 R Cyberpunkwith allw tools. Gallwfans says n smells. Dun maen y Leadforassen o Mastersome Tomorrow. Ar ôl, dywch wrth dybe o'i ddatblynedd hon. Wrth gyfer digwydd gweithio I up,r diwrnodr gwych o miliadau iherodd.serion hwn mew. I sumio ar gyfer elinacholau neu yn mynd ei hunain, a niech chi ddmyrdeuson hyny. Rym ni doeddi den gwell firen? Merży dweud sut roedd y dynnu iddw i ddwy...wn ararach fel Gwoith Gy flood. Derbyn eu childry nhw. I hadd y gweithio'r ysgolwyddoedd rwy'n meddwl i'r eich cyfnod yn cyfondol. Rwy'n meddwl i'r ffwrdd ymgyrch yn gweithio'r ysgolwyddoedd rwy'n meddwl i'r eich cyfondol. Mae'r Gwym Ulwyr yw Marko Julley, rwy'n meddwl i'r cymhwylliannol ysgolwyddoeddol Henry Han, who is the Climate and Energy Policy Officer at WWF Scotland. Dr Neil Wade, who is senior research associate at the School of Electrical and Electronic Engineering, Newcastle University and Malcolm K, who is senior research fellow at the Oxford Institute for Energy Studies. Welcome to you all and thank you for coming along this morning. We have about 75 minutes for this panel because we did have quite a busy schedule this morning. I have asked members if they would to keep their questions short and to the point and if we could have answers that are short and to the point. That would be very helpful in getting through the points we want to cover in the time available. I have asked members if they would initially address their questions to one particular panel member and then if you want to come in on a point that has been made by another panelist, if you just catch my eye, I will bring you in as best I can as time allows. Given that we have quite a lot of ground to cover. I wonder if I could maybe start off and address the question initially to Gina Henry Han about the WWF report, Pathways to Power, which we have seen and has been circulated. It has come up, as I think you know, in previous discussions. When we took evidence on this two weeks ago, we did hear from a number of experts in the field, including a number of academics, who were, I think, it's fair to say, quite sceptical about the idea that we could have a purely renewable powered energy capacity in Scotland by 2030, based on interconnection and storage to provide backup. We heard similar evidence as well last week. I suppose that my first question is, why does WWF believe that this is feasible when we've heard quite a number of sceptical voices questioning whether that's a practical way forward? Sure. The reason that we commissioned this research in the first place was because of concerns about the pace of CCS development on the one hand and also because of the commercial realities of thermal power here in Scotland. I think that the committee has heard a lot of evidence over the last few weeks because of a variety of factors. It's very unlikely, given market signals, that new thermal plant will be built here in Scotland. We wanted to see in those circumstances whether it would be possible to go close to 100 per cent renewable. I should clarify that the report does build in some thermal power. There's still a little bit of CCS in the system, so we assume that the CCS plant, demo plant at Peterhead, goes ahead. It also includes a little bit of biomass. So it's not just 100 per cent wind, I think that's important to clarify. We commissioned independent engineering consultancy, a world leading engineering consultancy, DNVGL to do the analysis for us. They showed that it is feasible to create a close to 100 per cent renewable system by 2030 because we're moving from a situation where traditionally security of supply was provided by baseload plants with additional peaking plants to a much more flexible dynamic system, one where we concentrate on demand reduction, on enhancing storage, enhancing transmission and interconnection. So they've demonstrated that that's absolutely feasible by 2030 and in fact desirable because it allows Scotland to play to its renewable strengths as part of a GB grid. I did listen to the questions that were asked of the experts in the initial session, and I would have some concerns that the technical report perhaps wasn't parsed in full detail. So our report does deal with issues around the operability of the system, which I think was one of the points that was raised, system stability, whether the system would function dynamically. It considers issues like inertia, voltage control and black start, and DNVGL are confident that those issues can be managed. National Grid have a system operability framework which deals with how they are trying to address the challenges of moving to a low-carbon system, and I think maybe that's something the committee might like to pick up with them in the session later this morning. So I think that certainly there are challenges in managing a low-carbon, very high-renewable system, but we are slowly, but surely developing the tools to do so. The other concern that was raised was that the report doesn't account for the interactions with heating and transport. The report does deal with the interactions with heating and transport. It looks at how a shift to more electrification of heating will impact on the network. It also looks at the impact of electrification of transport. The findings of the report show that, essentially, electrification of transport will add additional load, but that will be offset to a large extent by the shift from resistive heating to electric heat pumps in the heat sector. I should say that WWF is also commissioning a much broader analysis of heat, transport and electricity, how the energy system needs to function as a whole by 2030 to meet our climate change targets. That's being done for us by Ricardo AEA. The findings aren't available just yet, but we have some initial findings and it shows that we will need much higher proportions of renewable heat and transport in our system, as well as a huge proportion of renewable electricity. I'm quite keen to hear from other members of the panel on the issue as to whether we should have a new thermal plant, whether we require a new thermal plant in Scotland, or whether we can go purely to our renewable system. Before I do that, I have one follow-up, if I can, because some of the evidence that we heard suggested that if we went down in that model you're proposing, what we would in effect be doing is relying on importing to Scotland through interconnectors unabated gas or coal produced power or nuclear power. Therefore, isn't it a bit of a cop-out for us to say, we'll be renewable but when the wind isn't blowing, we'll be importing fossil fuel produced power or nuclear power from the rest of the UK or indeed further afield? I think we have to think about the system as a whole. Where do the resource strengths lie and how do we play to resource strength? In Scotland we have an amazing renewables resource and I think it would be perverse for us to build a large amount of thermal plants here in Scotland, which would naturally limit the amount of our renewables resource that we could send through the wires on a regular basis. If we were to build, for instance, a conventional gas plant here in Scotland, it would have to function at a very, very low load factor if it's to avoid breaching the decarbonisation target and to ensure that we can use our renewables strength. Otherwise, we'd have to build a huge amount of transmission capacity to accommodate both thermal power and renewables in Scotland and I don't know whether that's in the economic interests of consumers as a whole. I understand the slight hesitation about it but we can't build an infinite amount of transmission capacity so what do we choose to send through the wires and how does the system function best as a whole? You accept the basic point though that we would still be relying on imports of power from elsewhere, which might well be produced in a high carbon fashion. Absolutely, I accept the principle that there will be imports on certain days of the year when there is low renewables capacity in Scotland but we also have to acknowledge that the GB grid is expected to decarbonise at roughly the same rate as our grid here in Scotland. The Committee on Climate Change has recommended that the UK Government sets a decarbonisation target for 2030 of 50 to 100 grams of CO2 per kilowatt hour. The Scottish Government has already set that target based on the CCC advice, I think that's welcome. It clearly acknowledges that decarbonising electricity is the first step to wider system-wide decarbonisation. Absolutely right but of course you'll appreciate that due to a policy difference the UK Government might take the view that the way to achieve that target is through new nuclear power, which is not something that might be pursued in Scotland. I accept that, yes. I'm keen to bring in some of those. Mr Kaye, I think that you were trying to come in. Yes. I think that it's worth looking at the underlying technical report, which I've got no quarrel with at all, but it's also worth stressing that what the technical report makes clear is that security can be maintained on the assumptions in the report. If you make the assumptions in the report it points out that security would be maintained whatever the system in Scotland is, even if there were no generation in Scotland. It's not really saying very much about what the optimum system is either in Scotland or in the UK and that's a much wider question. That said, the basic challenge is certainly there and I think that the report is right to point up this challenge. What I think is missing from the report in a sense, though it wasn't asked to look at this, is how you give the right economic signals, how you construct markets in a way which might deliver this, that the underlying assumption in the report and the underlying assumption I think and some of the witnesses you've spoken to so far is that the Government has to sit down and decide what the system looks like. Now we're supposed to be living in the liberalised system, we're supposed to be finding some sort of way in which the market can signal that even within an environmental framework and I think that in many ways is the key challenge. Okay thanks, we're going to come on I think later in the session to explore some of these issues around market signals. Dr Wade you want to come in? Yes please. I think I just emphasised the interconnectedness of systems within Scotland, so the electricity and the heat system and how they're going to need to become more interconnected and independent in the future and also the interconnectedness with the rest of the GB system, your questions about how the balance of energy supply is made up, whether that is appropriate for it to come from the rest of the GB system, the most economic way to build system is to include diversity which is what the network provides. So I'm not sure of thinking of trying to be completely isolated in energy security is not really the approach I would follow and I think you need to make use of the resource that comes from GB and that may or may not be of a similar level of decarbonised energy that Scotland's able to produce. Okay okay thank you for that. Mr Gillie, do you have a particular view on this? I mean I mainly agree with the last point I think there's no really there's no energy security that can be fully achieved in a completely insulated system. Basically systems are made of mix but even massively enlarging the role of renewables in this mix security can be merely achieved through interconnection because renewables give their best contribute to the system. The more we enlarge the geographical scope or the geographical deployment of them because like this they can really exploit synergies and one of the big problems we had with renewables in Europe has been a patchwork of very different support schemes. This was completely uncoordinated west it would have been probably much more efficient and secure to have a coordinated approach for instance insisting on winds in the north of Europe and on solar in the in southern Europe and this hasn't happened and this is the reason why today we have we have so many problems within the internal market. Thank you and good morning perhaps I just with Marco explore the sort of interconnection aspect with Europe. If we're looking at the sort of GB aspect at the moment and our capacity margins are sort of narrowing is it not the same case that this is the same situation in Europe? So therefore going ahead with the interconnections with Europe how does that actually secure the supply for GB? I mean if other member states are actually having the same problem especially in high demand times like winter? Yeah I think the approach in Europe has been for a long time the one to encourage interconnection but with I would say quite a bigger result. There has been a lot of advancement in terms of coupling. This has brought some results and coupling involved GB as well. Unfortunately there is here a problem of the original market design with the internal energy market. What I'm referring to is that basically what Europe did was elaborating this internal market at the time when renewables hadn't yet displayed their let's say disruptive effects on energy mix. So actually coupling alone did not deliver. When Germany decided unilaterally to go for this energy event basically we had before that a good convergence of prices in the world central western Europe region when Germany went unilaterally for energy event since 2012 I would say this price convergence was really reduced and this is very much related to a lack of interconnection. Now there is a new political impetus to encourage interconnection but there is also the fear in the EU that this unilateral adoption of capacity mechanism might put in jeopardy this for the efforts for integration and interconnection. Do you think it's feasible to set up what has been proposed within the sort of regional aspect of having the operational centres within Europe to ensure that there's a direct supply on demand? The reason I'm asking is that it's feasible because obviously the pricing structure within GB and maybe the rest of Europe isn't compatible so therefore there's going to be some variation and that's probably not in the interest perhaps of the GB consumer or indeed some of the European consumers. Is it feasible this regional approach that is being proposed within Europe? I think that the original approach, the reason why it was proposed is exactly because it was considered the most feasible approach of course or something coming let's say top down and propose a completely uniform market design was an option that was rejected and I think even the regional approach right now is not in very good shape. This is an approach that will be quite consistent with the world philosophy of the energy union but we also saw that in the let's say council half endorsement of the energy union on the member states insisted on keeping a flexible market design and if we want to read this between the lines basically it means that they're not very confident on a regional approach. I'll bring another witness to a minute but I just want to explore one aspect of it, this aspect of the European Union. The differences in the approach to for instance or climate change targets within GB Scotland, the rest of the GB and Europe is somewhat different so therefore the approach to supplying energy is also very different. It's not compatible is it? Well I mean this very much referred to the whole European approach to climate change. I cannot specifically comment on the Scottish case, we have now new targets for 2030 but I think that the approach will basically not change. Doctor Wade you're keen to come in. Yes, I just wanted to, you're asking about what benefit the interconnector provides for security of supply so how much can we depend on those and I just wanted to make the point that in the capacity mechanism the interconnectors will be included in that from I think it's 2018-19 so at the moment the interconnectors aren't operated in a way that necessarily contributes to security of supply but they will be included in the capacity mechanism in the future. How that pans out, I can't say for sure. Just wanted to talk about the principle of how interconnectors can help to contribute to security of supply. Firstly while peak demand might occur at similar times in markets that are close to us unplanned outages don't tend to so if you have a big piece of kit coming off the system because of seaweed or jellyfish or anything like that it's unlikely that the same thing is happening at the same time in another country. Also the more integrated and interconnected we are as an energy union long term the more we can benefit from the different energy choices that different countries have made so for instance Norway has a lot of storage, pomptidro and that is a very natural complement in many ways to high wind and other sources of renewables say for instance here in Scotland so interconnection does have an important role to play and it helps to keep the cost down overall of the energy transition and the final point I suppose to make on that is that at the moment interconnection is considered very conservatively in analysis of security of supply many academics and others have argued that we could account for more interconnection as firm capacity for meeting peak demand we tend to be very conservative about it analysis by Poyry and Redpoint and a number of very respectable consultancies have shown the value of interconnection in terms of security of supply. Okay, Mr Key. It's a small footnote on the interconnection point. What has been said applies to a large fully interconnected area like Europe. With an island the situation is slightly different the normal criterion for security in an electricity system is what's called N minus one you should be able to do without your largest single unit of supply. Now in traditional systems that's a power station you think of a power station going out in for instance the modelling that was done for the WWF report the largest single item is the interconnector or either of the interconnectors so in a sense you're replacing to a fair extent one risk with another there is a risk that that will not be available so it's a question of size when you come to iron supplies in a fully interconnected system that's not a problem you've got a large excess of internet connection capacity but that's not necessarily true of an island. Yeah, I'm just still trying to sort of see where or the actually scooter supply would be. Do you envisage that what we have would would be an exporter or would we be an importer in terms of the interconnection given a situation and my I suppose my question relates to the fact that if other member states are at a time of high demand and there's a better pricing structure in operation surely then the electricity is going to flow to the other member states rather than to the GB would that not be the case so if we're dependent upon that others may have a better pricing structure than we do and so therefore the electricity will flow if it's a operational and more beneficial to companies and go to the member states that they make a higher profit. I think that this issue of the how many peak load hours are shared between member states needs to be based on some on some rather technical assessment what they can make reference to is a study of the European Parliament Research Centre that dates back to I think the end of 2013 and used this methodology to explore the the potential of I mean at the time was the potential