/pn12_066/pn12_066.aspx

At the agricultural scale (50kWp) the FIT tariff reduction was much lower than planned taking the 15.2 pence per kWhr down to 13.5 pence per kWh for 10-50kWp installations. In addition, the multi-installation tariff was confirmed at 90% rather than 80% of standard FIT rate; this will apply to those clients who commission more than 25 installations. The tariff length was reduced to 20 years but as mentioned below the export tariff increased from 3.2 pence to 4.5 pence per kWh. There is a continued energy efficiency requirement which means that installations that do not meet an EPC rating of a D or above will only be eligible for the standalone installation tariff (7.1 pence per kwh).

DECC has introduced a degression mechanism which allows tariffs to be set by Ofgem on a quarterly basis reflecting deployment of the technology earlier in the year. The degression, which can be up to 3.5%, can be skipped for up to two consecutive periods if deployment is low, or alternatively the percentage can be doubled and redoubled (up to a maximum of 28%) if deployment is high. Solar PV schemes of less than 50kW in size were degressed on 1 November 2012, with the next review date set for 1 February 2013. This mechanism aims to remove the need for emergency reviews and will hopefully result in a more stable, predictable future for solar PV.

The Smiths Gore SRE team are still finding that PV can provide healthy returns (where the conditions are right, e.g. a large south facing roof of an agricultural building, no upgrade needed to the electricity network, no strengthening required to the roof, a non-asbestos roof and a high usage of electricity on-site).

The time span of the solar tariff is being reduced from 20 to 25 years, bringing it in line with most other technologies. A degression mechanism will also be introduced for Anaerobic Digestion (AD), wind and hydro from April 2014 in line with uptake of these technologies. Tariffs will be published two months before the degression date.


13

1.3 Export Tariffs Alongside the FITs (which are paid for the generation of renewable electricity) there is also an export tariff. This is paid by electricity companies for the purchase of renewable electricity that is exported back to the grid. These export tariffs have risen from 3.2p/kWh to 4.5p/kWh as of 1 August 2012. This is likely to influence the financial case for installations where on-site use of electricity is low and so export to the grid is high. The export tariff for existing installations will not be changed. For non-PV technologies, the same new export tariff will be applicable for installations with an eligibility date on or after 1 December 2012. 1.4 Other Changes DECC is also introducing a system of preliminary accreditation (similar to the Renewable Heat Incentive scheme) so that all AD and hydro installations, and larger wind and PV installations over 50 kW, will be accredited prior to any construction taking place. This will provide certainty over tariffs for six months to two years depending on the technology.

Essentially it means that if a developer gets their project up and running within the tariff guarantee timescale, they will receive the tariff that applied at the time they applied for preliminary accreditation. See DECC’s web pages for further information on FITs: http://www.decc.gov.uk/en/content/cms/meeting _energy/ Renewable_ener/feedin_tariff/feedin_tariff.aspx The link below provides responses to FAQs on the latest FIT changes: http://www.decc.gov.uk/en/content/cms/meeting _ energy/renewable_ener/feedin_tariff/fits_faqs/fits_faqs.aspx 2. Renewable Heat Incentive (RHI) The RHI provides support for the generation of renewable heat. Support began for non-domestic renewable heating schemes in April 2011, which includes biomass, solar thermal, heat pumps, deep geothermal, energy from waste and renewable Combined Heat and Power (CHP). There is no upper limit of generation scale (unlike the FITs which do not apply above to schemes 5MW in size). Similarly to the FITs, various tariff rates apply depending on the technology type and size of scheme. For further details on RHI tariffs please see below.

