 Felly, honi'r gwrth gellaf yn unig ar bobl yn Ymannau gymunedol a Derbyn Gwyrdain Cymru. Felly, rym ni i'n cael cangwyr roi eich gweithio, ac rym ni i'n gweithio'r gallu yn gweld yr sidewyd SSY, ac i'n cael cangwyr roi'n gweithio'r gwasanaeth am y gaeleri. Yn cymdeithas gydaennyniad hon i'n gweithio'r roi'n Gweithசinwyr, a'i gweithwyr y gweithwyr your energy successes and challenges. Welcome to your all! Hope you enjoy the proceedings and find them of interest. Can I remind everyone, please, if they can turn off at least, or turn to silent or mobile phones, as other electronic devices so that they don't interfere with the sound equipment? Item 1 play on the agenda. Members together with the security of supply inquiry should be done in private. Is that agreed? Thank you. Item 2 on the agenda? Next week we will be considering our draft annual report as a committee. Our members agreed that that will be taken in private. Agree. Thank you. The next question is from LAUGHTER. Beth eisiau. Ac oedd yr ysgol i'r gwbl yma yng Ng Falle'i Cymru. Y cwmdeithasol i'r ffwrdd yn y gwbl y sylfaenol i'r cwmfiner ymlaen sy'n wych am yr ysgol yw o'r Facebook i'r cyflaen i'r ysgol ar y tabartledd 12.4.3 a'r gwrsiau hyn o mewn ddiweddol ar yr ysgol. Beth eisiau. Right. Item 4, we are now taking evidence in relation to our security of supply in propriety and round table format. Now you are given the number of people here, I think, the easiest thing to do is if you just go round the table and all introduce ourselves and say who we are. I'll start, my name is Moldon Fraser. I'm a member of the Scottish Parliament for Mid Scotland and Fife, and I'm the committee convener. I'll hand over to you. I'm Gareth Harrison. I'm Professor of Power Engineer at the University of Edinburgh. Dwi'n cwm ni, I'm Dennis Robertson, I'm the MSP for Aberdeenshire West, and I'm the Deputy-Convider for the Committee. Colin McKinnon, Sir James Watchere, Professor of Engineering Science at the University of Glasgow. Chuck Brody, SNP MSP for all of them, for the South of Scotland. Morning, everyone. I'm Keith Bell, I'm from the University of Strathclyde, I hold the chair in smart grid technologies, which is supported by Scottish Power and I'm also a co-director of the UK Energy Research Centre. Gordon MacDonald, SNP, MSP, for Edinburgh Pentlands. Alan Walker, Head of Policy at the Royal Academy of Engineering. Richard Loyall, SNP, MSP, Central Region. Ian Arden, I'm representing the institution of mechanical engineers and lead author of several recent reports, which I know many of you have seen. Lewis MacDonald, Labour, MSP, North East Scotland. Michael Riley, I'm senior policy manager for grid and markets at Scottish Renewables. Joanne Lamont, Labour, MSP, for Glasgow Pollock. I'm Dr Edward Owens from Heriwatt University. I run several large European research projects on demand-side management and microgrids. Patrick Harvie, Green, MSP, for Glasgow. Hi, Brian Galloway. I'm the Energy Policy Director at Scottish Power. Joan McAlpine, SNP, MSP, for the South of Scotland. Lauren Slade, Interim Chief Executive for Energy UK. Thank you all. I should also say that we have the official reporters here who are noting everything you say. I should not be seen in any sinister way, but it's simply that we keep a record of what is being said. We're also joined by Alasdair Reid, who's lead researcher in the Scottish Parliament Information Service on energy and road-driven succene resistance clock. So thank you all for coming. Now, the way we're going to run this this morning is we've got... When we schedule 90 minutes, I think if the witnesses kind of comedy is, I think, and given the number of witnesses we have, I think if we can run it till about 12 o'clock, we will do that if that's convenient. But we need to finish sharp at 12 because there's other business we need to address. So a maximum of two hours. Clearly there are a lot of people here to give a view and we've got a lot of ground to cover. If you all try and address every single question, it's going to take an awful lot of time to get anywhere. So I have the job of chaining this. What I will do is, if members have a question, I will ask them if they could direct it initially, perhaps to one particular individual. And then I would say if you agree strongly with a view you've heard, or perhaps even more importantly, disagree strongly with a view you've heard, if you catch my eye and come in at that point, and I will try if you catch my eye to bring people in as best as I can. And we're keen to hear a range of different views. We don't want to hear you necessarily all agreeing with each other. I think maybe you will. Maybe, unlikely, says the deputy computer. So we want to hear a range of views, but I'll catch my eye and I'll bring you in as best I can. Now, I thought I would just start off and maybe just go round all our witnesses just and give you all just a minute or two each and I'll start with you, Gareth, seeing as you're handy beside me on this one. I'm just going round our witnesses. And maybe it's asking just in a few sentences to answer this question, which really is the key question the inquiry has to address. We are, as we know, going to lose Longannet power station shortly. It might even be within the next year, which accounts for 20% of Scotland's electricity generating capacity. As matters currently stand, we're due to lose Hunterston and Tornes by 2023. That represents another 35% of Scotland's generating capacity. So within eight years, we could lose 55% of capacity. The question we really got to address is, should we be concerned by that? If not, why not? And if so, what do we need to do about it now? I'll start with you Professor Harrison. OK, well, I think the main issue here is that per se, you don't have to have generation located in Scotland of a thermal nature if you have sufficient transmission capacity to import it. So you don't need it if your network operates properly and if everything else works fine. The problem that might arise is cases as some of the evidence of Scottish power and so Scottish power and national good has shown is that you have other things going on and you have a range of different technical requirements in addition to do you have enough capacity that you've got to ensure you actually can operate the grid effectively. So I think in terms of lots of generation closing I think you would, if you're comfortable with that, then you could probably cope. Assuming there is sufficient thermal generation in the rest of UK to cope with the inevitable swings in wind. My own personal view is that you should retain something. It provides you with a degree of flexibility that you wouldn't otherwise have. Thank you for being very succinct. Professor McInnes. Yeah, I would agree wholeheartedly with that. I think if we're seeing a drop off a potentially 55% of capacity within eight years and we do nothing to put in place measures which at least get some thermal plant into the Scottish grid then we're looking at a position whereby we're entirely dependent on importing the output of thermal plant from south of the border. All of this presumes, as previous witnesses said, that the network south of the border is secure and has the spear capacity to deliver into Scotland at times when the wind speeds fall to zero as it does for sometimes many days, a time during periods of high demand in winter. My concern is that overall the UK system there's no clarity in terms of responsibility for security of supply, so it becomes that much more difficult for Scotland to ensure its own security of supply if we were to depend entirely on the rest of the UK for thermal generation, which I think would be a pretty grave mistake. Professor Bell. Yeah, I think there are definitely challenges. There are technical challenges, there are cost challenges in delivering decarbonised energy system. It's not just, of course, about electricity. In terms of whether the regulatory and market environment is correct to make sure that the correct responses are made to these challenges, my view is that, broadly speaking, they are. I wouldn't quite agree with what Colin said about lack of responsibility. There was a bit of a grey area for quite a long time, I think, about the generation capacity margin, but the capacity market does a lot to counteract that, and it's gone round the first round of auctions for that, seemingly successfully. We hope that it will all be delivered for 2018. There's obviously a bit of a hiatus in between. But there is also, I think it's important to note, a statutory responsibility on the three transmission companies, network companies, to comply with a security and quality of supply standard. So what that means is that the capacity market is designed to ensure there is enough generation capacity for GB as a whole, and then the network standard is designed to ensure that any area of GB has access to it, both in terms of facilitation of competition for energy supply across a year and in terms of reliability of supply, security of supply, if you like. So, for me, then, those broad bits of the framework are in place. It's a question of how they are interpreted and whether they could be clarified further, which I feel they could, and whether, especially the transmission licensees are responsible for delivering on that, whether we feel that they are taking that forward in a timely manner. Thank you. Dr Owens. I'm going to pretty much agree with my colleagues so far. I think we see this very much as a GB electricity system. This is speaking on security of the electricity supply. Obviously, it requires sufficient transmission services, and that's an area that I think other colleagues would know a great deal more than I would. I think the capacity mechanism hopefully will ensure sufficient capacity comes on in a timely manner, but we only have had one round, so it'll be very interesting to see how that develops and evolves from here. I think in the timeframe that you're looking at, it's unlikely that the demand profile will change significantly that we won't get too much of a transporter or heat transferred to the electricity system, so you understand that side of it as well, so you've got a bit more chance to plan and understand the amount of capacity you need. The academy that we saw was really important. Is the need to bring investment through, to have that certainty in the market conditions and the political conditions going forward so that there is the confidence to bring through the pretty massive investment that is required to evolve our system as it moves forward? That's the one thing that's really important. Okay. Professor Arbyn. Thank you. I'm certainly not going to disagree as far as electricity is concerned, but I probably will in general, because it's not about electricity as we've stressed in several of our reports. Electricity in Scotland amounts to 19 per cent of our total energy demand. The truly tragic thing about Longanna is not that we will be losing 2,400 megawatts of electrical power, but that we've been wasting twice that much heat energy by heating up the third or fourth over the past 40 years. That is serious, and looking at electricity in isolation is what got us into this mess. It for sure won't get us out of the mess, and I think we need to look at security of supply at the 80 per cent of our energy that comes from fossil fuels and will continue to come from fossil fuels in the heat and transport sectors. The electricity sector in Scotland has never been entirely dependent on fossil fuels. The other two are pretty much entirely dependent on fossil fuels. Unless we broaden the question and start looking at combined heat and power plants in particular, I think that we're just storing up enormous problems for ourselves. As far as the electrical issues are concerned, I agree with my colleagues, but I think that we need to look at it on a much broader basis. Okay, thank you. Mr Riley. I think that the context is incredibly important. Security of supply in Scotland does need to be seen in a GB context, and the GB system is increasingly part of a wider European one. Across those markets, we're trying to resolve the energy dilemma, so ensuring security of supply, reducing carbon emissions and ensuring that unnecessary costs aren't passed on to consumers. National Grid, as the party with responsibility for ensuring supply meets demand in conjunction with the transmission owners, have assessed the system and taken any actions required to ensure that security of supply can be maintained now and further into the future. However, there are some areas where Scotland could perhaps strengthen its position. That includes continued investment in delivery of transmission assets, particularly the west coast interconnector. Also, evaluating where storage and demand-side response can add value to the system and identifying any regulatory or any commercial barriers to the uptake of these technologies. Finally, it's ensuring that the recent reforms to the electricity market and the capacity market and contract for difference do what they set out