of coupling but we know it's not enough we need also some degree of physical interconnection to reach good results and in the most of the cases there were a lot of matches bilateral between countries and bilateral between regions and between single countries within some particular region and I mean there was a lot there were a lot of discrepancies but in average terms the this share of peak load hours was below 40% which induces to think about a good potential for coupling. When we have to evaluate the performance the picture is much more complex because in some cases coupling gave very very good results is for instance the case between Spain and Portugal and in some other cases basically price convergence just did not happen it stayed the price differential stayed just the same it's for instance the case of France and Italy. Gordon MacDonald has got a supplementary question and it's for Gina on your pathways to power report. You've suggested that Scotland doesn't need any large-scale generation that we can depend on wind power etc and there is the issue of the interconnectors. Professor Hazeldine and his written evidence said on the basis of closure of large-scale generation in Scotland said the prospect would require to treble or more the present interconnection there will inevitably be technical problems related to frequency stability at 50 hertz and to maintaining equitable voltage dependent on peaks and troughs of wind output so you know if we don't have the interconnection capacity to rely on inputs from south of the border if we didn't have a large-scale generation in Scotland and there are these other issues to do with stability of voltage etc. How would we make up that shortfall? I heard Professor Hazeldine's point about the need to triple interconnection. Certainly the analysis that DNVGL did based on our scenario indicated that the amount of transmission capacity upgrades that were in the system in planning and long-term being discussed was more than adequate to deliver security of supply through the transmission network for those relatively rare occasions when there is very little wind and other renewables on the system. I don't think that there's a need to spend phenomenal amounts on transmission capacity as a whole. The pipeline that's there is more than adequate. In terms of stability and issues around the quality of electricity supply, the report does deal with them and there are from DNVGL's perspective no showstoppers. They think that that can be adequately managed in the system that we envisage and national grid and others are at the moment trying to come up with tools to address how the system will be operated in a very high renewable scenario. One way or another, we're in the midst of an energy transition across the UK, across Europe and globally, we're going to have to develop the tools and practices to manage high renewables to maintain voltage in those circumstances and the best minds out there are struggling with these issues at the moment. It doesn't mean that it's impossible. We're not talking about an overnight change to the system, we're talking about a transition over 15 years or so, which we think is adequate to prepare for those kinds of issues. Just one quick. You said that Professor Hezzardine has said that interconnections have to travel and presumably one of the ones that you've talked about is in the pipeline is HVDC Western Link. However, that website states that the Western Link will bring renewable energy from Scotland to homes and businesses in England and Wales, so it's predominantly aimed at exporting electricity and we know that the UK energy market predominantly south of the border is dependent on imports from the interconnectors from France, Netherlands and also from Wales and also from Scotland's exports. Where would that extra capacity come from? I think that most of the time it will continue to operate exactly as it does. Scotland will continue to be a net exporter given the strong renewables potential and existing capacity that we have. I think that the concerns about security of supply at a GB level have been overstated. While the capacity margin is narrowing last winter and this winter, it's quite clear that it's increasing again in the coming years. The off-gem and national grid have introduced a whole suite of new tools to address the short-term issues, things like the SBOR, but also the capacity market has been introduced by the UK Government longer term that's specifically designed to ensure that the GB system as a whole has the capacity it needs to meet peak demand. Now, we have some concerns that there are elements of that the capacity market could be doing better, it could be incentivising demand side response, demand management better, it could be a little bit more consistent with our decarbonisation objectives, but that tool is specifically designed to ensure that we have the capacity we need to meet peak demand at those times when renewables aren't available on the system. But back to the point that Malcolm K made earlier, what are the market designs we need to do to incentivise that? I just wanted to really point out that the system that's being talked about in that kind of vision, it is different to the system we have now, so the same rules don't necessarily apply in terms of system design, we will need new elements in the power system in order to make it happen, so that's things like much more use of demand side response, cross sectoral energy exchanges, so maybe converting electricity to fuel or syngas or well some type of gas, energy storage at all levels in the power system, so you can find that it's difficult to imagine this future system if you don't include all those extra elements, they need to be brought in to the system as a whole. All right, thanks. Lewis Macdonald. Just to get the grips with the European energy union possibility, I guess there's a couple of questions, one which has been partly touched on but I don't think fully answered. Capacity margins are narrowing in Scotland and in GB, but they're also narrowing in other European Union countries and they're doing it for the same reason as they're doing it here, which is thermal plants coming offline and not being replaced or certainly not being replaced like for like, and an increasing dependence on renewable energy, those are all developments in line with policy decisions that have been made in member states and more widely. They do raise the resource question of where northern European countries are all increasing their energy policy in the same direction and face the same challenge in relation, for example, to low pressure during winter months when the wind doesn't blow. So there's that fundamental question, which I would like, perhaps Malcolm K would, I know he's addressed some of this in his paper and I wonder if there's something he would like to kick off on that. What does this contain within it solutions or is it simply a helpful backup, which still begs the question of what's done to ensure sufficient generation here and in other member states? Will I agree that there is a problem here? I think in the short capacity payments on the sort of mechanisms that Gina was talking about are probably going to have to be introduced, but I think they are actually not the right measures for the longer term. I think, as I was hinting earlier, the fundamental problem is one of broken markets. There is no proper way for markets to give signals either to consumers or to producers about what they should be building and when they should be operating, and that just means that they are not performing their proper function. Capacity payments are essentially a short term fix. They're like a sort of patch or a failed operating system. They're not really going to allow a new operating system. As Dr Wade said, the new system is going to be very, very much more complicated. It's not just going to be a matter of forecasting peak demand that ensures enough supply available. It's about integrating a very large number of sources. I don't think that Governments have remotely started to get to grips with this yet. Firstly, at the moment, according to a report for the EU, something like 90% of support for the process of decarbonisation or for intervention in energy more generally actually is on the supply side. Only 10% is on the demand side. A small proportion of that is an energy efficiency and, quite absurdly, the largest single measure of support on the demand side is in special tax favours, relief from carbon taxes and so on, which is quite perverse in the terms of the situation we're talking about. The first thing that is needed is a much more integrated policy overall. Markets essentially need reforming. This support on the supply side is basically just about pushing investment on to the system. It's not market reform, although it's described as that. There is nothing in that to optimise investment, to make sure you've got the right mix of investment or the right mix between supply investment and the sort of demand investment storage and so on. There's nothing equivalent to feeding tariffs on the demand side and so on. At the moment, we are creating an unstable situation in which you can get, as you say, this excess of a certain sort of generation. There is nothing in the market to cope with that. It is difficult, ultimately, for any government in the present circumstances to say what is going to be optimum. We simply don't know, because we don't know how much consumers value reliability, how much they would be prepared to put into storage, how much they'd be prepared to be flexible to use things like, say, off-peak storage, heating to use battery storage in the house, how much central system storage would be economic, because at the moment there are no viable signals in the market for that. So, I think it's premature in many ways to say, we know what the outcome is, we don't. We don't know until we've tested out a lot of these things. But the first thing to do is to test them out. Meanwhile, I think we have to live with the sort of suboptimal situation you're describing and try and use the patches like capacity payments and so on to cope with a fallout, but that can't be the ideal long-term solution. Does that mean, if I can follow that up and obviously interested in other people's views, but does that mean that if governments have not yet reached the right solutions in their own national territory, does that mean that the European Union or the creation of an energy union might also be premature in the sense that how do you put together different systems effectively if the ones you're putting together haven't yet solved the problem or cracked the problem that they need to solve? I think ideally the energy union should be an opportunity, not a problem from this point of view. I say ideally because if you look at the small print of the energy union, the European strategy paper, it says the commission is going to look at a new market design to better integrate renewables and demand response, so I think it recognises the challenge. I may be unduly pessimistic, I'm not sure if it's going to come up with something that's adequate to meet the challenge, but at least that's a first step and I think for the sort of reasons that have been discussed, it makes sense for something to happen across Europe. It's going to be much cheaper to do this on a basis which allows the whole resources across Europe to be used. You've been talking, for instance, about the deficit and capacity in northern Europe. Well, some southern European countries, Spain, for instance, has got about twice as much capacity as its peak demand. It has an excess of capacity because basically you're not aligned by law to close a power station there, so it's got a lot of power stations it doesn't need. Even in Germany there are sort of rules about when you can close a power station, so it's a bit of a messy situation across Europe, but there's no doubt that all that resource could be used better. For instance, the huge solar resource in Spain could be probably better used from a European point of view, but only if there is some coherent way of co-ordinating this because given all the complications I've mentioned, I'm not sure that government sitting centrally can do it. I think you have to have some market signals helping it to happen. Regarding the energy union, I very much agree, we have to bear in mind that this will require a change of mindset on behalf of member states because the energy union is labelled as a union, but in technical terms it's not a union to the extent that there is no shift of sovereignty towards a more centralized level in the world documents, so the policymaking in legal and procedural terms is just going to stay as it was in the past. Now, capacity mechanism might provoke some sort of delay or harm to this process. It's very difficult to find some consistency, and in the energy union communication it was clearly stated that the functioning internal market does not need capacity mechanism. I think that there's a first step, something extremely important would be to have a common assessment of generation adequacy because this combination of member states elaborating their own capacity markets and assessing generation adequacy themselves raised the possibility for quite a lot of concentration of capture of undesired consequences that might be in the end very harmful for further integration. I'm sure that that's right, but if the sovereign authority over each member states transmission system remains at member state level, there is presumably a risk of political judgments being made that a member state might choose not to follow the market and instead to look after domestic priorities ahead of interconnection and transmission. Is that a realistic risk? I mean clearly behind energy union issues, political issues from Eastern Europe, but there are also political issues within Western Europe, but we'll have a say in these things as well. Well indeed this risk is very much present. Member states have gone for very national consideration to this extent so far. For instance France has put a lot of obstacles to its own interconnection with Spain, and as a result let's say of this political impetus coming from the energy union process, the commission has been able of a sort of strike a deal between France and Spain that can pave the way for further interconnection. So these are steps that go in the right direction, but at the same time there are a lot of steps that might go in the wrong direction. Mr Kate. I guess a small footnote to that. I think it's not just a question of political interference. National regulators have duties, they have obligations, they have responsibilities, and they're framed obviously in national terms to their own national consumers and their national systems. I think as long as there isn't, and cooperation between national regulators can take you so far, but until there is something at European level whose duty is to the European system and to European consumers in general, I don't think you're ever going to be able to get out of that and it's not just a question of political interference, it's a question of the structures in place and people even without political interference following their own duties and obligations in a perfectly fair way without outside interference would still create problems in terms of the sorts of things we're talking about. Can I ask on a slightly different question, but briefly going back to the convener's earlier line of questioning, the electricity generating policy statement from the Scottish Government assumes a number of things by 2030 substantial investment in renewables, three new thermal power stations with carbon capture and storage or capacity to take carbon capture and storage and increased interconnection. I don't think we've yet heard a witness who said all of these things are going to happen or are all desirable in the development of the Scottish generation in the 2020s. Is it time that generating policy statement was updated, does that need to change? I think from our perspective the EGPS is a foundation but it's not fit for purpose anymore, it's not in line with commercial realities and it doesn't have enough emphasis particularly on the demand side of the equation, it's very much a generation policy statement. We'd like to see the Scottish Government come forward with a very clear demand reduction strategy whether that's as part of a wider electricity statement or a standalone strategy in itself. While the Scottish Government doesn't have all the levers in those respects, of course it's primarily a UK competence, it does have some significant levers, some money that could be put towards incentivising demand reduction, behaviour change and a number of areas where it controls including heat and transport that the interaction between those and the electricity system are very significant so I think yes it needs a review at this stage. On that point of the EU wider market, the European Commission issued their energy union fact sheet and it says on the internal energy market that the commission will provide enhanced rules for cross-border energy trade and propose appropriate measures to encourage renewable energy producers to better integrate in the wider electricity market. My first question is what do you think those new rules would be? Could it be the introduction of an even playing field in terms of flat charging regime, given that 25 out of 28 countries in Europe have some form of flat charging regime and if it is an introduction of a flat charging regime for transmission charges, does that mean that the existing transmission charging regime has been a disadvantage to one to Scotland but if we become part of a wider EU market, if we retain the existing charging regime will it be a disadvantage to the UK to attract inward investment? I'm not sure we know exactly what the commission means in all including its market reform proposals. It has come up with some new proposals on state aids for renewables. It's obviously trying to introduce some uniformity but to be frank I think the commission does not expect, given the underlying treaty position that this is for member states, that it can do away with separate national renewables regimes. It can introduce a degree of coordination and I think that a lot of what it's doing here is not so much about the renewable support apart from what it's done through the state aids guidance. I think a lot of it is about some more technical aspects for instance the way balancing markets work, the way, I mean there are different rules for instance in different member states about constraining off you know when there's too much renewables generation there are different rules about how far renewables generators have to keep within their forecast production you know for a wind farm often it's not it is not that easy unless you get the incentive to forecast your production precisely but in some countries like Spain where they've got a lot of renewables they face exactly the same obligations as other generators and they manage to to forecast pretty well. So I think it's as much about coordinating those sorts of more technical aspects and getting roughly similar systems and renewables as you probably know supposed to have priority of access to the transmission system but precisely what that means in practice is interpreted in different ways in different states. So I think it's all about those sorts of things. I think the fundamental position though is going to be that the commission