Tariff name

Eligible technology

Eligible size

Previous tariffs up to 31st March 2012 (p/kWh)

New rounded tariffs from 1st April 2012 (p/kWh)

Small biomass

Solid biomass, municipal solid waste (including combined heat and power CHP)

Less than 200 kWth

Tier 1: 7.9 Tier 2: 2.0

Tier 1: 8.3 Tier 2: 2.1

200 kWth to 1,000 kWth

Tier 1: 4.9 Tier 2: 2.0

Tier 1:5.1 Tier 2: 2.1

1,000 kWth and above

1.0

1.0

Medium biomass

Large biomass Small ground source

Less than 100 kWth

4.5

4.7

Large ground source

Ground source heat pump, water source heat pump, geothermal

100 kWth and above

3.2

3.4

Solar thermal

Solar thermal

Less than 200 kWth

8.5

8.9

Biomethane

Biomethane injection and biogas combustion, except from landfill gas

Biomethane all scales, biogas combustion <200 kWth

6.8

7.1

Source: http://www.decc.gov.uk/en/content/cms/meeting _energy/Renewable_ener/incentive/incentive.aspx

Domestic RHI support has now been delayed until at least summer 2013. A consultation was launched in September and runs until 7 December 2012. The Renewable Heat Premium payment (RHPP) provides small upfront grants for these schemes. The data below shows the current RHPP payments by technology. Payment per installation

£300 Solar thermal water heating

Available to all households

£850

£950

£1,250

Air source

Biomass

heat pumps

boilers

Ground source heat pumps

For households without mains gas heating


14

3. Renewable Obligation Certificates (ROCs) The Renewables Obligation (RO) applies to large-scale renewable electricity generation. For Smiths Gore’s clients this is likely to be relevant to leasing sites for large scale wind or commercial (5MW) solar projects. ROCs have recently undergone a banding consultation, the results of which were published on 25th July. Support for onshore wind from 2013-17 is due to be reduced by 10% to 0.9 ROCs. This level is guaranteed until at least 2014 but could change after then if there is a significant change in generation costs. This reduction is the best that the industry could have hoped for because a drop of 25% was being considered at one point. This announcement should provide reasonable certainty and security to wind developers and should therefore enable healthy rental values to be offered to landowners for commercial wind sites. The support for most other technologies is due to drop slightly as a result of the review, with a gradual degression planned

over the next 3 years. There will be no immediate reduction in support for large-scale solar, but further consultation is planned this year on reduced support levels given the recent dramatic falls in costs that have been observed. In addition, this band is to be closed to new projects at or below 5 MW, from 1 April 2013, subject to consultation. On a brighter note, there are some instances of increasing support, as in the case of certain marine energy technologies such as tidal stream and wave generation. The support for these will more than double from 2 ROCs to 5 ROCs per MWh, subject to a 30MW limit per generating station. The RO will close to new generation on 31 March 2017, and generation which is accredited under the RO will then continue to receive support until the scheme closes in 2037. See this page for further information on ROCs: http://www. decc.gov.uk/en/content/cms/news/pn12_086/pn12_086.aspx

THE Pulse Tom Greatrex MP, Shadow Energy Minister, speaking on BBC Good Morning Scotland on Friday 12 October said, when asked by David Miller whether new nuclear power stations should be built in Scotland: “I think we shouldn’t rule out nuclear on an ideological position. We should have a balanced energy mix. A considerable amount of electricity is generated from nuclear power currently, and nuclear power is low carbon which is a big factor when you’ve

got pressing climate change commitments in Scotland and the rest of the UK … “Nuclear power currently makes up 30 per cent of what is generated in Scotland. If we didn’t have it you would probably be importing it from England or through the interconnector from France. Nuclear will continue to be, I think, part of the energy mix in the UK.”

So we asked: Should nuclear and renewables be equal contributors to the UK’s energy future? Professor Ian Bryden, Head of the Institute for Energy Systems, The University of Edinburgh, said:

Thomas McMillan, Renewables Energy Consultant, Smiths Gore, said:

I think that both will be necessary.

Ideally I would like to see a nuclear-free UK in the next decade as the current generation of reactors reach retirement. This is for several reasons:

Dr John Constable, Director, The Renewable Energy Foundation, said: No planned or predetermined share should be guaranteed for any generation type, renewable, nuclear or fossil. Instead, we must rid our energy markets of distortions and allow competition to reveal the cheapest, clean kWh available, whatever that happens to be. Unfortunately, current policies and market structures attempt to pick winners on the basis of sentiment, and, quite predictably, are resulting in the promotion of a non-viable generation mix that imposes unacceptable cost burdens on domestic, public sector, and business consumers.

There are no natural resources of uranium to fuel nuclear plants in the UK, so once again we will have to rely on imports from foreign nations.

We have a significant supply of renewable energy if we utilize it correctly.