to do. Thank you. Dr Rowans. It's hard to disagree with anything that's been said around the table so far. If we're going to lose 55 per cent of our generation, then that's despatchable generation, the generation that we can switch on and off when it suits us, we're going to be left with a big problem because of intermittency unless we can mitigate that and have back-up thermal generation of one form or another. If we choose not to have it in Scotland, that's going to have a very positive effect on our headline emission levels, but we're really just displacing those emissions to England. So it's really whether you take the opinion that this is a Scottish issue or whether it's a UK issue. Things are going to change over the next 7 or 8 years as well in that I expect electric vehicles will start to expand over that period. That provides a demand-side management opportunity. Just last week, Tesla launched a new product which is essentially a home energy storage system in the form of a compact battery. Those things will introduce new opportunities so that we can make more of intermittent sources. In the end, when we have a high-pressure system in the middle of the winter, our grid will be stressed. We will need to find energy from somewhere and the English renewables will always be stressed at the same time. That gives us a big problem in supplying ourselves with reliable energy at the time that we need it most. Thank you. Mr Gallaway. A lot of moving parts, as several folks have already said, in terms of electricity production capacity, certainly we're increasingly operating within a wider EU market, as Michael says. Transmission investment will be key and keeping the foot down on that. Interconnection will increasingly play a role in the GB market context. There's probably between 4,000 and 5,000 megawatts of new interconnection, which can play a role in security of supply. Energy efficiency has a big part to play. We've seen reductions of peak demand in Scotland and indeed in the UK of somewhere in the region of 20% over the last seven or eight years, so that's clearly relevant. And then we've got heat and transport, as Ian and others have said. I think what we do about it, I think I'd probably highlight to four things, ultimately in terms of the electricity side, its national grid's main responsibility and they've got, we would assess, all of the tools they need to ensure the lights do stay on. The four things I would maybe point to, as I say, making sure we've got timely and sufficient investment in transmission assets. Maximising the generation we can have in Scotland and that probably means continuing to develop low-cost onshore wind production. Thirdly, I think we need to start a serious debate about energy storage and technologies like pump storage and how those technologies can help balance the system and provide much needed flexibility. And then finally, just making sure that the GB mechanisms we do have such as the capacity mechanism are working as well as they can be and the procurement's right and we're buying enough capacity to meet the challenges ahead. Thank you. Mr Slade. Thank you. I think agreeing pretty much with everyone that's gone before, but some points I would raise. I think, again, it's very important that we look at this geographically speaking in a whole GB market. And when you're looking at security supply, you're looking at across sort of the level of interconnectedness amongst the whole of GB, but also just building on the point from Mike and others around the level of interconnectedness that we're looking at from near Europe, from Norway, et cetera, over time, which we'll see feed in, but then also how they impact the commerciality of current investment into GB. So I think that's a positive that needs further investigation. I think we've said that capacity margins are tightening and we've seen that coming, but I think it's also worth noting that we do have one of the most secure systems within Europe at the moment. And certainly from, as has been said, from national grid's responsibility, we're confident that they have the tools and the resources available to them to deliver security supply over the coming years. I think it's very, very important, though, that after the work that's gone into delivering EMR, that it's given us a certain amount of time to bed in. Rushing change at this point would send the wrong messages out to the investor communities. It may require tweaking. I don't think anyone would necessarily disagree with that, but let's monitor it and let's make sure it's delivering before we make any rash changes and make sure it's working from a whole market perspective in terms of what it's ultimately delivering. A couple of people have touched on DSR and energy efficiency, and I have no doubt in my mind that demand side management reduction, energy efficiency, have tremendous parts to play over the coming years, improvement of housing stock, but also let's not look at, let's not forget about how we can improve energy efficiency of businesses as well. There's been a lot of concentration on the domestic market. We also need to look at how businesses can improve their efficiency. I think just to agree with Brian, I think the whole area of storage in a multitude of different technologies is something that we know a lot about. In some respects, currently, there are also a lot of unknowns as we go into the future. Thank you. It must be very helpful. Thank you for that. I mean, it seems to me we have a quite astonishing degree of consensus around the table around some of the big issues unless I'm mischaracterising the responses we had. And the view seems to be, if I can summarise, is that we don't have a crisis. We're not facing a crisis, but in the longer term, Scotland will be reliant upon imports from elsewhere if we don't replace some of our existing thermal capacity. That seems to be the message we're getting. And there's other issues brought up around issues around heat, around transport, around transmission, storage, energy efficiency. One thing I don't think anybody mentioned was affordability and the impact on bills. Maybe that's something we can get into in due course. But just before that, I'm going to bring in Dennis Robertson's deputy convener just in a second. But before I do that, I just wanted to follow up on one issue because we've had a submission. I'm sure some of you will have seen a submission from WWF who produced this Pathways to Power report, which basically argues that by 2030 we can get to a situation where we needed no thermal plant in Scotland. We could rely purely on renewables and interconnection. I just wondered if anybody had a view on that briefly whether they thought that was a realistic or indeed a designable scenario. Yeah. I would want to study the system behaviour first to reassure myself that it can be worked dynamically. So, you know, we know it's an electricity system is complex, it's non-linear, it's dynamically changed all the time. There are particular challenges around people talk a lot about the kind of loss of inertia. So it's a stored energy that's there that's very useful for managing short term changes. So that's one of the things that would need to be examined very carefully. It's part of the transmission company's responsibility to do that. So one has to trust that they will get on and do that. But it's not trivial. But okay, there's some time to get there and to check that it does work. But I don't think it's quite as easy as just to say, well, of course it's going to be okay. Engineers are used to solving problems, so they should solve the problem and it should be okay. But the resources need to be put at it to make sure that it really is. And if necessary, find creative solutions to it. And there are ideas out there. Professor McCannis? Yeah, just to kind of comment on that particular report. I mean, it takes a rather narrow view of electricity in the future in the starting point for Scotland to be 100% renewable rather than having electricity which is affordable, secure and increasingly low-carbon. And if we look at, for example, back to 2012, if we sum up the low-carbon contributions in Scotland to be sum up nuclear, wind, hydro and the other renewables, then we're exceeding our domestic consumption. So by the Scottish Government's metrics of looking at the domestic consumption as the starting point, we can argue that Scotland actually is low-carbon just now that has been for several years. But the issue is that we're losing roughly 17 terawatts of electrical output each year from Henderson Tornes come 2023 if they both close to entry. Pretty sure Tornes will be going on into the 2030s. But to me, at least the whole reason we're talking about security of supply is because we're at the starting point of zero nuclear and maximising renewables rather than taking a systems level view which is optimising for cost security of supply and increasingly low-carbon. So I would very much caution on the WWF report because it takes a very narrow starting point for electricity supply in Scotland. Okay, Dr Walker. I'll just back that up and actually support what Professor Arben said. Electricity is only a small part and the one that is actually the easiest to decarbonise as well, transport and heat being, as he said, almost entirely fossil fuel-based. I'd also back up what Professor Bell said, is that there are many more characteristics and functions that different electricity supply and generation types have. I think the one word that was mentioned a few times as we were on the table is flexibility and that's one thing that's not necessarily rewarded in the current market structures at the minute and things like inertia, things like voltage control, reactive power. Engineers are very intelligent and innovative people. We will find solutions to these things but it will take time and they need to be given time to find the optimum solutions, particularly as you merge the heat transport and electricity sectors together and it's not a very non-trivial task that they have. Be ambitious, yes, absolutely, but be realistic as well. We've heard three views very similar. Do you want to take a contrary view? You want to express an opinion? I'll bring in Dennis Robertson. Thank you very much, convener, and good morning. I wonder if we could expand some of the discussion around the flexibility and interdependency within the network. I think that from what the evidence we've heard and the initial discussion this morning, there is this interdependency and Scotland is not standing alone. There's a great reliability on the GB. We've also heard that there's this possibility of our European Union in terms of an energy union. I'm just wondering, in terms of domestic investment, that domestic within the GB, is this going to be diverted because maybe the European market is at maybe a better place for the investment? I'm just wondering, does this flexibility and reliability of security of supply in the future going to be more reliant upon the interconnection with Europe rather than our own domestic interconnection and obviously supply? I think that the second question, if I may convener, would be regarding the security of supply. The one thing, and I think it was Professor Bell that put this in his submission, was in terms of the workforce. Do we have the skilled workforce to ensure the security of supply for the future? Professor Bell, do you want to start off with that, then? As I said in my submission, I do have some concerns about the through-flow not just of professional engineers but also of skilled craftspeople, fitters, technicians, the kind of smart grid and inverted commas which includes things like demand-side management, demand-side response and so on, all sorts of other technologies, but it brings some challenges there. A lot of the industry talks about the need for skills and the shortage of engineers. There was something on the today programme this morning, just on that subject, but in my experience of working as a sector at least, the commitment seems to be wavering from one year to the next, depending on exactly what last year's results were. I think that's a big subject in itself. In respect of Europe and the European interactions, there are studies that say that for European consumers, then to share security of supply or share reserve capacity across Europe saves a hell of a lot of money. I cut from the exact numbers I've seen in one study, but hundreds of millions of euros per year. Of course, there's a political dimension to that, about the reliance on capacity from another country. We can see that DEC has gone for a capacity market in Britain, the French have gone for their own capacity market and the European Commission has gone into print saying, well, we don't like that. We don't think that's actually in consumers. The European consumer's best interests in terms of the affordability. So, yeah, there's just some choices to be made there. There was some other thing that you raised that I was going to pick up, but I forgot what it was right now. That's the issue about skills and