understands that in practice all member states are going to go on supporting renewables in different ways with different prices with slightly different sorts of support schemes and that is a problem for the single market but I think it sees no way out of that. Yeah I suppose on the transmission charging I think what it tries to do is be cost reflective so connecting distant wind farms is relatively expensive but the benefit of having that wind farm installed is that it's in a very good wind regime so you kind of you get the benefit of the location in terms of the energy that you're able to produce but there is then a cost to that because your transmission costs are are higher so it's a way of judging whether a scheme is economically viable. Clearly it's a very complicated economic regime in terms of the subsidies that are given, the different carbon credits or whatnot but it's producing a break on the projects that are going to add real significant cost to the transmission system so I don't think the principle of being expensive to connect generation in areas where it's difficult is wrong but that's not to say that the you know you've got to look at all of the incentives that are given and the dissidentives and see whether that's hitting the right balance or not. What about the view that the charging regime will could disadvantage inward investment is that? Is that something you would agree with or not? Like I said I think you've got to look at it in the whole I mean the wind regime so the amount of wind power that you can take from those locations is very good so that means that the amount of energy you can produce is better than locations which are perhaps a bit closer to a firm bit of a transmission system so it's really the balance of those two things. I wanted to move on to whether the market structure was in place to deliver the decarbonised electricity regime by 2030 which is what the Scottish Government wants to see and in particular the whole issue of pumped storage the incentives for pumped storage which are obviously important to complement Scotland's wind energy are the incentives in place for pumped storage that we need. I'm happy to have a first batch of that. I think quite clearly the market design that currently exists isn't going to be enough to get us to 2030 and beyond and the truly kind of flexible dynamic low carbon system of the future that we're working towards. At present the UK electricity market doesn't provide any real incentives for building new pumped storage. We know that there are two significant projects in the pipeline in Scotland Cruick and Two and Curragloss and at the moment there is no way to get a return on investment at this stage through the capacity market or any other mechanism so I think it's certainly if we accept that we will need some sort of storage in the future and that pumped storage might have a role to play. I think we do need to assess how we might incentivise that. I don't have the answers but I think certainly it's something that the UK government needs to get together with the energy companies and those who have interests to discuss how that might come about. More widely I think the market as it's currently designed doesn't incentivise demand reduction and demand side response adequately. We know that it is the least cost way to decarbonise to privilege energy efficiency as the first fuel so at the moment in the capacity market for instance demand side response actually only has a one-year contract whereas new generation new gas plant generation or flexible generation has the ability to attract a 15-year contract so it's not on a level playing field in terms of the capacity market and the capacity market only exists at the moment because there are concerns about whether there'll be enough available capacity in any given year. Once we move past any concerns about that we need to think about how we can incentivise energy efficiency longer term through potentially feeding tariff or another mechanism as Malcolm Kay discussed so I think the signals aren't there and we do need to think about how the electricity market works for those other system services that will be so important in the future. In general terms understand that the UK is way behind many other developed countries in terms of energy storage and investment in energy storage. Does anyone have any suggestions as to how policy could be adjusted to change that and to help us catch up with places like the United States and European countries? Yeah I was going to say I mean it's really the US I would say that a leading particularly California again driven by their renewables commitments they've recognised that storage is going to be critical for them to to make that system work. We are trialling energy storage projects in the UK which are I guess not if you treat a pump storage as conventional energy storage if you like since it's been on the system for 30 years. We are trialling non-conventional storage and so that's be like the use of batteries or liquid air as a medium for storing energy and certainly anything that can be done to enhance those demonstration projects and to roll them out as more routine solutions in electricity networks is going to be beneficial. I think it's worth saying that the location of energy storage and the size of the storage system has quite a big impact on what it can do in the system and the regulation and the markets that exist to allow an energy storage developer to recover value from the services they provide is not well developed and part of the aspects of these demonstration projects that are taking place is to show how the markets and the regulation need to change in order to accommodate this storage. It goes much wider than security supply in the sense of having enough generation present, the security supply in terms of having your electricity network able to deliver the power to all the nodes in the network, all the demand points and energy storage can play a role in making that more secure more so than the absolute provision of energy. I'm not sure when necessarily as badly off for energy storage as you imply. UK's got quite a large amount of off-beak storage heating more than most countries and that is a form of electricity storage and I think that brings up the wider point. I don't think we should be looking just in terms of particular technologies like pumped storage. We should be looking at markets and pricing more generally so that consumers, individual consumers, have an incentive to look at ways of balancing their demand and storing in whatever way which requires people to come up with imaginative retail offerings as off-beak storage heating was. It was a nice simple offer which worked in the long term. You could envisage companies offering packages like that if there were the incentives to do so. So it's partly a matter of the way wholesale markets operate but to a large extent it's a matter of the way retail markets operate. There's absolutely no incentive for any consumer to store it. Does it cost the same whether you use it at five in the afternoon as at two in the morning unless you happen to have an off-peak meter? What we need to do is to, and I know that for some politicians more complexity is a problem but I don't think that should be seen as a problem. The fact is as we've all said the whole system is changing and in particular it's changing from one that's based on you know what an economic term we call marginal costs that's fuel costs to renewables which are fixed capital costs. Now when you look at other systems like that we're perfectly used to say for you know our telephones or our internet service we don't think we have to have that always in gigabytes or minutes of call. We used to when we had centralized suppliers but people are quite able to cope with subscriptions you know paying for a fixed amount and getting a fixed amount for that with you know perhaps extra payments if you exceed your fixed amount ideas like that. What we need in the electricity system is more innovative offerings at the retail end which will actually allow us to work out how much storage consumers value and how much they need. There may well be cheaper ways of providing this sort of security in the system than simply saying we put a pump storage scheme somewhere in the in the middle it may well be that you know off-peak storage of heating is a bit a bit. We don't really know until consumers are the opportunity to respond to some sort of a retail offer and make some decisions. Just respond to that point because the last session here that I was at a couple of weeks ago Dr Eddie Wins rather of Harriet Watt University suggested that it would be worth exploring whether we could use smart metering to when you were talking about the way telephones charged etc he was saying that perhaps we could move towards a system whereby you got cheaper electricity when the wind was blowing if you had smart meters and a weather prediction service that helped people to do that. Do you think that that's something viable? It's already happening in environmental community conscious communities across Europe but could we give costs incentives for people to use renewables? Well I agree with the general approach I personally think it's much too complicated if you have different prices when the wind is blowing so you keep going you know having to go and look at your meter and work out the price and so on. What I think you need is a very simple retail proposal like off-peak heating so it'd be something saying that you can get cheap electricity when electricity in the system is cheap and in a system like the future Scottish one which has got a very high amount of renewables that will be for quite a lot of the time you pay more at certain times. I mean there are vague parallels like this the French used to have a or that's still due to an extent have a tariff called the red light tariff where you know a little red light came on the house and you knew electricity was more expensive. I think the problem with smart meters is that they're not it's rather a half-hearted programme it's really set up at the moment to help utilities but to avoid them having to go and read the meters and it's not really set up to do much else and as long as you have government saying well we want to keep everything simple I think it's going to be very very difficult to have innovation and you know new ideas being tried and so on because the pressure is all to keep it simple and not to do this but I think this is going to have to change and I think it's going to I'm afraid require a degree of government intervention as I said at the moment all the interventions on the supply side it's some intervention on the demand side to encourage these sorts of flexible approaches to make it easier for consumers maybe to help subsidise things like it's not just smart meters but you would have to have them linked with smart appliances so there'd be smart appliances and you could tell your appliance turn off when the price gets over 20p or whatever I mean that we don't know yet so it's difficult to say this is what they should be doing but these are the areas we need to explore if we're going to get a well-designed overall system and so there might take slight exception to the committee's title security of supplied I think security of supply is a bit old thing it's not just a question of forecasting demand they're making sure there's enough supply in the future it's a much more complicated system with all the sources that Dr Wade's spoken about having to be integrated into it so it's still a question of security but it's it's not just of supply it's of all sorts of things feeding into it and we really need to start experimenting with what the options are and seeing what people like what people can cope with because at the moment we just don't know frankly I'll just I'll just observe before I bring him in I was hosting an event for smart meters recently and one thing always occurs to me that when we talk about promoting smart meters one of the examples is given you could you could turn your washing machine on when you go to bed because the power is cheaper of course the one thing the fire brigade say you should never do is turn your washing machine on when you go to bed because it's more likely to burst into flames and burn you and your family to a crisp when you're sleeping so I think there are various issues we need to consider around around the fringes Dr Wade yeah so I suppose this one's had this the smart metering programme and other smart meter programmes in other countries that have taken place have not included energy efficiency in their business case or energy reduction rather so the the business case has been around theft of energy and yeah the reduction in the utilities costs in in getting the meter data but the the UK smart metering business case does include an element of energy reduction within it so that that is something that's expected to come from it and the other thing I was going to say is that the you don't necessarily want to think about demand side response in terms of cost because the cost signals are typically very small so the amount of energy that you can actually or the amount of value that you can give to the system by reducing your consumption is on an individual level is quite small but there are investigations going on into whether through essentially educating people about the their role within the energy system and getting a community kind of level of interest in energy use that you can aggregate up those very small energy those benefits that you get through through your interaction with the with the power system and yeah approach it in a much more of a sort of community based kind of way but you you you need people to become more familiar with their their impact on the on the on the energy system and just generally more more conscious of their their the effects of their actions and how it fits within within the community so I think that kind of approach we don't necessarily have to chase pence which is ultimately what it is it's it's people understanding the system and appreciating that they they can play a role and that perhaps as a community they can get some benefit from that okay all right okay Patrick Harvie is keen to come in and follow up questions about demand reduction just before we leave storage I just wanted to to raise a point that Professor Hazeldine raised in his evidence with us last week on on storage and talking specifically about pump storage and the volume that would be required he said that we have we had a simple system where we were heavily reliant on wind power that would mean according to him we would need around 10 or 15 additional crook and tight pump storage schemes which would be a huge amount and obviously have a very substantial capital cost to build and indeed we could ever find the size would anybody have a view on the the the level of storage that we would we would require? Gina? Sure I suppose if you were to accept that we were going to have a very simple system based entirely on wind power that that is a feasible scenario but of course we're moving towards a very complex system with a diversity of of electricity sources and I think in that context certainly I think we possibly would need much less pump storage than than envisage there and that's not even taking into account demand reduction and the need for us so you know as we move towards a kind of low carbon lower demand system the need for new kit of any sort is lower. Dr Weed? Yeah just add to that that once you get to those kind of levels I think you need to look at a different type of energy storage of perhaps converting to a fuel stock that you can store you may have to do that at a relative low efficiency but again it's about looking at the whole system maybe you can take that relatively low efficiency if possible I mean another thing you can do is maybe look at industries that could be introduced that can manage that level of flexibility within their processes so that's again it's another direction of trying to look at the whole system. Thanks okay Patrick Harvey. Thank you convener. Yeah several of the witnesses had mentioned demand side issues and we started in the last few minutes to go into that in a little more detail I still wanted to explore two two basic questions both governments I think would say that they're doing something on energy efficiency. Energy efficiency is a good thing but it's not the same as demand reduction we can use energy more efficiently and end up using more of it so demand reduction energy efficiency and some of the more some of the complexity that's come out in the last few minutes I think the the idea of a kind of energy internet which I think Malcolm Key was hinting towards a few minutes ago where it's more like a bit torrent exchange than a simple download if you like where price signals might not affect individual behaviour but they might tell you distributed generation to switch between putting its energy onto the grid and putting it into distributed storage for use later. Given the range of responsibilities between UK government regulator Scottish government generators national grid what is it that the Scottish government because that's who we're here to scrutinise what is it that they can do to give any greater leadership on this which would be effective given the the range of different responsibilities and the second question is really about the balance between how much of this can be achieved technically and how much of it does require cultural change how much of it requires us to move to a scenario where nobody thinks it's normal to put the blinds up on the windows and burn a hundred light bulbs in the room. If I could start I think one of the first things the Scottish government could do is your report could put a lot of stress on this and less on security of supply but more I would say on the need for a fully developed and integrated demand side strategy for the Scottish government now that'll be constrained by its powers of course but at least it can do I think one of the things that the Scottish government does very well provide a bit of a lead for the rest of the UK and saying you know we are addressing these issues and here is something that you could look at and try and follow. I would not necessarily agree that it should start off with energy efficiency I think energy efficiency isn't really the the right concept what we're talking about is something more like smart efficiency so to give a few examples it's not just about creating efficiency overall it's creating more responsive demand in line with the sorts of demand response we've been talking about if you're talking about product standards it's not just about standards for reducing the energy consumption of a product it's also about standards which will enable them to fit into this new more flexible system so there will be smart products there will be some sort of a standard for how smart products should exist I think one thing the Scottish government could very well do would be to trial some of these things itself because there are differences in the Scottish circumstances in in various ways not least the sort of housing here is quite different and the dispersion of population is quite different so you might well be talking about different approaches so that's another sort of set of things the Scottish government could be doing but I think the the main thing is to maybe see if it could sit down look at what an integrated overall strategy properly