 Mwneud fawr i'w ddweud y Llywodraeth Cymru, Paul Wheelhouse, Stuart Matheson, who is the senior policy adviser on electricity networks and regulation from the Scottish Government. We now turn to look at the renewables obligations Scotland amendment order 2018. I will invite the minister to make his opening statement. I thank you and the committee members and Indeed your clerks for allowing me the flexibility to appear late in your session today. I appreciate that you've had a long session today, so I'm grateful for your forbearance. The order before committee will, if approved, result in a minor amendment to the Renewable Obligation Order 2009 and before turning to the amendment itself. It might be helpful just to provide a little bit of background to the Renewable Obligation Order itself. There are three Renewable Obligation Orders, with one covering England and Wales, another for Northern Ireland and, of course, one for Scotland. Those orders place an obligation on UK electricity suppliers to source an increasing proportion of the electricity supplied by them from renewable sources. Renewable Obligation Certificates, or ROCs for short, are awarded to eligible renewable generators in respect of the output that they generate. Suppliers can then buy these ROCs and use them to demonstrate that they have met their obligation or they can pay a fixed sum into a buy-out fund for each ROC or Scottish ROC, the either can't or choose not to present. The obligation, as intended, has provided a hugely effective incentive for renewable generators with capacity across Scotland having reached 10.3 gigawatts as at the end of quarter 2 of this year. Indeed, the final figures for 2017 show that renewable generation supplied the equivalent of 69 per cent of Scotland's electricity consumption at a record high level, slightly higher than the figure that is quoted in the document itself, because since then we have had updated base figures. Successive Scottish Governments have largely maintained an approach consistent with the other UK obligations. However, there have been important exceptions where we have tailored the Scottish obligation to better reflect Scotland's particular needs and priorities. For example, in April 2009 we introduced enhanced rock bands for wave and tidal projects in Scotland and in April 2014 we introduced two new enhanced rock bands to provide additional support for innovative offshore wind projects in Scotland. The committee will recall that these devolved powers were curtailed by the 2013 Energy Act. The contracts for difference mechanism has now replaced the renewable obligation as a means of supporting new renewable capacity. However, although the obligations across Great Britain were closed to new capacity from April of last year, they will continue to run until 2037 for eligible projects. The order will now turn to the content of that for the committee. When the UK renewable obligations were closed in March 2017, changes were introduced that allowed generators to add capacity at accredited sites. This additional capacity would not be eligible for rocks, but nor would it affect the eligibility of the existing capacity at sites. However, article 17.4, within the Renewable Obligations Scotland Order 2009, has the effect of preventing any accredited hydrostations from adding capacity where that takes the declared net capacity of any such station above 20 megawatts. Our remending order will rectify that. It will allow hydrogenerating stations in Scotland to add extra renewable capacity while retaining their eligibility for Scottish rocks, only from the originally accredited capacity at their site. It will allow any generators who choose to do so to increase their renewable capacity and production without creating any additional costs for consumers. It will also bring hydrogenerating stations in line with all other technologies and allow them to compete on a level playing field. In conclusion, convener, we expect that this order is likely to have limited application, since it will only be of relevance to hydrogenerating stations that were accredited before 2002 and which have the ability to increase their declared net capacity above 20 megawatts. However, although its impact may be modest, it nonetheless provides a means to encourage additional renewable electricity generation in Scotland, and I believe that it is an equitable and sensible amendment. Before I formally move to the motion that we recommend in the order, I will of course be happy to respond to any questions that you or your fellow committee members have, convener. Are there any questions from committee members, Andy Wightman? We have received some evidence from SSEs who are responsible for the vast majority of the power schemes that have downgraded from a capacity exceeding 20 megawatts. My understanding is that SSEs have sold all its hydro assets to Drax. Scottish Power has sold their assets. SSEs still retain them. Ah, okay. Sorry. Apologies. I got it wrong. You have come up with scenarios—low, central and high scenarios—about the likely impact on generation. What are the kind of factors that will influence that? I think that, in fairness, Mr Wightman has raised a fair point. SSEs, we think, are unlikely at this stage to make amendments to their seven sites out of the eight that have had their capacity curtailed as part of the impact of the previous policy position. We do believe that one other developer, Simech, who has the Kinloch-Leven hydroscheme, which is serving the former Alcann spell to Liberty and I own at Lochaber, will potentially do that. The factors that we will play into this off-gem have made a point that, in order for this to be compliant, they will need to be either separate metering to fully record and make sure that there is not an overclaim on the rocks or, alternatively, they