the workforce. Yeah, skills and the workforce. Definitely, I think there's an issue that are initiatives going on. To be honest with you, I feel a bit frustrated that the talk is not always matched to my mind by parts of the industry that are coming to graduate recruitment and apprenticeships and so on. It seems to come and go a little bit. Does anybody else want to specifically comment on either of these questions about the European grid or workforce? If not, I've got plenty of other members wanting to come in. I'm sure we can develop these points. Yeah, Professor Arbyn. Just briefly on the skills issue. Speaking of someone who's from an industrial background rather than academic, I've grappled with this problem in Scotland for 30 years now. The problem is that private companies can only take on as many people as they can afford. If we are to take on apprentices, graduates and so on, we have to see a future for them to be able to afford them. Universities and colleges churning them out is one thing, but having a market for them afterwards is another thing. Working in academia, as I do, I'm constantly concerned about the number of people leaving universities who haven't got jobs in this needed profession to go to. It's a much bigger issue than just looking at providing people with the skills. I need to have the demand for the skills. Dr Walker. On the skills thing, Royal Academy of Engineering recognises that across all sectors. Industry is telling us that they need the people at all levels as well from technicians. Hopefully the job prospects are there, but it's a huge issue and something that we're trying to coordinate on a major effort in. Is what impact this is going to have on the future of security of supply? I'm not sure I've heard from anyone that they feel actual services or actual investment is at risk immediately. It's more of a long-term issue. To date, most employers have been able to find the staff from somewhere to find the most efficient skills, but that doesn't mean that that will continue. I was going to say another bit on the interconnector side of things. When we were looking at the capacity margin and if you look at OFGEM's capacity assessment reports, the role of interconnectors is one of the big uncertainties in it, because they are fairly... If you look at the France GB link, it's an entirely separate entity that flows whichever way the price signals tell it. What no one was really able to say is in times of stress whether you could actually rely on the connector to either provide energy or just simply at least not be taking any away. So we probably need to look a bit more at the market conditions that oversee the connectors that are basically just point-to-point commercial arrangements. Mr Gallaway, I think you want to come in on the skills question. I want to go back to Mr Robertson's original point about investment in the European context. I think three things I would say. One, companies do what they're good at. So, for example, Scottish Power in the UK was spending a lot more than we've ever spent on energy infrastructure and that goes into areas where we are strong and renewables and distribution and transmission networks. So that's the first point that I'm going to design that that investment is dropping off certainly at the moment. Secondly, member states do what they're good at and should look to capitalise on areas of natural advantage. So, for Scotland, that has a read across to onshore renewables and making sure we keep the focus on that. But even if we address those two points, we're still going to need some local solutions around storage and flexibility and I think we probably would prefer some thermal plant alongside intermittent renewables. But I think the investment story is still reasonably robust. Professor Bell, did you want to come back in? Yeah, I think that was the investment point from Europe. There were two perspectives on this. I do remember speaking with some people from Germany just a few years ago who were expressing exactly the same concerns about how a more integrated European energy market would draw investment away from Germany towards Britain. So, it does depend a bit on how the markets work but a commission perspective on it, for example, is that there's always fantastic renewable resource in the British Isles, wind, wave, tidal that they believe should be realised and exploited to the benefit of European consumers and meeting European climate targets. Of course, there were good solar resources towards the south of Europe and so on. So, from their viewpoint, it's about optimising which resources are where and how you get access to them, which requires network investment. That's one of the bigger challenges, just about getting planning and revealing the mechanisms to reveal the need and the level of investment or alternatively storage and the point that's been made by a couple of people. Firstly, it is still very expensive. Normally speaking, networks are cheaper at the moment but storage gives you some other things and some storage technologies, the costs are coming down. But a moment maybe more fundamentally, coming back to within a GB context, there's a few people expressing concerns that the market mechanisms that we have might not be quite revealing the need for storage and rewarding investment in the way that arguably it should. Now, I haven't thought about it enough to tell you exactly what way it should go but there seems to be a recognition that there is a question to be asked there. There was another point about security of supply and the technical challenges around that. I think there are some very particular technical challenges. My perspective as someone who works with the network companies, both as a educator and as a researcher, my own personal view is that I'm not sure the technical expertise has quite been replaced over the last few years but that's a personal view and I've discussed it with senior people in people like national grade who don't agree with me. OK, Dr Owens, you want to come in and I need to get some members in, but Dr Owens? Yes, sure. A couple of points I'd like to make. The one is to return to the skills, possible skills shortage. Under another hat, I'm a director of recruitment for the School of Energy, Geoscience, Infrastructure and Society at Heriot-Watt. I'm intimately involved in the recruitment of students at the postgraduate and postgraduate level. The job prospects for engineering graduates are extremely positive. The petroleum engineers in particular fly out the door, although obviously changes in the oil price might modify that in the future. But civil engineers, structural engineers, many of them go off to work in the energy industry and the employment rate is very high. Where we have trouble recruiting students is into the postgraduate market to do specialist MSCs. The numbers can be disappointingly low but last year the SFC introduced some scholarships which enabled us to essentially double the numbers on some of our courses. The courses are programmes related to energy skills, so by supporting postgraduate study I think you could certainly upskill the workforce with an immediate effect. Just to initiate a bit of cost as well, storage is expensive. In December I was at a conference in Australia to talk about storage. Particularly they were interested in photovoltaics and in Australia they now think that photovoltaic energy is competitive with gas-fired generation. But when you add storage into the mix because the sun doesn't shine at night, doesn't shine in the middle of a thunderstorm, you double the price. So someone has to pay for that and in the end it is the consumer. So we have to bear in mind that we have to keep in mind that people who pay disproportionately more for this tend to be the poor and we can't fail to notice that that will have an effect in the long run on their energy bills. Thank you. I've got a whole lot of members to come in. What I think I'll do is I'll take three members initially and just get points or questions and then we'll go back around some of the panellists and see how we go on the start of Gordon MacDonald. Gordon MacDonald. I want you to go back to the opening remarks made by Professor Harrison that seemed to have general agreement round the table and that was if I picked you up correctly that we might not need to have additional thermal capacity in Scotland and we can be dependent on the rest of the UK. My understanding situation is that the derated capacity margin for the UK is 4%. The interconnector from France and Netherlands is running at capacity importing electricity into the UK. The numbers that I've seen for England's consumption of electricity of 266,000 gigawatt-hours is that it's dependent for 10% of that need from imports from Scotland, Wales and mainland Europe. My question is really where is this electricity supply going to come from if we don't build the base load capacity in Scotland? We'll just hold that thought for a moment. A couple of questions, convener. First of which is related to Gordon's. The market capacity mechanisms are designed as I think Gordon said so that capacity in GB doesn't fall below 5%, but clearly it can fall to that level. I guess the first thing I'm interested in is is there not a real risk that what we'll end up with a position of is not the lights going out, but at times when renewables are not generating, we'll get a position where the market, because they're market mechanisms, effectively the way that power is rationed will be on price and the consumers will still be able to put the lights on, but the cost of doing that will peak in ways that are unacceptable. And in relation to the European context which people have talked about, clearly we're a long, long way from a European electricity system compatible with the GB system, but even when we get there, a lot of the weather patterns, climate change and weather patterns that are being predicted for these islands are also predicted for much of northern Europe. And the same question I suppose but on the European scale, is the ultimate outcome of that, not that you turn to a coal-producing plant in Poland, for example, since we have Polish vistas, to meet low supply from renewables in Great Britain and the consequence, and therefore what is the price effect first of all on consumers and what's the climate benefit of that. And my other question, which is I suppose a different one, but I think Alan, sort of Edward, referred to photovoltaics in Australia, we have a renewables mix for electricity generation which is very largely dependent on wind. Should we not be looking more at other sources such as solar and the potential that they have and trying to grow not just a diversity between low carbon and other sources but a diversity within the renewable group of generating potential as well. OK, and Chick Brody. Some of it, good morning. Some of it, the things I wanted to ask are about European connection because not only do we have just looking at the risk assessment, not only do we have a potential political problem with Europe but we also have a technical problem, for example, as has been mentioned, the northern oil connector has a much reduced technical capacity because of failure in the cables and nothing says that cable connection will be secure from Netherlands, Belgium or what have you. The other question I have in relating to this is investment, which has been mentioned. I think that Dr Alan Walker mentioned that we need pretty massive investment. The national grid, as we know, is a private company and although it made 3.7 billion pounds of operating profit in the last financial year, is increasingly investing in New York, Massachusetts and what have you. How do you feel, or do you feel secure about the opportunities for investment, which some of us would like to see very much more renewables, et cetera? How do you feel about the availability of investment given that Europe will have to look at its own investment? Our national grid is increasingly investing elsewhere. Do you see that as a risk in terms of longer term supply? Okay, thank you. I'm going to start with Professor Harrison just if I can just summarise the questions because I'm quite keen to get different views on them. Gordon MacDonald's first question was about is there sufficient UK capacity or are we not hitting peak the prospect of brownouts? Gordon MacDonald is also asking about the impact on the European market where all European countries are facing the same challenges as us. Does interconnection actually solve much if we interconnect with the rest of Europe or do we not end up just importing coal produced electricity from Poland? Also a question about the price to consumer if we are relying on renewables, which if they are not at peak, does that drive the price up? A question from Lou is also about whether other renewable technology might be better than focusing purely on wind such as solar in terms of spreading the load. Is there too much focus just on the one technology? And Mr Brody's question also about capacity interconnection but also about the