integrating the demand side and I go back to my numbers 90% of intervention in the energy sector is on the supply side of the remaining 10% most of it is on tax relief which doesn't seem to me the right balance so the Scottish government could at least think about what is possible in that area obviously there are constraints I'm not suggesting it's going to be able to come up with a ground breaking policy overnight but it could it could I think you know lead in the UK on this because it's it's the sort of area where the Scottish government has shown itself I think imaginative I think in addition to the kind of issues that Malcolm has has talked about the Scottish government has has quite clear powers in the heat and transport sectors and over time as we electrify heating and transport there'll be much more interaction than there already is between the electricity sector and those sectors while it doesn't have full powers over the delivery of energy efficiency the Smith commission recommendations the Scotland act will be giving Scotland the power to design a new energy efficiency programme on top of additional programmes or replacing them that will work better for Scotland so I think there's a huge opportunity there to do something quite substantial on the heat side of things we have been calling for energy efficiency to be considered from an infrastructure perspective sorry energy demand reduction or to be considered from an infrastructure perspective where we would set very clear goals about upgrading the housing stock and our building stock and try and take an approach where the capital budget begins to work much better for the kind of changes we need to see so that we would start to invest significantly more in energy efficiency than we have been doing already with a very clear long-term goal and a very holistic whole of government approach so I think more can be done on heat and I think we have to acknowledge that transport policy and energy demand reduction in transport policy is very problematic in Scotland there's currently no real transport policy in the RPP to the report and policies and proposals it's very much the forgotten relation the poor relation to electricity and heat is the poor relation to electricity secondary and maybe transport tertiary so I think we have to do more to reduce energy demand in that sector so that when we move to a situation where we're electrifying vehicles we're not creating a massive problem for ourselves so that there are multiplicity of ways of addressing it and I think looking at heat and transport is one of the areas where Scotland can do a lot. Thank you. Yeah I agree with that it was mentioned earlier I think there was this concern that maybe transmission charges might reduce investment in renewables I think the other thing to consider is the connection cost as well so that's driven by the again by the ability to connect to the network in a timely and cost effective manner and there are methods being investigated for for for making connection costs lower. No I mean generators. I see. I'm not sure how that connects to the demand side. Well in the sense that it's a it doesn't really connect to the demand side explicitly but it relates to how you build your networks and what the energy mix is going in and well I was I guess I was more addressed in the point of like there was a concern that people might stop building renewables in in in Scotland if the the charges are too too high so I just wanted to point out that there's connection charges as well as transmission charges and they will have an impact on whether a project goes ahead so there's a lot of projects that are consented but they're they're not being built because the difficulty in connecting well that's one reason why so and that relates also to the planning planning regime as well so again something that's um that the Scottish Government can have some direct influence over is the yeah the connection of renewables okay right um very briefly John Lamont yeah click on the planning regime what what changes you think there need to be? I don't know the details of it but I just I know that it that it is this holding up the I know there was evidence given from the planning section of the I'm not sure if it was local authorities or the or the central Scottish Government but they were highlighting an evidence that there is you know issues around for for instance that the the planning consent is only in place up to about 2020 so from 2020 onwards there's uncertainty of whether that planning is going to get renewed but also then as you get as you get more renewables built then that reduces the ability of new generation to come on because you've got a you're accumulating more and more um winter by essentially it and and that tends to reduce the um success of planning applications okay thank you okay right okay we're at the end of our time very neatly thank you very much to our panel for coming along it's been extremely useful and we now have a short suspension to allow a changeover okay if we can reconvene I'd like to welcome our second panel of witnesses we're joined by Eric Levy who's head of Transmission Network Planning Scottish Power Energy Networks, Kirsty Berge who's partner electricity transmission and head of off-gym in Scotland, David Gardner director of transmission Scottish and Southern Energy and Mike Calviw director transmission network service at national grid welcome to you all and thank you for coming along this morning now we've got about an hour and 15 minutes or so for this session quite a long ground to cover so we'll get straight into it I would ask members as ever if they keep their questions short and to the point and responses as short and to the point as possible it would be helpful and because we've quite a large panel I'd ask members if they would initially direct their questions at one panel member if you'd like to respond to a question address to somebody else or just agree or disagree with the point somebody else has made if you just catch my eye I'll do my best to bring you in as time allows I'd like to start off if I can with the issue of transmission charging and maybe initially address this to Mike Calviw and then bring others in and get their views but we've heard in all the evidence we've taken in this inquiry that the transmission charging regime is an issue for many people involved in the sector if we take the view that Scotland needs new thermal capacity and obviously there is a debate around that you'll have heard that from our previous evidence but if we take the view that we need new thermal capacity then the current level of transmission charges act as a barrier to that being constructed in Scotland and I wonder if Mr Calviw I could ask you if you can in fairly simple terms just to explain why we have the current transmission charging regime that we have in the UK who benefits from that who are the winners who are the losers what are the alternatives and why you feel the current system is a better than the alternatives and if you try and do that in a few sentences that'd be very helpful thank you I like a challenge motor yeah so in in GB we have a energy market that has a single energy price so effectively everybody has open access to the same market we pay the same for energy coming on off the grid at the wholesale level the locational transmission charges is effectively acting as a signal to persistence of those markets around the long run impact of their impacts and ultimately for decisions their decisions about where to build and obviously as well where to close on the cost of transmission network so as you know we actually have an awful lot of generation coming on in Scotland we are having to spend an awful lot investing in the grid across national grid and my colleagues in the Scottish power transmission and she transmission and effectively the transmission charges provide a long run economic signal to the market reflecting those costs the costs are equal and opposite effectively for generation demands so they at the moment they are higher in in the north of england scotland for generation and lower for demand customers and that's it and that you know that's a key point effectively and and it's and it's the opposite so in the south of england it's lower for generation and they go negative but it's much higher for demand customers and that effectively is reflecting the the direction of flow on the network so for scotland we do have an excess of generation currently peak demand in scotland is 5.4 gigawatts we've currently got about 11 gigawatts of generation connected in in scotland and i've got a further queue of 13 gigawatts of additional generation with contracts to connection network so that's that's the background position the benefit and a curse that you can probably add to this is all the studies that we've done often have done have basically shown that that cost-free flexibility has long-term economic benefits for all customers it encourages over an efficient network to be developed and planned and that benefits customers clearly if you went away from that people talk about flat charging you wouldn't get that benefit and clearly in scotland the immediate impact to go into flat charging would be to raise bills for scottish customers by about 10 pound of customer so you know that that but clearly it would benefit scottish generation i think the other fact to add is is you know there is a lot of talk about europe and how other countries in europe do this and i think no doubt over time we will see increased harmonisation across europe how we do transmission charging but yes many other countries in europe don't have locational transmission charges for generation but but they do tend to have locational energy markets so if you look at scandinavia they effectively run a single market with different price zones across different bits of scandinavia so effectively the locational signal comes through the energy market rather than the transmission market and the european commission's proposal single market are talking about concepts known as market coupling and market splitting so you know an idea that could happen is you could move to a world where we don't have locational transmission charges but you then have more granular price zones in different parts of the network so where there are big transmission constraints you split the market into different price zones the impact will be very broadly the same so you would effectively have energy prices in scotland on average being lower because of the excess of renewable generation in scotland particularly when the wind's blowing you'd see very low prices obviously that'd be good for consumers not good for local generation and equally you probably have higher energy prices on average in enging and wells and that's and that is an active you know debate about is it better to do the locational signal through the energy market or through the transmission prices um we're probably you know um you know we can argue for either the current methods has some benefit of simplicity moving to a fully locational energy market would be complex i think you could argue long term there are economic efficiency opportunities for moving that direction okay thanks i'm keen to to bring cursory virgin and others in and i want to hear in a moment about um this issue about impact on consumers i think it's quite important but can i just follow up a couple of points if i can mr calview just so i understand this correctly um you talked about the the increased capacity on the grid that was had being constructed was coming in is it the case essentially that the more the more capacity you create in a particular area the more the charges go up um no effectively what what what the charges do they're sort of long run average charges so um we the broadly the charges affect the direction of flows on the network and where we're having to invest um but but effectively actually the the charges will then be quite dynamic and responsive to what's happening on the network one of the things we're introducing next year subject to the um judicial review into in uh which is happening this summer um with our new charges we're spinning the charges into a peak security charge and an economic charge which and and the key thing that does is effectively recognise that we're building a lot of the network at the moment for intermittent renewables and that's causing us to make a lot of investment but that's not necessarily the same as what the network we need for to meet winter peak where maybe the wind's not blowing so the the impact of those changes coming next year is actually charges for generation in scotland will be going down next year with project transmit and particularly the the it gives the potential for if there are further closes of baseload generation capacity in scotland in the future that actually will a signal then will emerge for new peak capacity or storage or demand side or whatever the right economic solution is to meet those peak peak peak demands via the transmission charging signal um so it is quite a dynamic system uh you know part you know the the numbers do move around um but broadly making more investment in the transmission network doesn't by itself uh cause uh the price to go up it's effectively just a feature of the net generation demand in each area and where the power flowing on the network so if if we're seeing more wind capacity coming on the grid and more of that being created what impact does that have on the charges for baseload conventional plant does that does that push those up well as i said so with assuming project transmit is implemented as planned by next year then the um the the the charge for a generator in zone nine which is the the zone which longanus is uh uh located in just a given example is currently 17 pound per kilowatt next year we're forecasting it going to down to 13 pound per kilowatt given the current generation we expect to be on the network however um we haven't had any uh we actually haven't had any um notification yet about longanus intentions so assuming that longanus closes as as they've indicated they probably will but they haven't actually formally said they will it would actually reduce down to three pound per kilowatt now you know so just to show it is quite dynamic to what's actually happening on the network um the the the charges for the intermission wind farms will be higher because effectively that's the that's the where the economy criteria kicks in and it's basically a charge that sort of applies to people that are running throughout the year and it depends on their load factor so it's it's it's it's a more sophisticated system we move to it's splitting out peak security from from sort of year round running and it will depend on the nature of the generation connection network okay i'm going to bring Scottish power in a minute because i think this is quite interesting because Scottish power told us previously when we took evidence that there was no uh business case to build a new gas station in Scotland on the longanus site for example or somewhere else because of high transmission charges but what you've just told us is that if longanus closes there would then be a substantial reduction in the transmission charging um so if somebody wanted to build a new gas station that wouldn't be facing the barrier that is currently being faced well i think obviously if they then built them how big it was because clearly because the charges do depend on what's connected so people will you know model you know if you were built a a gigawatt or two gigawatt so effectively a place longanus then you'd obviously go back to where you started so i think what Scottish power generation said was absolutely right i think the point i'm trying to make is the charges is sufficiently dynamic so that if you get to a point in the future and i know you've you've talked about what happens post 2023 or whenever the the existing nuclear stations close when there is a clear need for investment in further peaking capacity and and i'll say peaking capacity rather than thermal because i you know i think it's up to the market to work out how most efficiently to deliver that um then the there is scope in the transmission charges to start to incentivise that when it's needed my view is i don't think it is needed at the moment from the work we've done and you know clearly from the fact that even if longanus does closure there is still an excess of generation over over over peaking demand in scotland okay i'm probably fair to bringing mr levy at this point from scottish powers perspective just get your view on the transmission charging regime good morning i would like to just clarify that sp transmission doesn't really have a bearing on how the charging regime would be operated so it's a bit transparent from our business point of view we we provide assets on the basis of need and we provide them to all comers who require transmission capacity so we don't really get involved in the market for generation or the use of the system we provide the assets in a cost effective and efficient manner yes i appreciate you're not from the the part of Scottish power that's involved in electricity generation perhaps we should have made that clearer at the start you're from the transmission side yeah well it was to say that for business separation purposes we we are totally separated from the generation and retail parts of scottish power in the wires business right but the scottish power have a view on transmission charging as a as a policy stance it's not really appropriate for me to comment on other parts of scottish power's view it is from a transmission owner point of view we we don't have a bearing on what the policy should be okay our focus is to keep the cost down and providing the infrastructure okay thank you mr gardener from sse are you in the are you in the same in a similar good morning can you and the committee it's a sort of similar position sse is submitted written evidence from the you know the corporate sse which covers you know it covers the the wholesale generation side is similar there i think probably i would add to it is that you know we have a system in the north of scotland i have a lot of customers that are connected to that system i personally having a being a transmission operator would like more people to connect so if transmission prices you know reduced in the north of scotland it would help my business to expand but that's where i am but say out with you know with with gars to any other comments i'm really very much aligned with SPTR okay thanks okay i want to go to the cursory barrier let's go back to this point that we touched on a moment ago about the cost to consumers and you know what is the impact of the transmission charging regime we have as opposed to moving towards a socialised or our postage stamp system can you can you say something about that yep happy to do that and again thanks for having me it's good to be able to to give evidence to the committee and just to so just to emphasise the the point that mike said about the reason we have the transmission charging regime we do is we have a cost reflective regime and the reason for that is that it keeps costs down for all consumers because what it does is it makes sure that when firms invest in generation both you know the type of generation where they situate they take into account these costs when they make these decisions and consumers ultimately pay that the cost of the whole energy system be that you know the fossil