Quest for power

In two articles for this Journal in 2005 (July, 26; September, 22), I explained how Scotland’s wind farm industry had grown over its first 10 years to a position where 25 commercial wind farms were operating by mid-2005, consisting of 381 turbines of over 409 megawatts (MW) of capacity.

Targets had been set in 2003 (Scottish Government Policy document “Securing a Renewable: Scotland’s Renewable Energy”) of producing 18% of our electricity from renewable sources by 2010 and 40% by 2020.

I went on to consider what required to be done to meet these targets and what opportunities this presented for lawyers. Specifically, I pointed to the need for a quicker planning process (both to approve and reject applications) and the need for an enhanced grid system to cope with the additional projects coming on line. I also suggested that it was likely that the bulk of the development, at least to meet the 2010 target, would have to come from onshore wind. There was little new hydro planned at that stage and other technologies would still be in their infancy by 2010.

Taking stock

This now seems an opportune time to take stock. Will the 2010 target be met, and where are we on the road to 2020? Has the planning process speeded up? Do we have more grid capacity? What progress has been made in the development of new technologies? And to what extent has the renewables industry developed to create even more attractive opportunities for legal work?

The good news is that it’s really a resounding yes to all of the above. The need to try to secure our energy supply, the challenges of dealing with climate change and the targets set by Europe, the UK and Scotland, combined with our energy resources and the creation of a vibrant industry, have brought renewable energy firmly into the spotlight over the last few years.

It can realistically be regarded as one of the Scottish Government’s main priorities. In his 2010 New Year message, our First Minister predicted a “renewables revolution” emanating from Scotland, which had won the “national lottery” of wind, wave and tidal, offering the capacity to produce some 10 times Scotland’s own electricity requirements.

Scotland has actually increased its targets – we now aim to produce 31% of our electricity needs from renewables by 2011, 50% of those needs by 2020 and 20% of all our energy (heat, transport and electricity) needs by 2020. The new Climate Change (Scotland) Act 2009 also sets emissions targets – we aim to reduce emissions from 1990 levels by 80% by 2050 with an interim target of 42% by 2020.

Target in sight

So what is required to meet these new targets? A Renewable Energy Framework Consultation brought out by the Scottish Government at the end of 2008 estimated that to meet the 31% and 50% electricity targets we required around 5 and 8.4 gigawatts (GW) of renewable capacity by 2011 and 2020 respectively (a gigawatt being 1,000 MW).

Figures from the Scottish Renewables Forum at 15 December 2009 showed 3,583 MW already installed (1,488 MW of hydro, 1,881 MW of wind, 100 MW of energy from waste, 113 MW from biomass electricity and heat and 0.8 MW from wave, with tidal not yet contributing to these figures). At the end of January 2010, figures from the British Wind Energy Association showed that in addition to these installations, new wind farms in Scotland with capacity of 599 MW were under construction, a further 2,519 MW of wind had received planning consent with construction yet to commence, and there were thousands more potential MW of onshore wind in the planning system. It can be easily seen that once the wind farms under construction are fully commissioned, less than half those with planning consent need to be built and commissioned to achieve the 2011 target and hence we can confidently say that this will be achieved.

2020 vision

To reach the 2020 target, however, more input will be required from other technologies. New onshore wind sites will still come on board, extensions are already being added to existing wind farms and, before too long, we may see the prospect of some of the older wind farms being re-powered as turbines reach the end of their operating life (the first wind farms back in the mid-1990s had output of around 500-600 kilowatts per turbine, whereas on the schemes on which I am currently working many turbines now are routinely of 2.3-2.5 MW). The Climate Change Act has also led to the Forestry Commission announcing that it is seeking partners to develop large areas of afforested land for new wind farms. This is all vital because the Scottish Renewables Forum estimated in January of this year that 6 of the 8 GW required to meet the 2020 electricity target are likely to be required from onshore wind.