question of investment are we confident that we will see the investment here in the UK as opposed to competition from elsewhere. So lots to think about. Professor Harrison, you can start off. Thank you. How long have you got? I'll try and pick up these in some sort of order. I'm not sure whether it's a logical one. I'll pick up the baseline one first. Ignoring things like the issue of voltage control and stability and inertia as long as you have enough transmission links between different parts of the country are strong enough, it doesn't really matter where the generation is ultimately. It doesn't matter from that point of view. Where it starts to matter is where you have limitations on the network which is true. It does exist and there are limitations within Scotland across the Scottish English border and further south. So the challenge there is what would incentivise a thermal generator to locate in Scotland as opposed to Northern England or the south of England and that maybe pick up later on some of the issues around locational pricing and connection pricing for this. So I think the issue there is if it's purely on price then there's no logic to doing it. If there is something about security then you have to have a connection if you're unable to rely on other flexibility options. We've heard quite a few of those. I think the issue here is to what extent can you rely on demand side management storage and interconnection elsewhere outside the UK to replace for thermal generation. That's the ultimate thing. At the moment we don't have a huge amount of experience about demand side response beyond what already exists in terms of interruptible contracts and triads. If we can rely on those then we can do a lot and there's a lot of proving that needs to be done at distribution level and also at transmission level. The issue of the EU if you like synchronisation of wind and the rest, there is certainly there is spatial synchronisation. The smaller area you look the more likely you are to have high correlations being the output of wind here and here. The bigger the area the less correlated they are. But there is still some correlation and you can have relatively rare atmospheric conditions such that you get relatively still conditions over much of Northern Europe. It's not completely still but it is rare. So this really takes you down to the crux of the issue about renewables is what do you do when the wind doesn't blow and you can operate with a mix system which you then burn fossil fuels or you can move much further which is essentially what will be mandated to do where you rely on renewables for most of the time but you have other for when the wind doesn't blow. I don't see an inherent contradiction in that. It's a matter of do you want to pay for fuel or do you want to pay for capacity and I think that's probably the issue. I can go on but I think I have a lesson here. You're very helpful at some of the points. Who else would like to come in? I'll start. Mr Slate, you can start. Just to add to some of those points someone mentioned resilience specifically and I think it's interesting to note that looking at the UK as a whole in terms of its thermal capacity over the period from December 13 to February 14 which is the last numbers I've got in terms of winter performance the actual loss from thermal capacity unplanned was actually less than 0.3% in terms of the total context for GB capacity so I think it's important that we look at these things. The plant that is running across GB wherever it's based is actually very, very resilient and is there when it's needed so I think that's something we will need to understand going forward. I think to pick up on the affordability point and how all of this works and the European context of this we have raised concerns ourselves around the viability of European interconnectors that we will offer from the GB perspective from the Scottish perspective in terms of where the flows are governed how the flows respond to market signals so I think these are all very, very important pieces and as an association we're actually undertaking a fairly large piece of work looking at the role of interconnectors in the market which we'd be quite happy to share with the committee at a later date one that's published later on this year. Just I think a final point we've touched on and you mentioned the affordability issue that hasn't really come up. I think as an industry as a Scottish Government and as a European community we need to address the issue of expense behind all of these services and these new generations there's no doubt that renewables and wind in particular are making tremendously valuable contributions but we need to make sure everyone understands the costs associated with those and how they will actually be paid for over the longer term and I think ultimately you can't ignore when you're looking at security supply issues when you're looking at the trilemma of affordability, sustainability and security you can't ignore energy efficiency and ultimately as a development of that you can't ignore demand side response unless you're dealing with the energy efficiency of your housing stock, of your building stock you are not actually solving the root causes of the fuel poverty problems we face. Thank you. Mr Galloway. When we look across the different aspects of the four questions around generation and investment and the role of markets and affordability, I think there's two key questions one is around have we got the pace of the transition right and that's quite a difficult question to answer so basically the rate of closure of coal and older gas plant is that being adequately matched by investment in new gas plant new renewables new nuclear and an interconnection to piece all of this together and I think at the moment there seems to be comfort that assessment is right, National Grid have a role DEC and Ofgem and others have a role and I think there's transparency around how that is assessed and continue to evaluate that on an annual basis. Second question around markets is can the capacity mechanisms deliver and clearly we've got the early stages of the GB capacity mechanism which has gone well and we would want to see that continue. At the same time other member states are grappling with these problems and looking to introduce their own capacity markets and that gets into the wider European context of how we can mesh these markets together because that is not going to be very simple. There are a whole host of different market arrangements taxis and levies that are inconsistent across member states and it's going to take time to make all of that work. Ultimately procuring capacity has a cost scarcity has a value so there will be an impact on consumers at the moment that impact is relatively modest but we need to see how that goes as it plays out in a wider European context. I wonder if something could pick up directly Gordon's point about UK Professor Bell. Capacity margins have historically been some kind of metric for just is there enough generation to meet the peak demand the derated capacity margin is another variation on that and you're right some of the national grid scenarios suggest that next couple of years they're getting small but of course the question to ask then is how small is small and what point do you start squealing that it's too small and the approach that DEC and national grid between them have taken in respect of the capacity market is to measure things in terms of loss of load expectation which I think Professor Harrison has maybe talked to you about which is a bit more of a precise measure but they have to choose a particular threshold and say this is acceptable, this is not acceptable supposedly that's been informed by some economic analysis by coincidence or otherwise it's the same threshold they have in France and you know the capacity mechanism has already talked about it's supposed to deliver that from 2018 that's when those first contracts take effect so of course there's a question about what happens in the interim so national grid would tell you and you can get them in and they'll tell you directly I'm sure that they've got some things in place to manage the transition so they've got a thing called supplemental balancing reserve which they believe is going to work a valid question to ask of them and has been asked is about the place of demand side management in that and is that being undervalued but as Professor Harrison has said that has to be proven national grid I think are taking a cautious approach some would say overly cautious approach to accommodating that and comparing it with generation capacity in that market but yeah it's a valid question to ask them when you get them in about what happens in the interim between now and the introduction of the capacity market but my judgement would be that the threshold is set for that market is not too low Dr Owens Well the subject of demand side management was mentioned several times and I do have some experience of that so let me just say something about it at this point the domestic management can be as simple as being a participatory process if you provide people with information about the availability of green energy and those who are motivated by environmental issues are likely to modify their behaviour that is a very low cost solution it's probably not a big solution but it could have an impact on peak demand we've demonstrated that my own research group have demonstrated that recently at the Findorne community in Morayshire a measurable effect and since March we've also been varying the price of electricity to the participants so essentially rewarding people for changing their behaviour this takes the form of charging 17p for a kilowatt hour at periods when the wind isn't blowing down to 5p when the wind is blowing and we recognise that there's going to be a surplus of demand that has had a very measurable effect people are twice as likely now to use a washing machine when the wind is blowing down the way prior to us starting that experiment it's very cheap to roll out at a national level what it is going to take though is a change in the way that we sell electricity a new business model is needed that recognises this new future we have with intermittent generation the smart meter roll out provides us an opportunity because we can then measure electricity use when an hour by hour basis and reward people for participating this is the point Mr McDonald was asking about the impact on bills can I just go back to what Professor Bell said because in response to Gordon McDonald's point Professor Bell said if I noted this correctly that in your view the capacity margin set by national grid was not too low does anybody disagree with that okay right just to follow up on that and the point on yes we do need to move to once we get smart meters in the possibility of many more tariff systems although fellows we have that have worked in retail side of things said that they've struggled at times to get a third tariff they sort of worked at times with the normal tariff economy 7 tried to bring in a third one and they said it was just a real struggle to get the consumer buy in for that but at the minute we have fixed sort of tariffs for a long time the spikes you see do occur but they occur in the wholesale market and there does seem to be a bit of a fear of these spikes sort of occurring which is in a sense why the capacity mechanism came in but actually the spikes are the market functioning the way it ought to be and as long as the spikes are only very narrow the cost of the overall system isn't significant because it's the area under the curve and not the height of it that's important so I think we have to once we move to smart meters the possibilities become much greater but at the minute I think we shouldn't be scared of those spikes to actually indicate where investment is needed in terms of global investment in terms of national grid investing overseas you'll have to ask them I'm sure they'll have very good reasons might well be that they actually get to play in different grids and much smarter grids that are happening in the States and actually learn lessons from that but in terms of overall investment there is, I'd have to look it up I can't remember who's KPMG or someone who have rankings for sort of how the GB is seen in comparison to other countries for investment it has suffered a little bit in recent years as EMR was going through and there was certainty and with election it dropped one or two places in some sectors but it is still seen as a reasonably good market to do business in and as long as we can keep that sort of political certainty and as somebody said, bed in EMR and let's see how it works then hopefully investment come has to come from new places from hedge funds, from pension funds so they need to understand how these new mechanisms work and to de-risk them a little bit OK OK, haven't heard from Professor Arben for a while so I'll bring him in for you OK, thank you very difficult to disagree with what my colleagues have been saying that