fuel price be that the transmission network be that the distribution network consumers pay for that and that's that that's a bit that we really really have to hold on to and by having a cost reflective charging regime that incentivises the parties on the market side of the business to keep the costs down as much as they can while still ensuring that we have security of supply and we meet our environmental target so that's why we have a cost reflective charging regime and that does have different impacts on different generators situated in different parts of the country and what we did and mike alluded to this as part of project transmit which was our review of charging arrangements is we looked at well what what would be the cost if we took a more postage stamp approach so socialise the cost of transmission charging across the board and what we found was that that would add about seven billion pounds to consumers bills and I think there was a lot of support that this this was indeed the case and it does logically flow from the fact that if you don't incentivise parties to take the most efficient decisions they it is going to cost more so so that's that is why fundamentally we have a cost reflective charging regime in Great Britain that the other point to bring out and mike also talked about this is that charges are paid both by generators directly and also consumers and the way it's currently split in Britain is that generators pay about a quarter of the charges whereas consumers pay about three quarters of the charges and yes generators located in Scotland and more remote areas will pay higher charges everything else being equal than than generators close to the very big centres of demand but the converse of that is that consumers in these kind of areas and that includes Scotland and part of Scotland pay significantly less through the three quarters of transmission charges that they pay for directly so for example if a large and this this impacts obviously on businesses but also domestic consumers who pay through this through their their bills their suppliers so for example if you have a large demand customer situated in the charging region where longannate is and say an energy intensive user their transmission charges would be something like two million pounds a year whereas an equivalent type of customer situated in London would pay about double that about four million pounds a year okay so the current system protects consumers in Scotland is what you're saying I think that because there's and this goes back to the point that mike made because there's an excess of generation in Scotland that means consumers benefit from that to some extent because they are situated quite close to where that excess demand is the other point that mike made is that this is a fluid and dynamic situation so that changes when a part when a large power station closes that balance changes and consumers pay a little bit more and generators pay a little bit less but that is a current situation in Scotland now okay thanks okay other members want to come in and start with Gordon MacDonald thank you very much convener I've got a number of questions on this about whether it benefits consumers or not first one is just for my own benefit um the the existing transmission charges and etc what everybody says is it's about where population is it's about the transfer of electricity to where the population is so for modelling purposes where do you envisage the population centre is well it's clear I think when people talk about population centres they're trying to sort of like simplify it it's it's it's a it's a function of where the generation is coming onto the system and where the demand is coming off the system obviously population centres drive large demand they're obviously very large population centres in Scotland and if there wasn't much generation in Scotland you would see a real a really low price transmission charge for Scotland because it would be close to the population centre but because at the moment we have more generation in Scotland than needed to meet Pete demand that effectively that excess generation is being modelled as as as reality which is it's flowing down the system down towards the south of the country which is effectively where there isn't enough local generation and effectively therefore the model reflects um the fact that all those transmission wires are you know under pressure in terms of needing further investment to to to to carry to carry that power effectively down south in that cases so it's not quite as simple as just where is the local population centres it's where you know we clearly know where the demand is on all parts of the system where it's coming off where it's going on and we model all of that and that model is published everybody is in the industry can run it themselves you know you can put in different scenarios so that you know we try to be very open and transparent on that and anybody in the market who wants to you know sort of try out different scenarios with different generators coming on or off or different views on whether demand is increasing or decreasing that's all available they're basically saying that the generators are being penalised by trying to keep the lights on south of the border i mean what we're saying is that um scottish and southern energies written evidence says that um that we're sorry about this um the average figure mass differences in charges paid by generators in scotland up to 25,540 pounds per megawatt per annum compared to what happens in cornwall where they actually receive 5,804 pounds per megawatt per annum for using their transmission system who ultimately pays that as you know the customer that pays that and therefore it's the customer that's bearing that additional difference of in excess of 30,000 pounds well the the charges provide a cost-reflective signal on the cost of using the system so if you know there is in parts of the system such as um the south west of england there is a reasonable amount of demand still there isn't much local generation and therefore we have to spend money effectively reinforcing the system to get the power to those customers if local generation locates there that defers that generation and therefore that's a benefit and effectively the cost so the negative charge to the generators in those areas effectively affects the costs that we save in terms of our investment in the system um you know ultimately as Kirsty says all of this is paid by consumers the location aspect just provides a cost-reflective sort of overlay on what's paid by consumers and you know and that is important to know i mean just to give another flavour obviously you are particularly focused on what happens in scotland you know the the overall transmission revenue for my colleagues here in scottish power transmission and she transmission is about 630 million pound a year at the moment the amount actually raised by scottish market participants both generation demand is about less than 300 million so basically um the transmission charging mechanism is ultimately getting england and wells consumers to pay a large amount of the cost of reinforcing the scottish network lights on south of the border i mean that that is to reflect the benefit there is a lot of generation coming on in scotland i wouldn't necessarily agree about keeping lights on but it's in order to efficiently transport all of the low carbon generation coming on scotland into the rest of the system where the export levels and export record export levels in 2013 to south of the border 10 percent of its energy requirements is dependent on the interconnectors the import from wales and the import from scotland so you know we're basically penalising scottish generators for keeping the lights on south of the border and secondly i think it's really fair to let mr calvary on to that point yeah it's not penalising it is a cost effective signal if if and it's clearly given the amount of generation we have uh applying to connect to our network you know as i say we have more generation applying to connect to our network than we can connect at the moment in and the timescales we need to so that is a challenge that all of us as transmission companies are dealing with trying to get as much generation in scotland onto the network as we can so it's not penalising it's providing a signal and and and there and effectively the economics the benefits of in terms of the wind resource in scotland are outwearing that signal so we're ultimately getting to the right answer which in this case is to build the uh most you know arguably sort of most effective low carbon resource in scotland and to reinforce the network but in other cases there might be other stuff which it doesn't make sense to build in scotland because there's no underlying advantage in scotland and so you might as well put it closer to the to the demand that's the way the system works it incentivises efficient decisions and if the market and the transmission system charging regime works in the benefit of uh keeping prices down for consumers now there's two elements to consumers as households in this industry and if you look at the euro stat numbers comparing prices from 2001 to 2013 and only looking at the countries that are connected to the UK in other words can sell electricity to the UK um you see that during that period to households France had a seven percent increase Netherlands had a 10 percent increase in price Norway had a 10 percent reduction and the UK's price went up 22 percent when you look at industry there is a similar pattern albeit that Netherlands price also come down by 2 percent at the same time as price cost the industry went up 20 percent and all three countries France Netherlands and Norway as of 2013 which was the latest figures on euro stat had substantially lower prices than the UK which providing power to industry and obviously to be competitive you know power costs are one of the largest costs that a company can bear and especially for a manufacturing company so if the market and if the transmission charges are delivering low costs how is that no reflected in euro stat numbers well i mean i think clearly there are an awful lot of things that go into those end customer views uh you know about you know fundamentally generation mix access to natural resources so you know i absolutely uh believe and agree with off-prem analysis that the transmission charging regime does lead to a efficient decision making which should benefit to consumers trying to analyse exactly what's driving different uh you know things by company is clearly exchange rates you get different taxation there's just a whole load of stuff that you know i'm probably not the best person to talk to you about explaining i think you know i what i can say is clearly there are opportunities for efficient trading as i think you've heard from other witnesses before between european countries to get benefits so in some cases some of those countries you know do have access to either natural resources or you know sort of in france's case a very large arguably subsidised nuclear program and that does give opportunities if we increase into connection with them to again you know bring consumer benefits particularly as we move to more and more intermission low low carbon generation because we have lots of opportunities for share sharing between different countries it's probably a good point at which to just take a step back and think about the different components of the bill and the role that transmission and distribution charges and others have of that i think i'm not probably not going to get my numbers exactly right here but but i think wholesale prices account for something like 50 to 60 percent of the bill and then distribution charges i think are about 20 percent and transmission charges are about 5 percent of the bill and again as mike said energy prices both to households and businesses are driven by a range of factors but the very very big part of that is actually the composition of the energy mix and i think for the period you talked about i think was it 2011 to 2013 so these countries have very very different energy mixes again i'm not going to be precise but but france is primarily nuclear norway is something like 98 percent hydro so if they've got a lot of water in the the the the lakes high up in norway that's that's going to really if it's been a rainy year that's going to really influence their prices if fossil fuel prices are very high you know we still have and and in that period had quite quite a lot of well quite quite a fossil fuel dominated energy system so if oil prices are high and consequently gas prices are high and likewise coal prices then cost to consumers unfortunately are going to be higher in in gbs well so i'm not sure that these differences really reflect much in terms of the transmission charging regime particularly given the size that that is of consumers and bill not to say that it's not important but it's probably not the key thing driving these these kind of differences okay okay i've got two more members want to come in on on transmission charging and then we do need to try and cover some other ground so i'll start off with Dennis Robertson thank you very much convener it really just wanted it was actually off-gym themselves that raised the concerns about security of supply back in 2009 and with that obviously looking at the energy mix that was available at the time and the energy mix that potentially could be utilised in terms of resources and those resources if we look at scotland is both onshore onshore and offshore wind but off-gym doesn't seem to move in that direction in terms of ensuring that these projects can go ahead and part of that is because of the connection charges and you tend to prefer say the connection say between norway and the UK rather than perhaps looking inward and actually having a security of network say from the western Isles i mean should we not be looking at inward investment in terms of security of supply in the fact that we don't know what's going to happen within the EU eventually so you raised a number of points within that one is i suppose the support for offshore and onshore wind and different technologies and the second part of that is what is the role of transmission charges in relation to that and then you talked about interconnectors why why are we seeing projects coming forward on interconnectors UK governments that determined the policy and obviously you're independent of that yeah yeah so you anticipated what the first part of my answer was going to be which is that in terms of deciding the appropriate support mechanisms and taxes for different types of energy that is very much the role for government and that's what they do through the CF through the EMR policy the energy market reform policy they've got CFDs to support renewables they've got different pots for different types of technology they've got the capacity market in place to support peaking plant so that that is very much these key decisions are decisions set by government what the charging given these decisions and these are the decisions that really drive what our energy mix is going to be what the role of transmission charging in all of that is that given government policy what that determines the energy mix how can we keep charge how can we keep costs down for consumers and having a cost reflective charging regime does that I don't think it's right to use yet another policy instrument to to tinker to support things because government clearly had the tools to do that through the energy market reform programme can I get on to your question about interconnectors and and the western and well the western isles are connections to scotish islands probably more generally so there are a number of projects we're working very closely with with ssc transmission on this proposed to connect the western isles and also shetland to the transmission network and we've had we've had the Scottish islands delivery forum which is set up by Fergus Ewing and we've discussed the progress of these these projects agreed plans for how we make sure they progress in a timely manner and we've been working very closely with with ssc to make sure that that you know these links do come on when they're needed now the critical thing here and I come back to government policy is that the thing that's really going to determine whether wind farms get built is the support mechanism from the government so for example with scotish islands the first decision we need is a decision on the the cfd levels the support levels that these wind farms are going to get before we can you know either ssc or we can go ahead and say yes there should be a link to to these islands there absolutely should be a link if the generation is coming on and that link is needed but but again this is back to the costs to consumers the transmission network it's expensive business the costs you know the cost estimates to the western isles I think it's about 800 million we just approved ssc's investment for the the kathnes Murray link which was just over a billion these are these are big investments and we need to make sure that the generation at the end of that is coming on before companies start paying a lot of money in relation to that long-term benefits are we not sorry we are looking at a long-term benefit in terms of security yes so security so that actually that brings it on to the second part of your your question what it's really about how do we ensure security of supply and national grid and others may want to come in to this so one of the ways in which you ensure security of supply is by having a diverse energy mix because if you have a shock in one area if you have an oil price shock or if the wind isn't blowing you've got other sources on which to draw on so you can do that in terms of the energy mix you have domestically another way in which we do it and we do this in so many other markets in fact almost all other markets is by trading with other countries so that if a shock happens in our country if the wind isn't blowing as much in our country we can get imports from from other countries and you needing that demand themselves yep yep that's a that's a that's a very very valid point I think in in energy in electricity asked with anyone asked with with many other goods we are connecting with really quite diverse and different markets so when I talked about the fact that France has is primarily nuclear and Norway is hydro Denmark is is wind but the wind patterns are a bit a bit different from from they are here what these inter connectors do are they connect us to markets with different energy mixes and the probability that there are going to be shortages or things are going to be tight in our market at the same time there is much lower and they do contribute to security of supply and that's reflected both in terms of the support they may get through participating in the in the capacity market and in our assessment on inter connectors I wouldn't mind seeing a couple more things on inter connectors but if you want to move I just wondered first before maybe Mike comes in I just I wondered is it feasible that the UK GB could be totally supply demand basically they don't rely on any other connectors with ease within Europe so that we could actually produce the energy we require when we need it at all times is that feasible I think I might might bring Mike in on this I mean it's clearly feasible but as Cursie says in virtually every other commodity that