will pro-rata allocate over the total production from the site revenue through rocks to that part, that component or proportion that is eligible to receive rocks. That may individually, the developers will have to take a judgment as to whether that leads them in a better or worse position. I will be down to a commercial decision in the part of Simech as to whether they go ahead with this in Kinloch-Leven, but, at least, by removing this barrier, it allows them to make that decision and to potentially take it for it if they believe that it is the right thing to do. Similarly, SSEs have not ruled out doing it at some point in the future, but at this stage they have indicated to us that they are not likely to proceed. The overall impact will be modest, potentially an additional 10 megawatts of hydrocapacity at Kinloch-Leven. If all sites were to go down the route of reinstating the original capacity, that would be an additional 55 megawatts of hydrogenerating capacity that would be added, but with no additional cost to consumers, and that is an important point, that will be the case. The bottom line is that the order is removing a barrier, but it is up to the private generators to decide whether they wish to take advantage of that or not. Absolutely. Mr Wakeman is absolutely correct about that. I appreciate that this is about hydro schemes. Is there any likelihood or any chance that this could have any impact on constraint payments in the control wind sector? We do not believe so, but that is a clearly important point in terms of the capacity that is on the grid at localised level. There has been some discussion around the increased capacity needed at Lochaber to allow any increased capacity in hydro plant to actually transmit electricity to the grid. I believe that that is a commercial matter between Slymic and, in this case, SSE, as to the investment that is needed. We do not believe that there would be any direct impact, or at least I am certainly not aware of any, although I will ask my colleague Stuart Matheson just to confirm if that is the case, in that there are individual contractual relationships between developers and the distribution network operators as to receiving good capacity. There is already an arrangement in place, so if you liked those, trump any additional capacity that came in, you would have to argue for that separately with SSE and not eliminate the previous arrangements that there were for existing sites in the area. I do not believe that there would be any impact, but if I was your forbearance convener, I would maybe invite Stuart Matheson just to comment on that. I guess our assumption would be that, as part of that decision making process, Slymic would consult with the local network operator, which in this case, as the minister said, is SSE networks as to the available grid capacity. That would be part of the decision making process, the assumption being that, for Slymic to proceed with the project, there would be sufficient grid capacity available for them to export additional energy. In terms of impact of constraint payments, it would depend on whether there were wind generators in the vicinity that might be competing for similar grid capacity, but our assumption would be that SSE networks would only support that particular project if there was sufficient grid capacity for additional hydro generation and existing wind generation. If I might just add one point to that. Mr Hawker-Johnston, in the case of the Kilnillocleven site, if it is upgraded, then primarily that power will be directed towards the smelther itself. It is obviously a very energy intensive process and therefore there is a high concentration of demand for electricity in that locality. Therefore, the occasions in which transmitting net electricity generation into the grid might be quite limited. Initially, at least, given its own needs for electricity consumption, I suppose that the issue would be whether the smelther did not operate at some point in the future. Clearly, there would be an issue about unused capacity locally having to be transmitted into the grid, but hopefully we will never reach that point. Any other questions from committee members? Is there a reason why this was not done before? It is a good question, because it has been raised a number of times by individuals who have queried why this particular provision was in place in the first place. It would be fair to say that the derating of the plants was an unintended consequence of the original legislative change back in 2002, which was intended to allow a strand of activity to take place that would help the hydro fleet owners to reinvest in renewing their estate. The order actually helped to unlock significant investment from SSC and Scottish Power in renewing their existing hydro fleet. Therefore, it had a positive effect, but the unintended consequence was that several sites derated their capacity in order to come under the 20 megawatt threshold. That meant that we arrived at a situation today where we got this unfortunate barrier to them growing their output at a time when the world needs us to generate more renewable energy. It is an odd anomaly. I think that hopefully this regulation will remove that anomaly and that it will be able to operate on a level playing field with all our technologies. Well, if there are no more questions from committee members, we will move to the formal debate. I will invite the minister to formally move the motion. Does anyone wish to speak in the debate on the motion? If not, I will put the question. The question is that motion S5M-14103 be agreed to, are we all agreed? Finally, in light of timing, I will invite the committee to agree that, as convener, along with the clerks, I will produce a short factual report of the committee's decision on this and arranged of it published.