I just want to go back to what I said right at the beginning we are trying to address a very large problem from the end of the viewpoint of the smallest component which is electricity and unless we take a truly systems view of energy I don't see how we can resolve these problems unfortunately we've spent a lot of time talking about EMR but EMR is a classic example of a problem in that it has electricity market reform which pretty much ignores everything else that doesn't mean it's wrong it means it's ignoring 80% of the market and security of supply applies to 100% of the market and I feel there's a grave danger of just going down the route that we have always done before and in Scotland and the opposite of the systems thinking that they have in Denmark for example where all forms of energy are considered as part of an integrated whole and government legislation therefore reflects that and they have a very desirable situation heat energy is by far our biggest area of demand in Scotland and just to give you advice there's a new I make a heat energy report coming out in the next few weeks so and we do consider the situation in Scotland in that but that's part of what I wanted to say the other thing is on we talk a great deal about affordability and yet we don't seem to we don't seem to look at how our energy is produced in the UK and electricity in particular is still predominantly produced in very old power stations which are sunk assets once we get around to replacing those thermal power stations one way or another and their replacements are likely to cost an awful lot more and so we need to have a realistic view of cost of course none of us want costs to escalate but we have to pay for what we do and this became very apparent to us while we were doing the energy storage report it would be very difficult ever to make a financial case for energy storage but we don't see how the system works without it and that's the kind of real dilemma that we have to face I've got other members who want to come in I just want to, before I do that there's one issue that nobody's responded to, which is Lewis MacDonald's issue about renewables in Scotland are we putting too much emphasis on wind or should we be looking at a broader mix Professor McInnes, do you want to come in? I think you need to attend to the mix if you have to choose one renewable technology for Scotland then it will be onshore wind is the lowest level cost compared to our latitudes if you look at the other European countries experiences in Germany where they've had a really big push for soar and get these spikes of very high outputs your midday on sunny spring or summer days but the net result overall in Germany I believe is that investment, something like 300 billion results in about 5% of electricity from soar which corresponds to about 1% of total energy and as Ian says the electricity is one slice of the total energy budget so if Scotland is going to push renewable energy then onshore wind is the one to push my concern is having an appropriate mix of energy sources and just now we have a mix of nuclear some fossil fuel hydro and wind and I think we're going to skirt around the issue what we're talking about the fact is that we're closing down all of the thermal plant if we do nothing else and that's the transition it's not a transition that's allotted to low-carbon because hundreds of torn gas produce copies low-carbon electrical energy we're talking about a reconfiguration of our energy supply from 1% to 1% which is intermittent and we're storage interconnection we're trying to build around that to make a square peg fit in a round hole and we can talk about investments in storage and investments in interconnection capacity but it's a cost and that cost is borne by the consumer either directly through electricity bills or indirectly through the increased cost to business which are passed on to consumers against renewable energy at all but I do worry that we're over-egging onshore wind to the long-term detriment to affordable electrical energy not just in Scotland but UK-wide and if we again if we strengthen the interconnection to elsewhere in the UK the UK strength interconnection into Europe the buck has to stop somewhere we do need we do need warskiw, thermal generation somewhere in the grid it doesn't matter how smart your smart grid is you still have to put the jewels of the energy into it somewhere a couple of those things the issue of cost is obviously very important and the key thing is that all of the costs and decision we make on that basis invariably people are reducing it cost per kilowatt hours if you actually look at the evidence on it by and large they're all roughly the same you're just paying in different ways nuclear costs capital costs, fuel costs are modest wind is almost all capital costs gas fired is almost exclusively fuel and there are uncertainties associated with those so actually it really is there's an enormous sense there which one do you pick the answer is you can't really pick one on a single basis but if you go down the gas route you're guaranteeing yourself fossil emissions nuclear I'm reasonably agnostic about nuclear but I think the important bit here is that it doesn't matter which one you pick or which ones you pick it's going to cost you and I think that one of the things that we haven't really dealt with properly is that there's no magic bullet to this and reduction in energy consumption is critical and it's always left behind it's not sexy, it's hard to do and it really is the one you really need to focus on because if you can reduce your energy consumption everything else gets disproportionately easier even the balancing and bringing in the CHP if you do it in a sensible way it becomes much more straightforward I think we're getting to the difference between the levelise costs of energy and systems costs in my concerns we're thinking about levelise costs so the Pence per kilo are from wind, gas and nuclear and in fact they're not representative of the total system cost because if you're building in storage inter-connection capacity the total system cost which has to be paid for somehow and I think the levelise costs are very misleading because if you're trying to compare basal and nuclear with intermittent wind which requires a storage connection or gas plant backup then that's a pretty big hit on top of just the levelise cost at the substation I mean one of the interesting bits is if you actually look at the studies look at that and say there isn't a huge amount of difference between them you're simply paying in different forms I mean the obvious thing here that Ian's point about there isn't the business case for storage there is a business case on a system level and that's why people built 400 kilovolt lines across north Wales and built the Norwig there was no real need to do it but it was there to support the nukes because there was seen to be a strategic need to allow the nukes to operate during periods of low demand in the summer and that's why so it's actually the way the market operates in some respects it misses the point and I think that's the issue and it really comes down to where you're moving to next is you need to think holistically I think we agree Professor Harrison has just said there are studies which do try to address the whole system cost in electricity context and to include the cost of operating the system I think as Professor Harrison has just implied and I think I'll pick up as well something that Professor Albin was saying about the particular market mechanisms this applies particularly to storage might not be there to drive the investment that from a whole system point of view looks most economic so that's got to be a specific challenge and Professor Albin is absolutely right about heat as being a huge challenge now I think as Dr Walker said earlier electrification of heat looks like a reliable option and decarbonisation of electricity is something that we are already doing so that's part of the reason why we think we're going down this road but I'm daring to step outside of my specialist subject here I'm not an economist but something that struck me very strongly at all energy last week in various discussions about decarbonisation of heat and about district heating and combined heat and power was really that the investment model didn't seem to be there it was a lot of case studies from Scandinavia which seemed to be municipal investment or government investment where the investment could be recovered over a long period of time in a way that private sector investment perhaps wasn't able to tolerate and maybe Professor Albin can expand on that with more knowledge than I have I'm just going to think as everybody is talking about whole system models I thought it was interesting and some of you might be aware of this on the public contract Scotland website on Monday was published a tender notice for a whole system energy model for Scotland by the office of the chief economic adviser of the Scottish government wishing to commission a model of the energy system in Scotland including all processes or investments carrying the potential to impact upon the level of greenhouse gas emissions or removals in Scotland to stimulate investment decisions etc etc etc the model and any scenario supplied with it will be robust underpinned by research evidence and capable of standing up to challenge from the academic community and other stakeholders so there's a piece of work you might want a tender for Monday published on Monday I can have your comments on that that seems very interesting because that looks like a reissue of a tender that came out a few months ago so maybe they've failed to identify a preferred video nobody had the expertise to do it I mean I was involved in a few discussions with people who were thinking of tendering for it and who seemed to be the frontrunners it seemed like given the amount of money that was on offer and the period of time it seemed hugely ambitious was my first view so if you didn't already have something that already met the requirement you were going to struggle to deliver it what I will say as well though is that there are various initiatives across the UK in trying to do whole energy system modelling so a lot of those have been commissioned through the UK Energy Research Centre of which I'm, since last May, a co-director coming out for example from University College London who I know are some of the people that the Scottish Government was talking to about some of this capability there's another kind of research council funded consortium of people who are trying to develop tools and facilities to get that kind of capability so I think there are, from my perspective I think some of the capability needs to be developed further it's maybe a bit crude in some aspects of the whole energy system and incredibly detailed in other aspects but people do attempt to do it but it's good that there is a recognition of the whole energy system importance of electricity and heat and transport Thank you Yes, Dr Walker I think that's absolutely right but actually the reality of applying these engineering solutions in the real world is to match with the models so I think the politicians have to understand that as well that what your models and scenarios are saying are not necessarily what will happen in real life one of the things we're calling for is much broader demonstration sort of community level whole system so that you do bring in and start to understand how the electricity and the heat and the transport system could interact together particularly once actual users and sort of customers behaviour is taken into account and the different sort of billing mechanisms that might be used so actually moving from the sort of theoretical modelling to the real world there's very often sort of big discrepancies that we really need to understand because Professor Harman's absolutely right we do get sucked into the electricity system a bit too much and actually understanding how all these systems will work in a truly low-carbon way is not really understood yet it's we think we know how it's going to work but in reality it could be a lot more complicated than that so the real world applications are really important I've got three more members we'll just do what we did last time and take each in turn to start with Joan McAlpine I was interested in the exchange of views between Professor McInneson Professor Harrison Professor McInneson, you talk about the onshore wind is cheap but obviously there are added costs when it comes to storage and I noticed that from the Scottish Powers submission talks about the potential of cheap onshore wind in Scotland with 130 megawatts of waiting planning and another 800 megawatts potential for onshore wind but it strikes me as Professor Harrison said there are costs to every form of generation and it seems to me that those costs can be distorted by political decisions politically driven decisions so to accept that onshore wind is cheap but we need to invest in storage I just wondered what people's view was