will be seen as you're spending more than you need to there is a clear benefit from interconnection and being a trade between countries as as for the reasons that curses outline different different generation mixes I mean it's worth noting that even the time at which we actually see peak demands is different in art in on on on the GB network to what happens in on the central European network so even that you know gives the the you know reduces the chance we'll have simultaneous peaks and we'll all have a problem at the same time so there are real opportunities we you know we do see secure supply benefits of interconnection but I think probably I do interconnection is primarily about the economic benefits of efficiently sharing and trading resources when we're planning on this planning the system we do take in account that we we generally do see imports to GB over peak or we have in recent years though we do tend to then export to Ireland and we try to make sort of sensible assumptions around that if you go back and you look at some some of the work that the panel of technical experts that was appointed to independently review our assumptions for the government's EMR programme they criticised us for being a bit too prudent they thought and that they thought we could be a bit more sort of optimistic about the ability to import from other countries at peak so we we try to take you know prudent sensible assumptions around that but recognise there is a benefit from connecting to other countries so you know you can make us fully self-sufficient but it would come at a price so it would be an exporter at the end of the day as opposed to it yeah I think it all depends on the generation mix and relative economics when the wind assuming that we continue with the big build out of low carbon generation and wind when the wind is blowing across across GB and maybe it's less windy and less sunny in other parts of Europe we will be exporting at other points of when we have the big high pressure system we need to create that wind in the first place and that needs to be connected yeah yeah just maybe custody if I may convener that there is a criticism leveled it off gem I'm sure you're not surprised about that but the criticism is that you don't actually have the the expertise to make some of the decisions that you're making in terms of the your engineer sort of engineering capacity and all the rest there that's a criticism that's been levelled at off gem that you don't actually have the the necessary expertise within off gem to make some of the decisions you're making how would you respond to that yeah so we make we have to draw on a range of evidence and a range of skills to make the kind of decisions that we make many of them are around engineering so the technical capacity on the system many of them are around around the economics and we have a number of very very good engineers in off gem we are currently looking to recruit more engineers so we do have a lot of excellent in-house engineering expertise in addition because that the nature of the work we do can be a bit lumpy so for example when we're assessing when we're assessing transmission projects large transmission projects like Cathenus Murray it doesn't make sense for us sort of efficiently as an organization to have a lot of a lot of engineers we have a core set of engineers who are very expert and have worked in the industry for for many many years at least over 20 years in the in the case of some of them so we will hire in consultants and again good consultants to help us assess the kind of proposals that that are being put forward to us in addition there's the system operator so Mike a lot of what he does is electrical engineering it's about how the system functions and you know what happens if the voltage is is low I'm not an expert on that but we have incentives on the system operator to make sure that they do their job right and take the right decision so it's a combination of having in-house expertise in a core with a core set of engineers plus having incentives on the companies that we regulate and using consultants where that's appropriate that makes us comfortable that we do have the right level of expertise and finally you are independent but how that with regard to that independence that you have how influenced are you by the charming Mike Calvue and in terms of of moving forward I mean does he determine does he help you on your way to make these decisions I'm actually just saying are you really independent or are you working so close with with Mike that there is little independence in your decision making okay so I'm not going to comment on the charminess or otherwise of Mike March as you would like me to but are we independence absolutely we're independent we regulate the company we have to be independent of the companies we regulate both the system operator and the transmission companies I I suppose I worry about that kind of question and I suppose I would ask but you know what what what is the evidence for our lack of independence I'm not saying it's evidence there's a perception and I'm asking you to to sort of you know maybe try and answer the question in terms of the perception how do you actually get away from that if there's a perception there obviously you need to try and address that yeah yeah I think we are we we try to be as transparent as we can in our own analysis and in terms of how we we assess the the company so for example in the past we have provided our own commentary on security of supply analysis which national grid also does as a system operator so and we have not always agreed I think it's not a bad thing to have several voices maybe not too many on security of supply issues I think that's an example where you know we we we try to make clear that we are independent of the system operator thank you thank you thank you John Lamont um thanks very much um it will not surprise anybody to hear that I'm quite in favour of pooling and sharing resources across the United Kingdom and the characterisation of Scotland stopping south of the border's lights going out we would find probably if it was in reverse it probably wouldn't be something we'd like to characterise either when we're talking about security of supply so I'm interested in the way your the costs are worked because you know there's a logic to saying we get you know the cost down as much as possible it's as rational as logical as possible that would be okay if all power was the same as all other power and there weren't any other quality pressures so how can you create incentive around a movement to renewables which help our climate change targets if you simply have a view of all power is the same because that doesn't that seems to me to be a contradiction although you do talk about supporting renewables but if you're pricing them out through transmission charges because too much to to actually create one of these projects then you're making a choice in another direction aren't you is it to me start off so again I think I think part of the answer to that is around so so again it's government will set the target so government will determine the energy mix and what how much it thinks should be on the system in terms of renewables and otherwise in order to make to meet the climate change and environmental targets that the government wants government also sets a security standard it says we want the system to be this reliable i effectively as secure as it can be and it asks national grids to undertake analysis to look at security of supply and they do that through a range of publications so for example the future energy scenarios which are going to be published in july this year and there is a a session looking at more the more short term so the wind the winter outlook so what's the outlook for security of supply over the winter likewise there's now a summer outlook session I believe so so government sets policy around the energy mix but it also sets a security of supply target to make to make sure that given that policy on the energy mix we can still meet security of supply objectives the government's security of supply objectives and it has obligations on national grid to monitor that I don't know if that was your question obligations to round climate change targets absolutely and if you've got a pricing regime that prevents you maximising the renewable opportunities that must be I mean is that not a matter for for you it's simply a matter for government to recognise that I think we come back to what what are the what are the appropriate tools that different parties can use so so government has government is that is the body that manages that what we refer to a trilemma the balance between security of supply meeting environmental targets while at the same time keeping bills as low as possible for consumers and through the EMR the electricity market reform programme so the CFD mechanisms we've talked about the carbon tax and the capacity assessment it's put in place incentives to generators which will facilitate the kind of energy mix that they want but at the same time they keep a very close eye on on security of supply the charging regime most people do not think that the charging regime is a tool that effectively incentivises that you incentivise that using one tool i support for generators and then once you've done that the charge it use the charging regime to deliver the energy system that delivers these targets but at the lowest possible cost and that's why we have a cost reflective charging regime I don't know that quite answered your question I think that the dilemma is this is not something that's just simply how do we manage to what you seem to be saying this is about the best deal for a customer and who's going to deny that however if you're creating as I've said a situation where it makes it less likely that that that that you're bringing on renewable energy then there's a bigger policy issue but that's the only thing that's beyond the regulator it is simply about policy decision making. I think that's right and that's where the government uses the CFD mechanism it will determine how much what what level of support it gives to renewable generators and that is how it that is a main lever the government has for determining how much plant comes on and they are the you know the government when they set that are fully aware that we have a cost reflective charging regime and they support the fact that we have a cost reflective charging regime but they will use the the contract for difference or the sort of guaranteed price for renewable energy to incentivise the the wind that they want on the system be that onshore offshore and in other forms of renewable energy. Falls on quite neatly from that in terms of pump storage and if you were designing a system that maximises Scotland's advantage in onshore wind you and to the benefit of the rest of the UK as well and to meet our climate change targets you would invest in pump storage to even out the intermitencies in onshore wind now both SSE and Scottish power have schemes that are ready to go but if you SSE have told this committee and it says on their website that their scheme can't go ahead because of the existing transmission charging regime for pump storage and I'd like to know how that can possibly be justified because clearly it means that we're wasting a lot of our renewable energy in terms of the winds that we could store so I think yeah storage is clearly has a lot of advantages in a system that's getting increasingly intermittent but yeah there are a number of different technologies pump storage is maybe the traditional tried and tested technology but there are a number of new technologies being talked about and clearly you'd have seen the recent announcement about the sort of you know distributed home Tesla storage so I think yeah at at the moment it's probably a issue for the market to develop the most efficient form of storage I believe that between the mechanisms that Kirsty was outlining the capacity mechanism the energy market there are the mechanisms to incentivise investment in storage if and when it's economically needed on on on on the system and I think increasingly there will be a need for that and hopefully you know but but at the moment storage is probably just bit too expensive Kirsty mentioned our future energy scenarios we'll be publishing that in July one of the things we're doing is a specific case study around storage because it is one of the big sort of debates for the industry about you know when and if do we see large-scale deployment of additional storage and we've what we're we're trying to do is sort of almost say well these are the things that you would expect to see these are the price signals these are the sort of technology leaps you might see in terms of make it more economic before you might expect to see a real sort of large-scale rollout but the fact is storage effectively you know is is is one option amongst the number that might help in terms of managing intermissancy providing peak power when the wind isn't blowing a really active demand side is another you know and effectively you know so you know rather than sort of almost taking bets on particular technologies I think the view of government and off-germ and certainly myself is the best thing to do is apply the right economic signals and then effectively let the market come up with the best ways of doing it the market I mean the SSE SSE and others are not happy with the way things are going and you're talking about you know new forms of storage and that's fine them all for that but let's look at what you call the tried and tested pump storage that we have at the moment in Scotland they say that they need a satisfactory and supportive long-term public policy and regulatory framework when are they going to get that so shall I come in on that my starting point is is that storage is is part of I mean one of the things we need in an energy system is is flexibility particularly when we have a system where you've got intermittent wind and and I welcome the fact that the committee is looking at that it is looking at demand side response and it's looking at flexibility alongside security of supply because it is really important and storage and you know be at the pump storage or other forms of storage is is an important part of that and the future is is you know is likely to be an increasingly important part of that and what you need to incentivise more storage to come on so different different forms of flexible generation and say storage as part of this will have different costs so the government has put in place the capacity market to to incentivise energy that only sort of well will provide energy when the wind is not blowing so that's where the peaking plant comes in and I think I think pump storage can also participate in that one of the things we've done is we have sharpened the prices in the the energy market so the energy market the balancing market happens just half an hour before the real time when the energy is actually delivered and it's a market that's managed a bit by by national grid as a system operator and one of the things we've done is we've sharpened the prices in that market because that means and that is the kind of market that facilities such as pump storage is likely to bid into because they will now get higher prices if they bid into that market so we are doing things to to sharpen the signals for flexible generation that said different types of of flexible generation support does come at different costs and I don't I don't know the details about you know sse's cost but but I think I come back to the point that you want to create an energy system that provides security of supply at the lowest level of cost to consumers and and currently you know some of the storage proposals talked about given current costs for storage will not do that compared to other okay talking about costs the government said the UK government is planning to subsidise a new nuclear power station in some in some or set at a cost of 50 billion and that's I think it's something like four times the amount of subsidy that's been given to onshore wind so far that's a political decision and that's you know that's something that you know like you're integrating into your that's going to happen but the consumers are paying the cost for that and investing in pump storage would cost a great deal less so for usage suggest that this is all about delivering a good deal for the consumer is misleading because you are actually following a political policy lead set by the UK government which is pro-nuclear so so you're absolutely right that it is a political decision but that's that's government's decision it's government's decision as to whether it supports nuclear the extent to which it supports other forms of generation so we've talked about renewables through wind and whether it provides support in terms of research and development to to storage or or other financial mechanisms to to support storage and that is that's absolutely that is what government decides it decides on the different support mechanism so the government has decided to to to to subsidise nuclear ahead of pump storage yeah but what we don't want to do with transmission charging is drive things in a different way to the government in terms of the energy mix that that is not our role the government sets policy that determines the energy mix we as a regulator and we are slightly boring technocrats make sure that we can deliver the system in the the lowest cost to consumers and and having i mean this is going back to transmission charges again having cost reflective transmission charges does that given what the government has decided in terms of how it supports different forms of technology yeah just one of that a couple of things um obviously pump storage doesn't it sell it can facilitate wind energy and other intermittent generation but it doesn't in itself produce green energy so that is a difference um and obviously all storage technologies that i'm aware of will have an efficiency in terms of cycle efficiency so typically pump storage will be about 80 85 percent efficiency so given that sometimes they'll be pumping uh you know when it's not pure renewable you know renewables it's fossil fuel generation and and then and then there'll be efficiency so pump storage at the moment net will actually you know not to be a completely green technology even though i do agree with you but the other point i want to make and i think you know that i think going forward there will be an increasing role for storage i heard some of the previous witnesses talking about you do really need to think about energy storage holistically on the system it's not just about pure electricity storage you know and i absolutely agree with that if you look at the current system actually from an energy storage perspective the largest energy storage system of piles of coal outside power stations that you know and the second largest is very large stored gas in in in gas storage facilities obviously we're losing those piles of coal in the sort of 20 in sort of 2020 mid 20s sort of time period so at a holistic system level you do need more storage i believe to replace the fact that we are losing a big stores of energy storage now whether that's pump storage whether that's distributed storage in the home the heat storage types things that we're being talked about you know again i that's a really interesting and very complicated problem that i don't think any single person is