There is also the prospect of more hydro schemes. In 2008 SSE commissioned the first large-scale hydro scheme for many years at Glendoe, with a capacity of 100 MW, and a January 2010 report for the Scottish Government identifies another 1.2 GW of potential new output, mainly in small-scale developments. Again, the Forestry Commission has identified considerable opportunities for new hydros on its estate.

The Crown Estate (CE) has also opened up the Pentland Firth for wave and tidal development, initially permitting approved developers to enter agreements for lease with a view to start testing their demonstration devices in the harsh (but powerful and consistent and therefore potentially productive) waters off Orkney. This is in the hope of helping to contribute to the 700 MW which it was initially estimated might be able to be produced from this area by 2020. Some estimates now put that figure at over 2 GW.

More biomass plants will hopefully also be developed.

I acted for E.ON in the development of what was then the UK’s largest plant (44 MW) at Steven’s Croft, near Lockerbie, which was commissioned in 2007, and while most new plants will be smaller than that, there is considerable scope for more to be established.

Again by 2020 we should see more offshore wind farms around the Scottish coast. The first is up and running – E.ON have now installed 60 turbines (of 125m height to blade tip) at Robin Rigg in the Solway Firth, the first being commissioned in September 2009. In February 2009 the CE announced that developers had been offered exclusivity agreements for the development of 10 offshore wind farms within Scottish territorial waters which the CE thought had the potential to generate around 6.4 GW of offshore wind power. Then, in January this year, the CE announced two Scottish wind farm exclusivity zones as part of the UK round 3 offshore awards, one in the Moray Firth and the other east of the Firth of Forth. The possible output from these two sites is another 4.8 GW. So the potential is huge, although the high costs involved in developing offshore are still a challenge for the companies. It is also not a speedy process – I remember advising consultants on the then proposed Robin Rigg wind farm as far back as 2001!

Planning issues

On planning, I think we can safely say that, after intense lobbying by the renewables industry, the planning process has indeed speeded up and the current Scottish Government deserves to be congratulated for this. According to its figures it has determined 32 energy applications since May 2007, approving 27 renewables projects, compared with 19 determinations over the 2003-2007 period. Recent planning legislation has also aimed to simplify the process.

Very few people can have failed to notice the granting of planning consent to the controversial Beauly-Denny grid upgrade in January this year. Most of the controversy relates to the absence of any requirement on the utilities (SSE and SP) to construct parts of the line underground, although there are still 311 planning conditions for them to work through. It is also estimated that the work will take four years to complete, so it will be some time before new renewables in the north come on line. But that is only part of the progress. We now have a national planning framework in place; countries around the North Sea agreed in December 2009 to create a North Sea Grid; and the EU Strategic Energy Review also identified the North Sea as a priority as part of the long-distance transfer of renewables into Central Europe to help the diversification of supply. This engagement with Europe is fundamental to achieving a sustainability of supply for Scotland.

Opportunities for lawyers

The continued expansion in my work shows the possibilities for others. I have now been involved in over 50 renewables developments which are either built, under construction or consented and together contribute over 3,000 MW to the Scottish targets, with over 100 projects either at earlier stages or having fallen by the wayside. The work has involved all of the technologies mentioned above and has included options, leases, funding agreements, planning agreements, grid connection deeds, sales of consented wind farms, consultancy and contractual agreements, new companies, joint ventures, community fund agreements, restoration bonds, monitoring agreements and offshore licences. I see no sign of this diminishing, and the move into more offshore work is likely to open up new types of contractual agreements to cover the myriad of challenges that will be faced. No wonder that so many ex-banking, projects and corporate lawyers have started turning up in the renewables field!

SHREC 2010

Harper Macleod has organised the inaugural Scottish Highland Renewable Energy Conference, at The Drumossie Hotel, Inverness on 28 April 2010. The event will bring industry specialists such as turbine manufacturers and environmental consultants together with land agents, landowners and professional advisers, to improve mutual understanding of the issues that arise.

• www.harpermacleod.co.uk/events/1022