of the Conservative manifesto which makes it very clear that the UK Conservative Government doesn't want to see the development of any more onshore wind and how that might distort the market What it says is that subsidies will be removed by 2020 Excuse me, I was directing my question to the witnesses A factual point I was correcting that was all Richard Lyle Sorry, I thought that Joan's question was going to be asked Last time Just a comment and then a couple of questions to Lorne Slade For the number of years Scotland has been a net exporter That's the point, the Scottish power always used to tell me when I was a councillor exporting things over up from a record of 28% of generation My concern is that all the things are taken away we rely on England and dare I say it no disrespect they're having problems also and you don't rely on your next door neighbour to pay your bills so I think to rely on England we could actually face a problem but to go on to Mr Slade's you're on about energy efficiency renewables etc during the election going round seeing a number of houses quite a number of houses now have solar panels on the roofs to reduce the electricity consumption Do you think we should encourage new housing stock totally when they're building to have solar panel and when council now are upgrading houses I know we're talking about insulation etc but that only works to a certain degree should we now encourage councils to upgrade their council housing and the same also I think Mr Owens was on about the fact that we're encouraging people not to throw litter on the road we should be encouraging people to reduce the electricity consumption in ways that for instance low energy bulbs but the cost of low energy bulbs is you're talking about £5 a bulb could we encourage people to or encourage manufacturers to reduce the cost I'll hold that thought to Patrick Harvie Thank you convener my problem is every part of this conversation is sparking up another 15 questions I want to ask them all but I'm going to try and pin it down to two which I think are related in terms of managing demand and reducing demand and I say this particularly in terms of what Ian says about thinking about the whole energy system I think this relates certainly to heat we don't talk about transport policy and transport planning in terms of managing energy demand and we really should we're going to have to increasingly do that if we electrify but we should be doing it now anyway that seems to me there's a whole host of both behaviours and technologies that are emerging in relation to energy demand which are going to determine whether we're successful in addressing all three aspects of this trilemma the behavioural aspects that Dr Owens was talking about in his experience at Fenthorn I dream of the day when the whole of our society has the level of environmental consciousness of the Fenthorn community but we've got a hell to climb to get there that's a dramatic level of buy-in compared with where our society's at but also in terms of smart in terms of storage distributed generation and so on what is the role of government government's plural in ensuring that this happens rather than just trying to set up market signals and hoping that they play out well which they're not always doing at the moment what is the responsibility of government to plan and direct this kind of transformation rather than simply leaving it to the market and are we doing enough to ensure that these different areas of transformation result in good quality lasting jobs and economic benefit for a country like Scotland rather than seeing us import batteries from Tesla in the way that we're importing turbines from other European countries that stole a march in us and related to that the second aspect in terms of what Mr Galloway talked about the rate of change we're losing certain kinds of generating capacity and we're seeing investment come but not necessarily at the right rate again this relates to this question about the division of responsibilities between governments to make decisions to plan that transformation and the to me rather unfortunate situation is simply trying to set up market conditions and see if they play out it may be that people will respond by saying we wouldn't start from here but we're stuck with it but I would be interested in the responses to that okay thank you we've got John McAlpine's question about the future of onshore wind and the question of relative cost Richard Lyle's points about do we want to just rely on imports should we not have our own capacity here in Scotland and the points about energy efficiency and new housing stock and lighting and Patrick Harvie's questions about firstly on the rule of government and secondly the rate of change Professor McInnes do you want to start off on the onshore wind point I'm not saying that onshore wind is the cheapest of the renewables which Scotland has at hand just now compared particularly to Wave and Tidal which we've seen have had troubles in trying to develop on a really commercial and industrial scale so my comment is directly to the fact that if you're choosing a renewable technology which Scotland can develop then onshore wind is certainly the cheapest and the final is that the fact that we're focusing so much on renewable energy in Scotland to the detriment of the thermal power plant generation which is the purpose of the discussion and the security of supply so the transformation we're going the transformation we're doing is we're transforming our low-carbon nuclear which is a huge component to our electrical energy output in reliable, dependable 24-7 and we're replacing that with intermittent wind and that's my concern is that we're swapping one for another I don't want this to be an ideological discussion about thermal versus renewable this committee has taken evidence to show that because the regulations being set at UK level even if we wanted to build a thermal plant it would not be cost effective for the generators we might even get a new gas plant so that's a problem with regulation we also heard from Professor Harrison last week I thought it was very interesting when he was briefing us that a country like Germany which has a big investment in renewables uses thermals as a backup for the times when there is a crisis but we can't do that here in Scotland despite the opportunities for renewables because the way the electricity market in the UK Government means that we can't operate a thermal plant that's the political challenge is to have the conditions whereby there's good grounds for investment in new thermal plant so this isn't about the Scottish Government favouring renewables over thermal this is about the UK Government's regulatory system it's also a position we've taken whereby the starting point of the discussion is no new quote in Scotland whether the framework is there for that to happen in the future is an open question due to the market conditions but in terms of a political starting point where we're basing the discussion around do we know you and you co-rebuild in Scotland and so we're having to fill the very large gap which we believe have been hundreds and eventually turn this come offline we're having to fill that something and we're trying to fill that gap with intermittent wind alone that's my concern for the future what do you think then the UK Government's got down a different road with nuclear and it's investing I think that the subsidy for Hinkley will be £35 billion we could address some of our intermittency problems by investing in storage but we can't do that because again because of the way the market's set up I would imagine the subsidy would be considerably less to invest in storage and I'm interested in what Scottish power thought of that but again the way the UK system's set up I believe for political reasons it favours investment in nuclear or subsidy for nuclear over subsidy for storage which would be quicker here and we could have a policy you know road to Damascus conversion to nuclear tomorrow but it wouldn't solve the immediate problem what would solve the immediate problem is given the go ahead to the pump storage systems that we could go ahead with quickly if there was a different regulatory system at the UK level just briefly just point this one comparing storage and baseless thermal generation you're comparing very different beasts for example for pump storage where typically you're providing storage for a matter of hours we're in fact during winter periods of high demand we could have made many days at a time of almost zero wind speed across Scotland, the UK sometimes across much of western Europe but in terms of the nuclear issue if you're again in terms of thinking long term is the new investment in nuclear to the south a design life of 60 years probably run for more than that whereas wind has a design life for over 20, 25 years so the investments to the south are very long term extremely long term potentially the new nuclear plants to the south will be producing low carbon reliable energy right out to the end of the 21st century whereas our very significant investments in onshore wind are much more short term and we're coming back to the question of what we would do in the future due to the short design life of wind relative to nuclear but that's a bigger question to discuss Professor Bell wants to come in there's always a discussion that you can have with companies or policy makers about whether something's a conspiracy to lock up and whatever the motivation was for UK policy UK Treasury and Deck and Ofgem of course can speak for themselves my understanding is that what's motivated certainly for Ofgem's part the regulatory and market arrangements that we have in place at the moment is lowest cost of energy for GB consumers now whether it delivers an answer that you happen to agree with or not that's what they've intended to do there's always a need to review the mechanisms that are in place and to change them if we think they're not actually working in the way we intended and storage and the role of storage and how it's valued in the market arrangements I think is one example where it is time to review that and think about that quite carefully there was a point I think Mr Lyle made the point about England's got all sorts of trouble why are we relying on them England doesn't have all sorts of trouble out in the press every autumn when National Grid published their winter outlook and say oh it's a disaster the lights are going to go out but actually while you can never say never there is always a risk and there's always an economic balance to be struck about how much you're going to pay for additional reliability by international standards it's not in crisis and we've already talked about electricity market reform and the capacity market and what it's supposed to do it seems to be kind of the first round of auction seems to have been successful but in the meantime you can ask National Grid about what they're doing and supplemental balancing reserve and various services like that but my understanding speaking as an engineer is that the risks are not excessive for GB as a whole and that the regulatory levers are in place to ensure that at least at a bulk level at a transmission level consumers in Scotland do have access to electrical energy available if it's available in England to do it to give sufficient reliability supply I have to think the network bits could be clearer and could be better articulated but I think there are things that are kind of missed in the way they were written but broadly speaking they're in the right direction but of course people's experience of reliability supply also depends on distribution networks and there are other particular challenges around that as well so I don't think relying on England when England is in crisis I don't think that's a fair assessment however as we've said already in this discussion go beyond 2020 there are bigger challenges and yes it's absolutely right to be asking questions OK Do you want to pick over a lot of people Mr Riley you've been very quiet so far If I could just perhaps start on the point on shorewind probably not surprisingly I mean just to say on shorewind is the cheapest form of renewables generation and the outcome of the CFDE option as shown the competitive advantage that Scotland has in delivering that technology I think removing support for on shorewind would appear contrary to the process of electricity market reform that we've gone through in creating a competitive allocation of support for these technologies there was a point made about encouraging people to lower energy consumption and there's been a lot of talk about demand side response as well and I think those two things can actually go hand in hand that there's a very good example in benefits to communities in creating a more active response or active involvement in responding to price signals and smart meters the role of smart meters is one step in that transition but smart tariffs have to go hand in hand with that and yes I think now is a very good time to start