ever going to come up with an optimal solution so the best thing to do is try to let you know get the market signals right and i think you can debate are they completely right and then let the market come up with the right solutions i think you will see more storage deployed particularly in a sort of 10 to 20 year horizon but whether that will be pump storage or teslas or some other new technology you know i think is a very interesting question right need to move on and bring in Lewis McGold thank you very much and uh community i don't want to miss the opportunity with the transmission companies all here to ask about actually the transmission network and i guess the the off-gen paper highlights 2.9 billion of investment in buley denny and the west coast interconnected and so on and 2.5 billion of potential investment in the islands and and and the marifyrth link and so on i wonder if from all of the witnesses whether they feel that the way in which these these big infrastructure decisions are made currently uh is is is effective and efficient uh is it the right uh mix of market and direction and is it the right bodies which are influencing that because clearly talking of very large investments but very critical to connecting new generation um are we doing this in the right way uh are the things that could be improved either from the point of view of the scottish-based transmission companies or from the point of view of national grid or off-gen i'll have a good starting on that i think you know from the point of sheet transmission we've invested just about one and a half billion pounds over the last four years cursed it mentioned earlier on about you know there's a challenge on the engineering resource within off-gen you know at the end of the day we've we've we've sought we've sought approval and agreed agreed um we've achieved approval of you know two and a half billion just under two and a half billion pounds worth of projects which includes the buley denny includes the contire hunterston which they've just started putting the subsea cables down today and it includes you know the buley black helix and the buley dune rays you know some of these projects are completed and of course buley denny and you know these four or five projects will be completed during the course this year so you know from i think from our perspective you know it's a big spend it's happened we've got kathynes murrie which you know their manufacturing cable now they're on the ground another £1.2 billion pounds so the the process although you know can be frustrating at times is pushing on we you know we're delivering the assets and you know for likes of sheet transmission which you know five six years ago or seven years ago we had an asset value of on the order of 300 million and we're pushing on and you know within three or four years we're going to have an asset value of three billion so quite a substantial increase but that's an asset value increase you know without you know without the likes of the shetland or the western isles projects you know added to that so you know these are clearly to the projects we're hunting at the moment or hunting or trying to achieve and get close out at the moment but as well as that there's quite a number of onshore onshore radio circuits you know there's quite a few hundred million pounds worth of projects that at the moment it would be potentially difficult to justify for ourselves to demonstrate off-jam efficient expenditure so some of these things are the likes of the buley tomatoes or it might be the likes of the you know the kind of tenalt to you know crusague these kind of projects so there's so i i'd sort of think that it's not so much the process that we've got here with regards to working you know with sdc's relationship you know with scottish power with national grid and off-jam it's it's a challenging process and that's right i think that the main the key the key challenge is really to do with the kind of the you know the cfds and which are kind of effectively feeding into that and it's having better clarity on that so i think that that's the area from the point of view of sdc that you know to push these projects that we need and from the point of view of the projects you've described that are the ones that achieve these connectivity within the north of scotland area and from there more widely is is your company the driver of those investments and other if you're making the investments is is the initiative does the initiative lie with you or does it lie with the regulators or with government policy the way that this works is that you know the developers or the generators come they ask for a connection offer they come through national grid national grid can pass that on we look to see what we can do we have to you know give them the the least cost option so that will give the sort of local connection to the grid then we have to kind of work out with all these people that have applied if we need greater infrastructure improvement i.e. the likes of Julie Denny and then it's up to us you know in present presently before the likes of some of the itpr enhanced so in process you know being introduced it's up to us then to with regards to the big infrastructure projects then we put forward proposals to of gem and why we believe that we have value for money for the customers and that we aren't going to end up with assets that end up being stranded because developers don't develop projects because they don't have the appropriate you know CFDs or rocks or whatever for that to support the projects convener what i would like to say just to go back to the question that was asked are we are we happy with the way these decisions are being made in that context i'd like to bring out a couple of points that the over the next 10 years the the energy electrical energy position is going to change dramatically that's been referred to earlier we have some certainties and in that 10 year window we'll be looking at losing the conventional generation we'll be looking at losing the nuclear generation the other thing that's fairly certain is we'll see a rise in the renewable contribution the area that's most concerning from a transmission and distribution network point of view is to understand the level of take-up and the direction that the government's policy will drive for decarbonisation particularly the diversion of energy from fossil on to electricity for home heating and other purposes also the change in transport the existing network is capable of supporting small and incremental changes in load over a short period of time but if a large change of load is coming in over a 10-year timeframe then that 10-year timeframe also is consistent with the time it takes to develop the large-scale infrastructure whether it's a power station or a major transmission connection so we are looking at the moment of having to make some decisions that some of the options would be taking 10 years to build when the uncertainty around the take-up of additional electrical loads and demands now while the importance of demand side management and absolute reduction in the consumption of electricity from an efficiency point of view while that will happen what may not happen is the load that the network has to serve will fall because of these additional loads that will be added through these other policies so trying to forecast and foresee just how much capacity is going to be required in 10 years is a bit of a tricky subject at the moment so more certainty and medium-term policy in these areas would help us to decide how to satisfy that and the mechanisms i appreciate the point we'd all like more certainty I guess looking forward 10 years are the mechanisms in place that can help to do that ours in terms of the future energy scenarios that might refer to earlier yes there are mechanisms there that we can as an industry agree what we want to achieve to meet the demand that is forecaster foreseen as a take-up of government policy what we can't do is build a 10-year project that gets us to a place that government policy has moved inside that 10-year timeframe so we need to be very very careful about what it is we're being asked to provide capacity for we have a yeah how they've described it for sort of local connection is absolutely right the challenge are these big what we call sort of wider work projects where they do tend to be sort of you know big impacts on the system driven by the net impact of an awful lot of individual smaller decisions sometimes and we have this real challenge that generally investing in new transmission tends to take four to eight years depending on how you know whether it's a new overhead line with planning consent and all of those issues and sometimes the generation is changing a lot quicker than that certainly with wind we've seen probably wind can come on in a shorter time scale we're seeing with solar PV probably coming on more further south in this but we are starting to see some up in Scotland can come on in you know less than a year if you know from sort of virtually nothing to a to a connected project so Eric's absolutely right we are then slightly at the mercy of government policy shifting in timescale sort of shorter than we can respond to we have got mechanisms to deal with it we do the scenarios in the future and what will be systematising under the ITPR project which Dave referred to is effectively across the whole of Great Britain doing rigorous planning of against all the future scenarios that we think is could happen what is needed and then using that to inform decisions around what projects should we take forward where do we need to start doing pre construction engineering and when to actually take projects to an off-gen for approval for the overall to actually take them forward and that's quite important because if you're looking at say you know when do we start worrying about a scenario about say early nuclear closure in Scotland that's quite a hard decision because it's one that you'll probably always get wrong you know it's you know sort of so you know is it better to invest early to be on the safe side and then turn out you actually built lots of stuff you didn't really need or is it better to sort of like leave it and rely on other solutions coming along which might be quite expensive that those are not straightforward solutions we are trying to put the mechanism in place a deal with it in the past off-gem has accepted a concept we called anticipatory investment effectively investing before we knew we need it but in anticipation and I suspect we'll probably have to continue to use those sort of mechanisms it in the past has been a good mechanism that's why western link has been come forward in a timely manner because we started it before we really needed it before we really knew we needed it and actually you know we did need it so actually it's going to be beneficial flowing in both ways you know was again previously been talked about can I come in again I mean it's a it's a very good question because your question is really is the regime for planning and delivering these network assets appropriate and it's a good question because as we said you know the companies are investing about seven billion pounds worth in transmission assets over the current price control period so that eight years between 2013 and 2021 and we looked at this as part of the ITPR project which others have referred to it stands for integrated transmission planning and regulation we looked at exactly that question and our findings were there could be some improvements and we took our decisions on that earlier this year it was spring this year it's a bit hard to tell the seasons these days but so it was spring this year and what we decided was that we wanted a stronger role so as Mike said they produced the future energy scenarios which sets out what generation is likely to come on and then the transmission owners look at this consider developments in their own areas and they bring forward proposals for transmission build in light of that importantly and this is the boring tech tech part but very important part in their licenses they have the obligation to develop a system that is economic and efficient and what that means is bringing forward proposals that are built to deliver the energy and for us to assess in a timely manner so they have that obligation on them the changes we made to the regime for planning and delivering the system were firstly to give the system operator a stronger role in looking at these options and assessing whether those indeed are the best options that the transmission companies come forward with are there other another level of scrutiny you know are there are there other ways in which this can be done more efficiently both through actually managing the system more efficiently or through build because that's some of the trade-offs that the companies need to think really hard about is you know does it always need lots of big kit like pylon and undergrounding or are there other ways in which we can manage the system more effectively so we want the system operator to engage more closely with the transmission companies in doing that so that was that was what we did on the planning side on the delivery side again we think things can be done better and that set out in our proposals in particular to drive down costs to consumers we think there is a role for bringing more competition into building onshore transmission network so what we have said is where there are large new separable transmission projects these can potentially be tendered out and delivered by competitive parties and the evidence this is it's a controversial decision but we looked very very carefully at this we looked at evidence from what's happened in the offshore regime here evidence for other from other countries and came to the firm conclusion that this this can deliver benefits to consumers not in all projects not in small complicated projects that are part of the very mesh networks but for very big separable projects there are benefits in bringing more competition into the market here and pushing prices down and ultimately consumer bills and it's too early to know whether that might happen in other words whether serious bids might come in from new potential yeah so we are looking to move quite quickly on this we're hoping to be in a position to be able to tender it requires some changes to legislation and processes but we're hoping to be in a position to potentially tender projects around the end of 2016 2017 at the same time what we don't want to do is we don't if there are projects in train that need to be delivered for a certain time when we know this generation coming on at the end of that we don't want to cause undue delay to these projects but in the longer term we we really think we can drive down costs to consumers by introducing more competition onshore like we have in inter connectors and like we have in offshore connections to move on we need to we need to finish the session by 12 30 because we have the minister coming in after us and I've still got members who want to ask questions firstly check really thank you convener firstly my apologies for being late this morning i had a problem with personal transmission from Ayrshire to Edinburgh I have four very brief questions and I'm sure they will be answered briefly you've just mentioned i haven't made the first questions from Ms Berger you've just mentioned that you're looking for competition yet in your submission you say off-gem regulates the monopoly companies that own and operate the transmission and distribution networks i think earlier on you talked about the the basic costs which i think are a bit fanciful because there are other costs associated with companies running the transmission network and what have you so just very briefly can you tell me how do you regulate these companies what do you actually look at so we with the transmission companies they bring forward proposals for us to say we need we need a transmission network for we need a transmission link for example in Cathness Murray so so what we do is we look at their case for is there really a need for this and we look at is do we expect transmission to come on in this area and therefore is there need for a substantial reinforcement for that so that's the first point is it needed and the second thing we do is we look at the cost of that of the investment that come forward because they are monopoly companies and it's it's not like in a competitive market where you can sort of observe the price by different companies competing against each other that's what we do is when we regulate so for example in that case we looked at we said yes there is a need this clearly a lot of generation coming forward in the north of scotland that needs to be transmitted to the demand centres further south there is a need and then we looked very very carefully at the cost for that project as we've mentioned before it is about a billion pounds it's going to cost about a billion pounds to build this project we reduced sse come to us with the proposals for the cost of that we made quite significant reductions to the cost that they put forward to us and that goes straight on to into a reduction in consumers bills so that's that's how we regulate them well you say it goes on but we've had investment in the past which hasn't resulted in reduction in consumer bills and you know i would contest that and you know if i look at monopoly companies i look at much more than just you know what is this investment other than the companies themselves and apart from the management all of the other elements of cost so if i may just then on that basis ask mr cavio who are the barclay group sorry who are the barclay group uh okay i'm not particularly familiar with them but i suspect there are financial um player who works in capital markets so you're not aware that they that you have a joint venture with them and that uh you are dealing in property in up to four 24 sites this is from your night at your report uh and companies so if you're talking about so so so national grid property is a completely different part of national grid the one I work in um but we we do property development we have a number of sites that used to particularly in england in england um have disused gas holders in and we are we and we are experts effectively redeveloping land doing the environmental cleanup and releasing it in order to fight housing i think that's all very worthy forgive me for interrupting because i know we have a shortage of time but the again in in your national in your report financial report half your report it talks about realising greater value for london for our london portfolio i mean how much time are you spending on transmission which is your core business as far as we're concerned and investing elsewhere and it comes back to the issue that you're not looking at all the costs involved in monopolies at all well just to be clear i spent 100% of my time on transmission that's my business uh the people in national grid plc who deal with that a completely different part of the business and apply the appropriate resources we you know we are a large corporate um company with many parts of business and we make sure we have the appropriate resources but you know we are uh you know we absolutely take resourcing our our activities extremely seriously i'm i'm actually recruiting massively at the moment due to some of the enhanced responsibility that cursory is talking about we need more power system