There are long terms storage issues associated with Nuclear energy as well as wider environmental and terrorism risks.

A nuclear free UK could become a reality by default as the government is currently struggling to find any investors into the next generation of reactors. The challenge then is how to meet the base load supply that nuclear currently provides, and it already looks like the government has one eye on shale gas. In order to maximize base load requirements being met by renewable energy a super-grid is required and I would like to see increased investment into this area. I would also like to see more focus given to the generation of hydrogen from renewables or other theories such as compressed air energy storage to provide electricity at peak times.


15

News in brief Jamie Evans-Freke promotion

Jamie Evans-Freke

We are delighted to announce the promotion of Jamie Evans-Freke (Fochabers Office) to Partner with effect from 1 October 2012.

In November, Jamie will have been with the firm for ten years. During this period he has worked on secondment at the Dunecht Estate in Aberdeenshire and spent four years as a Resident Agent on the Firle Estate in East Sussex. He then returned home to his northeast roots with his family in 2009 working from the Fochabers Office where he is responsible for the day-today management of The Crown Estate's Glenlivet Estate as well as a number of private client estates throughout Morayshire. In his spare time Jamie plays an active role in coaching the juniors at Huntly Rugby club as well as fly-fishing all of which is carried out with his signature enthusiasm. SG hosts ‘Young Professionals’ at Royal Highland Show 2012 Despite a wet and windy Royal Highland Show, the Smiths Gore team transformed the stand into a welcoming setting for a ‘young professionals’ evening drinks reception. With invites extended to a wide range of fellow professionals, organisations and clients, the gathering provided an intimate and relaxed setting for the younger members on the team to make

associations with peers working within the rural sector. Drinks and canapės were served as conversation flourished on a range of topics, some even deviating from the weather! We look forward to hosting a further reception next year.

Land Girls Memorial Smiths Gore donated their professional services work on the Land Army Memorial Scotland Project. The striking memorial was unveiled by HRH The Prince Charles, Duke of Rothesay, on Tuesday 9 October on The Crown Estate, Fochabers.

Glencaple shop open for business The Caerlaverock Tea Room and Shop at Glencaple on the River Nith, Dumfriesshire, an eye-catching development by the Caerlaverock Estate, was officially opened by HRH Princess Alexandra in September.

William Hawes (left) and Neil Smith (right) of Smiths Gore in front of the Land Army Memorial. Both were involved in delivery of the project. Smiths Gore welcomes Jane Dungait to the Berwick office Smiths Gore Partner Thomas Florey with HRH Princess Alexandra at the launch of the new Glencaple Shop.

Both the tea room and shop are housed in a striking new contemporary building designed by Smiths Gore on Glencaple quay. Richard Henderson, Partner, Smiths Gore, says: “This has been a significant project for us for and more so for Caerlaverock Estate. It is a clear demonstration of their commitment to the local area and the local community to have, over many years, not just retained the local village shop and post office but now provided this striking building to be both a landmark and a new hub for the community.”

We are pleased to announce that Jane Dungait has joined Smiths Gore's BerwickUpon-Tweed office from the Duke of Buccleuch's Langholm Jane Dungait Estate where she has worked for the past two years. Jane, whose family farm in Northumberland, has a degree from Harper Adams, qualified as a Rural Practice Chartered Surveyor in 2011 and specialises in estate management and residential lettings.


The ScottiSh NETWORK Berwick office 8 Castlegate Berwick-upon-Tweed TD15 1JS t: 01289 333030 e: berwick@ smithsgore.co.uk

Dumfries office 28 Castle Street Dumfries DG1 1DG t: 01387 263066 e: dumfries@ smithsgore.co.uk

Edinburgh office 22 Young Street Edinburgh EH2 4JB t: 0131 344 0888 e: edinburgh@ smithsgore.co.uk

Fochabers office 7 The Square Fochabers IV32 7DG t: 01343 823000 e: fochabers@ smithsgore.co.uk

Haddington office 28 Sidegate Haddington EH41 4BU t: 01620 828960 e: haddington@ smithsgore.co.uk

Perth office 13 Marshall Place Perth PH2 8AH t: 01738 479180 e: perth@ smithsgore.co.uk


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.