having that discussion opening that discussion as to is the regulatory framework right in allowing us to accrue those benefits and that also includes identifying where these things can add most value that there's a number of ways that demand side response could evolve across the network either at a very aggregated level or at a much more localised level so I think we need to be thinking now about how we can make it work for our consumers there's an interesting conundrum isn't there because on the one hand there's huge pressure for power companies from consumer groups to simplify the tariff structure and you're talking about actually going in the opposite direction it is an interesting conundrum I think yes there needs to be simpler tariffs well I guess the question is do we need fewer simpler tariffs or more simpler tariffs but yeah I don't have the answer it's a question that I think needs to be to be opened and considered listening to the conversation I'm reminded that 40 odd years ago I started out my career supplying what we would now call biomass fired CHP plants to various countries around the world manufactured in the UK but not sold in the UK and so we've had that expertise for an awful long time and the one word that has been missing from the conversation so far has been biomass now and biomass is renewable it's jollywell should be sustainable it would do it properly it's dispatchable in electrical terms and it's thermal so we can provide heat energy from it seems to tick all the boxes yet ignored it also lends itself ideally to distributed systems rather than looking at the global network system which from my experience seems to be a direction in which we want to head although it's fraught with difficulties a simple solution to a lot of the supply side issues could be in biomass fired and waste fired CHP plants and I certainly commend that certainly support what has also been said about energy efficiency and perhaps a decade ago the institution of mechanical engineers produced something called the energy hierarchy which I know I've spoken about before in this building which looks at not just at energy efficiency which is a bit of a catch-all phrase but looking at the first tier of energy conservation energy efficiency looking at those before we look at different supply side possibilities and I think I just wanted to say that in support of what others have been saying around the table but it's not that we haven't known this for a long time and it seems to be the right way to start so those two points Mr Slate Thank you to respond to Mr Lall in particular I mean I think we tend to look at this more as a geographical market and a geographical network and I think that's been a lot of people here this morning have said similar things so it's not so much looking at as England and Scotland or Wales or Northern Ireland it's more this is a whole market and it's a whole system approach across the geographical area so I think in terms of reliability and whether you rely on it you rely on the whole system and you rely on investment into the whole system and you rely on the system having an appropriate mix of generation sources on it to be able to securely supply consumers up and down the whole region so I think that's the first point which I think has been reflected on this morning I think what's key with that though is that you make sure you have the frameworks in place to ensure that from a company's point of view you have the long-term investment certainty to continue investing in the networks and continue to invest in capacity and those are the signals that are absolutely essential over the next decade or more to be able to say I know that I can get a return from investing in X market and that will help to deliver the security and deliver the electricity that's actually needed so that is key which is why I said earlier that we need to ensure that EMR has given time to bed down and monitor it but we actually just let it bed down and tweak rather than significant changes on that front on energy efficiency I think it's been said that it's not a sexy subject it's not a subject that's spoken about in the evening but it's actually a very very important subject and one of the ways round this is to actually change the story you're talking about waste talking about stopping wasting money these things play out stronger with consumers than other arguments it's also telling a story about how it doesn't limit your quality of life how it improves your lifestyle these are different messages which we've all got to get better at communicating if people are really going to buy into this it's also worth remembering that there are other advantages around getting people warm healthy homes and this may be slightly off topic but there is a significant saving further down the line that increasing number of studies are showing that if you fix fuel poverty if you give people healthy homes there is a significant cost benefit around the health service which is obviously of vital importance at this time on budgets so there is a lot we can do there but there's a lot of extra things we need to do in terms of what we should be doing with new homes yes I think we can do a lot more in terms of what built with in terms of energy efficiency products whether it's solar etc that's a different body that looks at that that's building regulations a different area but pressure needs to be put on there but I think there's also a valid conversation around what you do with public subsidy so whether it's paid from general taxation or whether it's carried on the energy bill what you do with that how transparent that money is spent and how it's targeted is absolutely vital but also what is the able to pay market and how is that incentivised you don't want to be subsidising someone who can afford to put solar panels on their roof themselves you want the subsidy to be going to people who can't afford to improve the quality of their home so those are really important parts that the Scottish Government needs to be looking at and indeed are on that just on smart meters which has come up a few times now it's worth noting that there are several areas across GB where there are very very clear indications that with the right communications the right comms with the consumer you are seeing demand shift and you are seeing demand reductions off the back of smart meters being installed the point that Mike was making earlier I think it's very key it's how you communicate that usage and that change to the consumer and there are examples from California from Australia and nearerfield where that communication hasn't been done properly and you've seen a massive sort of negative opinion around smart and it's very very very important that before we move down a time of use tariff approach that consumers understand how this will work and where they can benefit from it Thanks Mr Galloway and then Dr Owens I'll find you with two points, one from Mr McAlpine and one from Mr Harvey first of all investment models and I said earlier that companies tend to do what they're good at but they also do what markets allow them to do in terms of meeting demand or price discovery or ultimately profit on the electricity side that a combination of policies and regulation seems to be providing a large part of the solution and electricity market reforms is a good example of that in terms of bringing forward low carbon generation notwithstanding some of the political challenges around onshore wind that were mentioned I think those mechanisms can also work for storage for tariffs and smarter markets and those sort of issues but whether it's worthwhile assuming that the same large companies will solve all of these problems is probably unrealistic I mean where the mechanisms aren't there around renewable heat alternative transport perhaps things like community energy I think what Mr Harvey says is right that we probably do need to explore alternative investment models other than sort of seeing the outcome being somewhat disappointed by it and then sort of putting some policy statements out and hoping that delivery comes forward so I think we do need to look differently at some of those questions secondly on pump storage I think key positive from today is in storage in general is starting the conversations about what needs to happen our initial view is that the technology can be cost competitive at large scale but again as someone said the question is comparable with what interconnection is different thermal generation is different but our initial assessment is that it can exist within part of a solution an overall system solution I think it ticks a flexibility box it certainly helps the network it helps the decarbonisation message in terms of things like reducing curtailments from wind farms I think sighting is clearly key to other environmental questions that arise in developments of that nature I think the three things we need to do is as I said get the conversation going build consensus why storage is an important part of the total energy system then we need to look at what are the barriers to investment and why companies cannot invest in that technology under the current market arrangements and then off the back of that think about what those market arrangements or regulatory frameworks might be and again very initial assessment but things like the cap and floor regime that is being developed for new interconnection might be one idea where the cap is there to protect consumers ensure overall cost is manageable and the floor is there to ensure that investors don't lose their shirt and that hopefully the outcome is somewhere in the middle so I think there are things we can do for things like storage but some of the other areas like a renewable heat may need a different approach Dr Rones There are several things I'd like to pick up on if you're patient with me We have about 20 minutes left so we're not that patient We shouldn't take 20 minutes to be pleased there First of all I'd just like to back up what Joan McAlpine said there about thermal generation I think it's slightly hypocritical of us to expect thermal plant to back up our intermitency to be built in England and not in Scotland We're going to need it one way or another I often hear the comment that the renewables industry generates jobs in Scotland I'm sure it does but so does thermal generation and if we're going to rely on fossil fuels anyway then we might as well have it in our own country although there will be additional connection costs as I understand it not being opposed in water person I'm not an expert in that other than the room are Another point is about district heating schemes 40 per cent of energy use is in heat and hot water for the built environment Many cities around Europe have large district heating schemes some fed by biomass boiler systems We don't really do that in Scotland but there is potential for us to do that and it could make a massive impact We're then targeting a 40 per cent of our total energy use rather than the 25 per cent that is the electricity market and I understand in Scotland it's actually nearly 50 per cent and 40 per cent The other thing is about tariff You're right, if we bring in variable tariffs we will complicate things but we have a really poor record of communicating a bit energy to the public if you look at interfaces we have to energy My mother's in her mid 80s she has a new boiler installed and some government incentive and she's given a control screen the size of a matchbox which she can't read she can't understand and she just uses a big on and off switch as she keeps hitting buttons until she hears a boiler going on and since she's deaf that's not a very... and since she's old and she's deaf that's very difficult so the interface between the systems is very important as well we need to think about how we communicate particularly if demand-side management takes off we need to do that in a smart and a graphical way so that people clearly understand it engineers tend to worry about numbers and little squares and figures but really it's about pictures it's about communication it's about ergonomics so it's not just an engineering problem OK, I'll take a brief comment from Dr Walker and then we need to move on Two brief comments I think the other thing that hasn't been mentioned today other than biomass is CCS and actually with Peter Head hopefully going ahead is one of the two schemes on that I think that's a... we really need to find out whether that works or not, how the business case works for it how the efficiencies work if it does work that's another area that the UK and Scotland particularly could take a global lead in terms of job creation and wealth creation and if you actually match it with co-firing a biomass you can actually get negative emissions so in terms of the climate system it could be particularly useful I will take a general point in terms of a lot of what has been said in terms of the message and what government can do Government does an immense amount in terms of the energy system especially even if you're just