engineers um and we've been investing um you know about a billion and a half per annum every year for the past probably five years on the on the on the transmission network you can understand my concern is who's paying for this or paying for a part of it certainly when we talk about getting the bills down which are not coming down and you're investing in non-core business i'm not saying it's wrong i'm just saying the any investments in non-core business that's like the transmission business we're only done on the basis they pay for themselves anything that wouldn't touch consumer bills the amount we're investing in the transmission network is in order to provide the ability to move power from where it's being generated such in scotland down to consumers in other parts of the network so uh and we're regulated by um Ofgem as she as curse okay i wonder i wrote this down immediately you said it you said coming back to to investment and generation you said we can't get generation the timescales we need to is that true or is that mistake no no i i i i said generation can come often often come in on a shorter timescale than we can necessarily build the transmission that that generation sort of um uh would ideally uh be in place we've had to put in a number of mechanisms to deal with that you know i don't buy generation i do sometimes contract with generators around specific balancing services but ultimately it's for the energy market of our generation just one one last question briefly for mr Berger mr levy and mr garner is the national grid the right body to uh act as our systems operator i could take that one yes the um the organisation that mic is responsible for as a system operator that um that has come quite different functions from the organization which is also inside national grid which is to own transmission assets so they're although they're under the same umbrella they do actually operate to two separate functions so we relate quite closely with with with mic and his team about connections to the system and how reinforcements need to be planned to meet the needs but we also relate to the other side of the business the owning side in terms of the physical connections and how we arrange our physical activities on the ground but someone's got to be the UK system operator someone's got to hold a ring so the only question would be whether there's sufficient independence between the two parts of the business which one of which is overseeing the national interest and the other effectively in competition with ourselves mr Gardner it's very much the same very much the same line is that comment um i think you need a you need a single s o to to ensure that you get the sort of optimum solutions that are developed and you know for the running of actually the system and the development of the system into the future right very briefly my answer is going to depend on what everybody else's was but but no so my answer that's not quite true my answer is yes they are but it's a good question because you do want to make sure that you've got confidence that um what they do is the s o is separate from what they do is the the to and i think that's where you were going with your question so for example with the enhanced duties that they have as a system operator following our itpr project we have set stronger ring fences about how they can share information who can take what decisions within the s o to to limit the interaction between the s o and the to okay thank you thanks um patrick harry are you still keen to come in i think the moment's pass was passed okay go on mcdonald do you want to come in about the capacity margin no right okay fine we've got three minutes left and he has to come in with a follow-up question lose my doll did yeah yeah yes on the conversation we had a little earlier about um transmission operation and the bids that companies might make to construct that because one of the other aspects that's come up in some of the evidence has been around other consequences of building the necessary transmission connections for example around economic development in remote areas around if you like creating the critical mass to enable generation to go forward and i wonder if witnesses feel that the structure and the system we have at the moment achieves those objectives as well as it could or whether there needs to be there ought to be a consideration of other aspects of policy in deciding whether infrastructure projects go forward or not start with that um so so we do need to be clear what our role is as a regulator and much as i might have personal preferences and be very interested in regional economic development unfortunately for me that is not my role as a regulator so we our duty is to protect the interest of interests of energy consumers it is not us an employment generating agency you don't want the energy regulator to be the employment generating agency you want government to take these policy decisions so so government takes decisions as to you know what what the skills policy what skills and training policies is what employment support policies is you know to some extent it's constrained by european legislation what kind of industries you should support in what places um and again what kind of energy mix you have you have through the emr policy so that that is not our role as a regulator our role is to make sure that the transmission companies deliver a network that delivers the government's objectives and energy um in the most efficient way and inviting potential competitive tender bids you will you simply go for lowest cost will that be the criterion that you will apply it is but it has to it has to meet the sort of safety and reliability standards and timeliness um it has to score against all these points it's not just you know quality matters um as well as cost for the the energy network absolutely right i think we're out of time so um thank you all very much for coming along um and helping the committee uh we will now have a short suspension to allow a change over thank you okay if we can uh reconvene uh i'd like to welcome joining us uh this afternoon Fergus Ewing minister for business energy and tourism who's joined by Colin Miller head of policy claire anderson drafting solicitor and Charles Keegan head of land register completion at the scottish government um we are here to take evidence on a piece of subordinate legislation the registers of scotland bracket voluntary registration comma amendment of fees et cetera closed bracket order 2015 in draft minister thank you convener the draft order which the committee is considering today is a significant step in the process towards the completion of the land register which is one of the key policy objectives underpinning the land registration scotland act 2012 as the committee knows the Scottish government has asked the keeper of the registers of scotland to complete the register by 2024 the main purpose of the draft order is to provide an incentive to increase the uptake of voluntary registration applications and it seeks to do so in three ways the first of all the order provides a 25 percent reduction in the fee for voluntary registrations across each of the ranges of consideration paid or value and if parliament approves the order that fee reduction that fee reduction would come into force on the 30th of june this year second the draft order provides for the closure of the register of sayings to the recording of new standard securities from the 1 April 2016 the effective of this is that a person who owns land which is recording the register of sayings would be required to apply for voluntary registration of the title to the land in the land register so that that standard security can be registered where voluntary registration is required to allow the registration of a new security in this way the draft order removes the fee for voluntary registration altogether once again that provision would come into effect on the 1 April 2016 finally the draft order removes with effect from the 1 April 2016 the keepers current discretion in section 27 3 b of the 2 12 act to refuse an application for voluntary registration registers of scotland estimate that these provisions taken together would result in an increase in the number of voluntary registration applications of the order of 5000 per annum over the period 2024 when the register is due to be completed this would equate to some five percent of the total number of unregistered titles as i've mentioned convener although the proposed 25 reduction in fee for voluntary registration would come into force on the 30th of june if the order is approved the remaining provisions relating to the closure of the register sayings to new securities and the removal of the keepers discretion to refuse applications for voluntary registration would not come into effect until 1 April 2016. Following consultation with interested parties the reason for allowing that relatively long lead-in time is to ensure that mortgage lenders and others have sufficient time to make any necessary changes to their own systems and processes registers of scotland will work closely with all interested parties to make sure that they are aware of the proposed changes and the process of implementing them is as straightforward as possible whilst the main purpose of the draft order is to provide incentives to increase the uptake of voluntary registration applications we've also taken the opportunity to make a number of relatively minor changes to land register fees first to provide a disposition for the sole purpose of evacuating a survivorship destination is to be charged at a fee for of 60 pounds for each title sheet convener affected instead of a value based fee which in some cases as you will know convener can be prohibitive second the draft order provides that the current fee of 30 pounds where an application is rejected or withdrawn will not apply where the sole reason for rejection or withdrawal is that another related application in respect of the same land or title number has been rejected or withdrawn and finally the draft order provides for the keeper to be able to charge a small fee of 16 pounds plus vat or in one case 30 pounds plus vat for copies or extracts of documents such as a copy of a search sheet from register of savings convener the main proposal set out in the draft order were included in the consultation on land register completion which took place between july and november last year and were finalised after further stakeholder workshops and feedback from business from the legal profession and from mortgage lenders. I believe that the provision set out in the draft order will be a significant step forward in the journey towards the completion of the land register which will be a major national asset for Scotland and I'd be happy to respond to any questions that members may have. Thank you minister. Do any members have any questions? Patrick Harvie. Thank you. I'm sure we'll all welcome steps towards the completion of the land register. I wonder if the minister could tell us if the increased registration rate that he's anticipated takes place, what level of income from fees will be foregone? Well, 25%. Which amounts to what in terms of the overall cost that the taxpayer will then be paying to the minister of the register? Well, I think that Mr Keegan can answer that question if you have. Thank you. The first thing to say is that the register of Scotland has its own income from its own fees, so we don't take anything from the taxpayer directly but through applications. In terms of the number of voluntary applications through this process, we would expect it to be around £5,000 a year, which we estimate based on our average fees of around £1.3 million, which we do. Obviously, that depends on the level which comes through due to market activity and how attractive this 25% discount would be to applicants. It's a reasonable point that Mr Harvie raises, convener. It would also be reasonable for me to point out that the purpose of doing this is to meet the objective of a 224 timetable, which is one that Mr Harvie supports. In one sense, if we don't do this, many of the 5,000 applications that we anticipate to get may not arrive. In other words, it may not actually lead to reduced income. It may lead to more applications that won't otherwise come if we don't do this. Therefore, if there are more applications than there would otherwise have been, then you could argue—time will tell, convener. I'm not making a search in one way or another, but you could argue that if you have 5,000 more applications that you wouldn't have had, or if you only had 1,000 or 2,000, although the fee for each has reduced, the global aggregate income may, in fact, be increased. I think that, just having had a moment's reflection to deal with Mr Harvie's question—a perfectly reasonable question—I should make that point, that it won't necessarily result in a drop of income to the keeper. It could actually result in an increase in income and certainly a policy imperative, which I assume Mr Harvie supports. I wasn't seeking to argue against this course of action simply to understand the scale of the income from fees that would be foregone compared with a situation where registration is required and fees required to be paid as well. Thank you. Any other points? Can I maybe ask you in a similar vein? If we're going to have an extra 5,000 transactions coming to registers of Scotland, I wonder, minister, if you're satisfied that registers of Scotland have the capability and staff to handle that, given that it's quite likely that some of these applications for voluntary registration will involve what might be quite complex titles, large estates that, over the years, have sold off little parts of land or historic titles, which perhaps are not plan-based. You can see quite a substantial increase in workload for registers of Scotland staff. Are you satisfied that there's the capability to deal with that increase? Yes, I am. I have the benefit of working with the keeper for several years now. I'm absolutely confident that our staff will deal with the work and deal with it extremely professionally. I should say to Clare Anderson that it's just pointed out to me that had we not made the changes that we are proposing to make in the draft order then, at present, the method of dealing with these matters would have been to require a keeper-induced registration, rather than a voluntary one. Were that to have been the case, the status quo to apply, then a keeper-induced registration attracts no fee. Therefore, it's necessary to move to the lower fee in order to obviate the situation, which would have resulted perhaps in the use of the keeper-induced method to attract more registration onto the register of titles perhaps held in trust of a state. It's a technical point, but it's one that is correct for me to put on to the record. On your point, convener, I am confident. I think I'm right in saying, although maybe my colleagues can help me here, that 5,000 is a large number, but it's a small number in comparison with the number of annual property transactions a year, which I think are in the order of 200,000 or 300,000 just from memory, if that's right. Maybe Mr Keegan or Mr Miller can just refresh my memory and your committee. Yes. Currently, it depends on market activity, but we get between 300,000 and 400,000 applications a year, so 5,000 would not be an insuperable additional number. On the first point that you made in response to my question minister about fees, if I had a title that was unregistered and I wanted to submit for voluntary registration, I'd be charged a fee, but if I do nothing and eventually the keeper comes along and induces it, I don't have to pay any fee at all. Why would I not just wait? I think that Clare Anderson is going to be right. The benefit to a voluntary registration is that the solicitor is involved in the process, and it's more likely that there will then be a grant of the keeper's warranty, which is a particularly good benefit to the title owner. In the case of a keeper's registration, it's less certain that that warranty would be granted. This is a job creation scheme for solicitors. Is all the more welcome for that? To be serious, I have advocated voluntary registration to those who have substantial land holdings and their representatives. I did so in 2011 and 2012 for that absolute reason that in that time many of the big firms in Scotland were laying off young solicitors, and therefore I have for a long time advocated that landowners in particular can play a part in helping to generate work that enables us to avoid shedding the services particularly of young solicitors just at the most difficult time. I mean, hopefully economically we've moved on since then, but I think the argument remains the same. If this is taken up and I'm confident that it will be, then it will help to secure legal work for young practitioners and give them good experience at the beginning of their career. I expect that they will end up doing quite a lot of the hard work action. That perhaps is a silly question for the legalities of this, but making a point of trying to get as many people to register as possible, what is going to be the mechanism for communicating this as widely as we possibly can? Well, I think it's already been communicated fairly widely. I mentioned earlier that what we've had, the land registration bill and of course members of this committee, were played a part in bringing that to fruition. But also the keeper has had meetings with stakeholders. I think I'm right in saying and I maybe ask Mr Keegan or Mr Miller to expand on this that there has recently been a meeting with 26 solicitors who have clients who are likely to be able to avail themselves of the provisions of this instrument, if Charles could answer that question. Yes, thank you. We've got a number within register of Scotland. We obviously have very good contacts with the solicitors and the persevering community, so we'll be sending information out electronically to them. We've also, as the minister said, we've had a number of meetings with key stakeholders and professional advisers of particular groups of landowners and explaining the benefits of voluntary registration. I have to say that working for the land register is very encouraging to hear those stakeholders think about actually being on the land register as a better thing. It's actually quite an encouraging thing. What we're doing with them is we're working out what we could do to help them in the preregistration world by providing information to them, maybe in different formats from the way that we've done before, so it's quite an encouraging landscape at the moment. If there are no other questions to the minister, I would just point out to members that the Delegated Powers and Law Reform Committee considered this instrument on 26 May, and there were no points that arose in relation to it. We will now move to item 3 on the agenda, and I would ask the minister to move the motion to approve the register of Scotland voluntary registration amendment of fees, etc. Order 2015. So moved. Thank you minister. Do any members wish to speak on this motion? If not, I will put the question. The question is the motion S4M-133-18 be agreed to, or we all agreed? We are agreed. Thank you. Are the members content that the convener and the clerk produced a short factual report of the committee's decision and arranged to have that published? Great. Thank you very much. We now move into private session.