Associate Feature: Scotland’s Renewable Energy Potential

Blessed with abundant natural resources, Scotland is uniquely positioned to take full advantage of the shift to cleaner, greener, renewable power.

In the last decade we have seen dozens of projects successfully deliver not only green power to communities, but thousands of jobs created in sectors from engineering to transport. With the scale of the changes needed to make net zero targets a reality, more green energy projects will need to be delivered in the coming years.

At Drax, we are progressing to build a new pumped storage hydro power station at our existing Cruachan facility in Argyll. It’s a hugely exciting project to be working on and would be one of the largest infrastructure projects seen in Scotland in a generation. The proposals, which were given the green light by the Scottish Government last year, will strengthen the UK’s energy security as well as enabling the journey to net zero.

Research published by the respected trade body Scottish Renewables found that the six pumped storage hydro projects currently under development in Scotland will more than double the UK’s pumped storage hydro capacity, create almost 15,000 jobs, and generate up to £5.8 billion for the UK economy by 2035.

Pumped storage hydro is the only proven grid-scale technology that can store vast quantities of energy for long durations. These plants act like giant water batteries, using excess power from the grid to pump water to an upper reservoir where it is stored, before re-releasing it to generate electricity when demand requires.

This ability to store large volumes of excess power is vital for enabling Scotland to generate more renewable power from natural resources like wind. Currently, excess wind power goes to waste due to a lack of storage or capacity on the country’s transmission system. We shouldn’t let renewable power go to waste; we should store it.

Drax’s plan to expand Cruachan will support around 900 jobs during six years of construction across the supply chain in a range of industries, from quarrying and engineering, to transport and hospitality. Around 150 on-site local construction jobs will be created during the development. It will be a real boost to local economy.

Like the existing plant, the new power station will be built underground inside Argyll’s highest mountain, Ben Cruachan. This will be done by creating a new hollowed-out cavern which would be large enough to fit Big Ben on its side. It’s a mega infrastructure project which will benefit Scotland, and the whole of the UK, for many decades to come.

Despite its benefits, unlocking the private investment required to get shovels in the ground for projects like this has proven to be tough in recent years. However, there may be light at the end of this tunnel.

Unlocking Investment, Enabling Renewables
The need to reduce our carbon emissions is clear, but how to make net zero a reality whilst also having an energy system which is secure, affordable, and sustainable is now the central question facing policymakers in Holyrood and Westminster.

This set of interrelated and potentially competing goals are the complex set of challenges known as the ‘energy trilemma’. Each of these three outcomes must be balanced to ensure that energy systems are resilient, efficient, and effective.

In the last decade, the UK has decarbonised its power grid faster than any other major economy thanks to the growth of biomass, wind, and solar power. But what happens to our power grid when the wind doesn’t blow, or the sun doesn’t shine? How can we have a green grid but at the same time have secure power supplies at an affordable price?

In pumped storage hydro, we have a tried and tested solution to the energy trilemma, but unfortunately there are barriers to unlocking private investment in such transformational projects. While the UK’s policy and market support mechanisms have evolved to enable new build renewables, the current framework isn’t suitable for pumped storage projects due to the long construction period and revenue uncertainty. 

That is why I was delighted last month when the UK Government launched a consultation on introducing a new support mechanism called a ‘cap and floor’. This would enable private investment to be unlocked for long duration electricity storage projects such as Drax’s planned expansion of Cruachan.

It enables private equity to have confidence in project’s maximum and minimum revenues over an extended period which reduces uncertainty. This assurance is crucial for attracting the substantial investment required for such developments, which often have high upfront capital costs. Investors and lenders are more likely to support projects with a predictable revenue stream, even if market conditions fluctuate.

Under such a scheme, operators would hand back excessive profits if annual revenues breached the cap. On the other hand, support from the Government would only be given in the event revenues do not meet the floor level, providing value for money for consumers.

Drax, alongside several other developers of long-duration electricity storage projects, have been calling on the UK Government to introduce such a measure. The case for doing so is overwhelming. Not only does it de-risk investment and provide value for money for consumers, but it also encourages operational efficiency. Operators are incentivised to optimise their operations to generate revenue between the established cap and floor, thus driving innovation and efficiency in the sector. This efficiency is not only beneficial for the operators but also for the overall National Grid, bolstering the stability and reliability of the UK’s electricity supply.

This mechanism is tried and tested and has been integral to supporting the roll-out of cross-border interconnectors over the last decade. The UK now has international transmission links to Ireland, France, the Netherlands, Belgium, Norway, and Denmark. With the cap and floor regime providing certainty for new developments, the number of links is set to grow in the years ahead.

Moving Scotland Forward
The UK Government’s consultation on designing a policy framework to enable investment in long duration electricity storage closes on 5 March, and I encourage those who support enabling a new generation of these plants to respond to the survey at Long duration electricity storage: proposals to enable investment - GOV.UK (www.gov.uk).

The climate cannot afford for renewable power to go to waste, and neither can households who are facing rising energy costs. With the right support from government, projects such as Drax’s Cruachan expansion will ensure more green power to homes and businesses across Scotland.

Climate change is the greatest challenge of our age, and Drax is ready to move mountains to tackle it.

This article is sponsored by DRAX

https://www.drax.com/