Repowering Scotland - A missed opportunity
The Scottish Government has squandered an opportunity to nationalise our energy by not taking Scotland’s first onshore wind farm into public ownership at the best time to do so.
Image Source: Alan O’Dowd, Geograph
The Scottish Government has squandered an opportunity to nationalise Scotland’s oldest onshore wind farm and has hailed as a “success”, a deal that will see the local community earn below the bare minimum in community benefits.
Hagshaw Hill in South Lanarkshire is a notable name in Scottish energy circles. In 1995 it became the site of Scotland’s first onshore wind farm, developed by Spanish-owned multinational company Iberdola under their subsidiary Scottish Power Renewables. It’s also visible from my village, so has formed part of the backdrop of my horizon for three quarters of my life.
Technology, as it is want to do, has moved on the previous thirty years and the turbines on the site have aged to the point of needing to be replaced. Rather than merely replace them like-for-like, however, the 26 turbines have been replaced by 14 new, larger and more efficient modern ones. The site promises to generate around five times as much energy as it previously did despite there being fewer turbines.
This process of replacing an existing wind farm with newer, larger turbines is known as “repowering” and Scotland is embarking on a wave of these projects as the first generations of renewable generators reach their end of life. This is in parallel with the ongoing expansions of new generation sites that will secure our transition to a fully renewably powered nation.
However, the Scottish Government has dropped the ball in at least two major ways when it comes to this site and it does not bode well if this shapes the precedent of the ones to follow.
First, is the level of community benefit paid by the company to local people whose environment is effectively being rented for the purpose of electricity generation. The villages surrounding the site – Douglas, Lesmahagow and Coalburn (my own Kirkmuirhill is just outwith the catchment area) – will see their shared community benefit increase as it is linked to the maximum power capacity. They will now receive around £400,000 per year. Which sounds like a lot and it is a substantial uplift from the approximately £15,000 per year they were receiving up till now, but it works out at only £5000 per MW of turbine capacity. This is the bare minimum level of community benefit that the Scottish Government has recommended for many years now. If the level had merely been uplifted to account for inflation since it was first introduced, then it would now be closer to £7,500 per MW per year or closer to £600,000 per year for the communities – enough to fund at least half a dozen community development officers or to retrofit and insulate half a dozen houses every year to lift the most deprived people in what can be a substantially deprived area out of fuel poverty forever.
In our response to the Scottish Government’s consultation on community benefits we stated that the £5000/MW number was far too low – this point has been acknowledged and accepted by Ministers when I’ve spoken to them about it – and that it’s no longer appropriate in general anyway. A sum based on the maximum MW capacity of a generator doesn’t take into account the capacity factor of the generator (the amount of actual energy it generates on average over a year. For wind, this can be around 30%. For solar panels, it can be 10-20%) and nor does it take into account financial factors like the cost to build and maintain the generator or the price of electricity (when the price of electricity goes up, wind turbine owners make more profit and the community pays higher energy bills but the community benefit payments stay the same). Instead, we called for the local community to be granted an ownership stake in the turbines – say, 10% - instead of making benefit payments. This idea has had some traction within the Scottish Government and the previous First Minister Humza Yousaf appeared to be particularly keen on it but the current administration appears to have both ignored that idea and has apparently ignored their own consultation on reforms to the benefit scheme.
This error will cost the communities around Hagshaw Hill several hundred thousand pounds per year – at least – for the next several decades meaning that millions of pounds that could have been invested in the area – an area that was shattered by the loss of coal mining at the end of the last onshore energy boom – will instead likely be granted as dividends to shareholders including US asset management firm BlackRock, the Norwegian Pension Fund and Qatar’s National Wealth Fund.
“Scotland could, in effect, renationalise all of our energy for free.”
The second error lies in the “repowering” itself. Many wind farms in Scotland are leased for a specified length of time. In this case, the old turbines were previously granted a 30 year lease and the new turbines have been granted the same. This is not always the case – it’s not unusual for operators of wind farms to be granted a 60 or 99 year lease with the anticipation that the lease would cover several generations of turbines. Additionally, the leases often specify a maximum capacity per turbine as part of the contract (this is to satisfy planning permission limits based on the visibility of the turbines). If a developer wishes to extend the use of the site beyond the term limit OR if they wish to repower the site above the capacity limit, then they are required to apply for a new lease contract.
In this case, the contract was simply given back to Scottish Power but it would have been perfectly legal for the Scottish Government to use the moment of repowering to hand the operational contract instead to a Scottish publicly owned energy company. Even if that company had to contract Scottish Power to build the new turbines for them, this would have allowed Scotland to bring the entire farm into public ownership, not merely the 10% that they could have (but didn’t) grant to the community. This could be done with every renewable site in Scotland – both on- and offshore. Over the course of 30 years or whenever new technology makes it feasible to replace an older generator, Scotland could progressively transition out private energy sector into a public one. The kicker is it wouldn’t cost you, the Scottish taxpayer and energy consumer, a single penny more than it is going to cost you to not renationalise our energy. The turbines are still being replaced and the cost of the replacement will still form a chunk of your energy bill regardless of who owns the turbines. Scotland could, in effect, renationalise all of our energy for free.
Unfortunately, the Scottish Government has chosen to not do this. The official position is still that Scotland doesn’t have the power to bring onshore wind energy into public ownership (despite Orkney Council doing just that within the past month). This too will cost Scotland dearly, not just in terms of the lost opportunity bring vital sectors into public ownership, but also in terms of the loss of ability to use the profits to improve the lives of people who live under the turbines and to take the edge off the bills of everyone in Scotland who pays for the energy generated here but can only watch as the profits from those bills leave for Spain, the US, Norway, Qatar and elsewhere.
Thirty years ago, Scotland began a renewables energy transition that led to us making the same mistakes as we did with coal and oil. Now, as the turbine spins back around and we begin the second phase of that transition, it appears that we’re making the same mistakes all over again.