looking at building new homes it's enforcing the regulations the efficiency and the sort of the standards and companies who we spoke to say we wouldn't do this if government didn't tell us to and government has to push that but more than that we have to see the energy system as a partnership between government and industry and it's only by doing that will we be able to actually sort of transmit the message as we've all seen this is a complicated system there's got a lot of change to happen and the more we can bring the consumers and the public along with us the better chance we have and that's only going to happen if there is a partnership and a joint message from government and industry and those two have played one another off against each other so I would be a bit of an appeal to the politicians here to really go for the partnership with government with industry in order to make the changes that are necessary Okay thanks, I'm conscious of the time we've got 15 minutes left I've got a number of members who want to come back in I'm going to start with Johann Lamont but it's more difficult anyway to ask a question although I absolutely relate it to your mother I suppose I'm interested there's some kind of frustration particularly from our colleague at the end here the sense that the conversation isn't a real conversation and that your reality is knocking up against public perception and political perception I just wondered how we deal with that and what role do you think you as professionals have in that we have grave public suspicion around anything, around energy whether it's in fracking or nuclear or renewables a public anger against the companies who feel that they've been ripped off how in that context are we able to have that rational conversation that clearly people are here are pleading for and what can we do about that and give us an example we know that there have been renewable proposals for wind farms in Scotland and clearly we've refused on a basis that public concern has been so strong so how do you hold a line on having an energy policy that's consistent with rationality when at the same time quite rightly you have to respond to communities so how are we interested in your view how do we stop politicians doing what they should be doing which is responding particularly to communities but also recognising there's a bigger challenge here and the second point I'd be interested in is briefly last week for example if you have a tariff which recognises that people are fuel poor are not able to use enough energy because of the charging but if you change the charging and they then use more energy you've kind of got yourself into the wrong place how do you make energy efficiency something that makes sense to people my granny many many many years ago was the first in her village in Tyrie to get electricity until the day she died and she looked out from the crop to see when anybody else's lights were on before she switched hers on it was a natural thing that you saved and you didn't waste energy how do we get back any more in this world to see it's a personal thing that you can control the amount of energy you use and how does the technology add to that rather than to confuse it I'm going to take very brief points if I can when the other members want to come back in Gordon MacDonald was mainly covered by Joe McAlpine second one is to do with a subject that Lewis MacDonald touched upon which was consumers affordability of electricity you know on one of my more bored days I sat and read the Eurostat pricing across the EU 28 and I looked at the countries that had interconnectors with the UK France consistently has lower electricity prices in the UK looking at the period 2011 to 2013 15% cheaper and they have 12% renewables as opposed to 4% for the UK we're talking about putting an interconnector to Norway in the period 2011 to 2013 Norwegian electricity prices have come down by 10% at the same time as UK's prices and we're not by 22% so my question is is the market and the pricing mechanisms in the UK working to the advantage of consumers bearing in mind that we're told that the electricity bills are going up because of renewables all right Richard Loudie just to correct Professor Abern I think really what we have to do we have to educate the public you know you're on about biomass I'm on about waste to heat the minute you say you're going to put one of these plants anywhere within a 30ml radius of anyone it's like putting a nuclear submarine beside it people don't want it and that's the problem I think we have a great job of trying to educate the public that waste to heat, biomass and whatever are plants that can be a point that backs up the point that Johann Lamont made about the need for a public conversation around these issues Dennis Ropson I'm just wondering we haven't really touched on it but it's really security of supply is a long-term issue and I'm just wondering should we be looking at ensuring that we've got further investment in areas like wave and tidal to supplement our demand for the future rather than moving down the road of nuclear or developing other thermal plants in Scotland are we really stepping away from this investment or should we be investing to move that technology on because it's there thank you very much the sun's still shining outside an endorsement of the potential for photovoltaics in Scotland but in addition we heard the comment made that we don't do district heating in Scotland actually in Aberdeen we have now expanding in the last couple of years thousands of council tenants on combined heat and power system the challenge there is retrofitting when people are private owners of their homes and I'd be very interested in any suggestions on that quite a lot of ground to cover in 10 minutes John Lamont's questions we need a national conversation how do we win over public opinion how do we simplify energy efficiency and make it more easy for people to understand Gordon's point why are the bills cheaper elsewhere what is that fault of our systems in this country Dennis's point about are we ignoring wave and tidal on offshore wind could they fill the gap rather than relying on a nuclear conventional generation and Lewis MacDonald on district heating well you were I wasn't ignoring you you were agreeing with John Lamont's point like we picked up together brief response if we can Professor Bell very quick one on why other countries have cheaper electricity in France they have the benefits of investment in nuclear power for electricity you could ask some questions I think about accounting of the decommissioning costs appear in that I don't know in Norway they have the benefits of lots of cheap hydropower I'm not sure why their bills have come down recently but one of the things that they always are concerned about is if you're going to have they want a wet winter or a snowy winter where you've got lots of snow melt to make sure the dams are full or the reservoirs are full and they've got enough water for electricity it helps them to store and manage their water supplies by having an interconnection to the Netherlands so they can keep the water back and maybe the average cost ends up coming down then they're not so worried about running out of water and they can use surplus thermal plant in the Netherlands right anybody else want to come in Mr Slate just on how we engage customers I think it's how you actually get them understanding their electricity consumption and their gas consumption if they're on the gas grid and I think one of the things that we are seeing now is via smart and via graphical interfaces be there via an in-home display or via a smartphone or via a computer people are seeing how they're using their electricity and that is helping them understand that and their usage in terms of those of poor sites there is actually I'm pleased to say work going on about how to actually bring interfaces in we're working with the Royal National Institute of the Blind to ensure that there's ways for people who are hard of sight to actually understand their consumption that way so these things are being looked at, fully support the idea behind a national conversation what we've been asking for though is to pick up Dr Walker's point it's got to be some kind of partnership between government and between industry and we've got to see transparency in those discussions thank you just picking up a couple of points there some about the affordability issue between us and others one of the key things about Norway and France is the role of the state in energy supply and one thing you will see in that is the difference in the discount rate, the cost of capital is generally much cheaper in state-owned systems in the UK so that is one key area and if you stretch that across a very long time you get quite a big difference in terms of the public investment wave and title I've vested interest in my university and my answer is yes I think that the obvious thing here is that you have something that has potential and it is particularly tidal I think is not arguably ahead now do you let it get to the point that we did with wind and then let it go abroad or do you just stick with it and get on with it but I mean can you answer Dennis's point specifically will that fill the gap? No but then actually not very few things will fill the gap. Long term I think you can get a very substantial contribution and I think it comes back to Lewis's earlier question about do you get benefits from spreading that around I think the answer is yes. Before you pick up on the energy efficiency it is a historical context this month is the 250th anniversary of James Watt inventing the separate and condenser so it's May 1765 where he did his insight wandering across Glasgow Green one Sabbath morning as he recounted to his biographer and James Watt's invention was a revolution in energy efficiency and improved the efficiency of the steam engine threefold from 1% to 3% and energy consumption soared of course kickstarted the industrial revolution and gave us a modern prosperity and civilisation which many always enjoy so if we're improving energy efficiency of consuming electronics or other devices then we don't necessarily have to recognise it doesn't necessarily mean we'll be using less energy into the future we're using more efficiently and energy efficiency in the past has been the mechanism through which energy consumption has been grown through a socially progressive mass democratisation of access to energy services. Peter Walker Just to pick up, I'm not sure I've got answers to some of these questions but I absolutely agree with the energy from waste being difficult to get planning from as it's tragic that in terms of the heat networks and retrofitting, retrofitting is another word that probably should have been mentioned a bit more in terms of the heat side it's all very well new built but the vast majority of our buildings that we'll be using in 2050 are already here and it's more difficult to retrofit but a much bigger slice of the pie. But there is a lot of work being done by people as to how to fix that but it's a hard nut to crack. Mr Gallaway Just an observation that everything we've spoke about this morning with the possible exception of energy efficiency and demand reduction has a cost associated with it. That cost is higher than the current cost of the energy system so that piece Lawrence mentioned about the debate on energy the costs, the trade-offs is really really important and the sooner that's understood right across society the better I guess. Okay, thank you. Dr Rowan I'd just reply to return briefly to one point about diversity of generation. Diversity can mean many different things one it can be geographical diversity so a wind turbine in Cornwall will experience different wind conditions from one in Shetland so that can mitigate the problem. We can have technological diversity so we can bring in PV, we can bring in biomass tidal I think is going to play an increasing role wave I'm not as sure about it it's further away for sure diversity of demand within our economy if we have different sectors of the economy that need energy in different ways at different times that can also help. Professor Rowan I just pick up on the education point which was mentioned by a couple of the speakers something I've had a lifelong commitment to and have the scars to bear it and I have literally been offered physical violence for speaking on energy from waste plants in Scotland sometimes I sad to say I've been opposed by MSPs I now teach an MSC course at the University of Glasgow on energy from waste and it's starting to have an effect and I'm pleased about that I hope you weren't threatened with physical violence from an MSP No I did try to separate those two Well on that note I think we are at the end of our time thank you to all our witnesses it will be an extremely useful and informative session and I'm very grateful to you all for giving up your time and coming along this morning to share it with us and the committee will now suspend and go into private session thank you