:00:00. > :00:00.economists. I still am. Are you? Relatively. Are you? We have but we
:00:00. > :00:13.have to get the lost growth back. Thank you very much.
:00:14. > :00:20.Tonight, on Newsnight Scotland: It's supposed to be the industry of the
:00:21. > :00:23.future. But investment in off-shore wind power in Scottish waters has
:00:24. > :00:27.been cut in half over the past year. Has the next stage of the drive for
:00:28. > :00:31.renewable energy been the victim of its own hype? And even if investment
:00:32. > :00:41.picks up, will consumers be prepared to pay for it?
:00:42. > :00:44.Good evening. There's a large conference about the future of
:00:45. > :00:47.renewable energy going on in Aberdeen tonight. One of the hot
:00:48. > :00:50.topics will certainly be a survey by Scottish Renewables showing
:00:51. > :00:53.investment in off-shore wind power has fallen by half over the past
:00:54. > :00:56.year. Also today, one of the world's biggest off-shore wind arrays
:00:57. > :01:02.started to produce electricity - just off the coast of north-west
:01:03. > :01:08.England. Huw Williams reports. Power through the waves and the rain
:01:09. > :01:14.off Barrow-in-Furness. Out to one of the biggest off-shore windfarms in
:01:15. > :01:20.the world. Well, today is a fantastic day for us to celebrate.
:01:21. > :01:25.Scottish Power Renewables say today is an important day, the culmination
:01:26. > :01:30.of years of hard work. We started planning this project four or five
:01:31. > :01:34.years ago. We started construction work on the project 18 months, two
:01:35. > :01:38.years ago. We have now been installing all of the foundations
:01:39. > :01:42.over the last year and now start started obviously erecting the
:01:43. > :01:49.turbines and putting them up and today is the first export, the first
:01:50. > :01:56.power coming out of the site. Today's development is off Cumbria,
:01:57. > :02:01.but, from the Firth of Clyde, around the Western and Northern Isles, to
:02:02. > :02:04.Moraa and the Firth of Forth. Firth Moraa and the Firthof Forth. Firth
:02:05. > :02:08.of Forth. , industry sees potential for
:02:09. > :02:13.off-shore windfarms right around the coast of Scotland. It's claimed,
:02:14. > :02:17.though, that uncertainty about the future means investment is falling,
:02:18. > :02:22.so that potential might not be fulfilled.
:02:23. > :02:28.We surveyed the developers working on projects in the Scottish waters
:02:29. > :02:36.in 2013. That showed there had been an overall investment to date of and
:02:37. > :02:43.one-third came in 2012/13. Around ?60 #34i8 yob. We resurveyed and
:02:44. > :02:46.them found a 55% drop in investment. That's clearly a concern for the
:02:47. > :02:51.industry and it should be a concern for the Government. The figures
:02:52. > :02:54.emerged as 900 people gather in Aberdeen for Scotland's biggest
:02:55. > :03:00.off-shore wind event. What is causing that drop in investment?
:03:01. > :03:04.We've identified two key drivers behind the slight dip in investment
:03:05. > :03:08.we have seen from the off-shore wind developers in Scotland. The first is
:03:09. > :03:11.a lack of planning determination coming forward from the Scottish
:03:12. > :03:15.Government and the second is the continued uncertainty surrounding
:03:16. > :03:17.electricity market reforms the UK Government is implementing. These
:03:18. > :03:20.two things working to the has meant that the developments are not able
:03:21. > :03:24.to move forward in the way we might have hoped. However, I'm sure we can
:03:25. > :03:28.address these two issues over the coming months and that'll lead to a
:03:29. > :03:32.positive 2014. The Scottish Government agrees with
:03:33. > :03:37.criticism of the regime, imposed by London, but insists this is an
:03:38. > :03:41.industry with a if you tour. Referry case should be dealt with on its
:03:42. > :03:45.merits. The consent processes nearing completion in some
:03:46. > :03:51.instances. But the Scottish Government believes that our future
:03:52. > :03:55.should have a substantial component of quality off-shore wind projects
:03:56. > :04:00.and, indeed, that that will benefit the whole of the UK, because the
:04:01. > :04:08.risk of blackouts, particularly in England in 2015 vsh 17 is very, very
:04:09. > :04:11.high. -- 2015/17. The minister rejects claims that the planning
:04:12. > :04:15.process is Scot tland is contributing to delayings and
:04:16. > :04:19.uncertainty. It's essential that the process be followed in a painstaking
:04:20. > :04:24.manner. It is a probust process where every case must be looked at
:04:25. > :04:27.with regard to the legislative framework. There have been no
:04:28. > :04:32.delays. There has been a direction to ensure that the process is being
:04:33. > :04:37.conducted swiftly and professionally and that has not caused any of the
:04:38. > :04:43.projects to be delayed or deferred or worse.
:04:44. > :04:47.Meanwhile, back off Barrow, what about the impact of all of this on
:04:48. > :04:52.energy bills? Scottish Power's partners in the project say they can
:04:53. > :04:57.bring down the cost of off-shore wind. We believe we can. We set a
:04:58. > :05:01.target to reduce the cost of energy from off-shore wind by 40% by the
:05:02. > :05:05.end of the decade making it competitive. We think it is
:05:06. > :05:09.achiefable and are working on that today and over the coming years with
:05:10. > :05:11.the supply chain through technology, innovation and building the supply
:05:12. > :05:21.chain capabilities. The Government wants us to generate
:05:22. > :05:31.all our electricity from renewables by 2020. It's clear that our seas,
:05:32. > :05:35.just like our hills, offer unique opportunities to meet that
:05:36. > :05:44.aspiration but they also pose real challenges for developers.
:05:45. > :05:49.I'm joined now from London by Maf Smith, who's Deputy Chief Executive
:05:50. > :05:51.of Renewable UK, and here, by Professor Stuart Haszeldine, who's a
:05:52. > :05:54.specialist in carbon capture technology, and by David Hunter, an
:05:55. > :05:58.energy analyst with Schneider Electric. Maf Smith, could you put
:05:59. > :06:01.this in perspective for us, Scottish Renewables are saying that
:06:02. > :06:05.investment in off-shore wind has gone down by 50% over the past year.
:06:06. > :06:10.What is the situation in the rest of the UK? Well, the UK, the off-shore
:06:11. > :06:14.wind sector is going through a few challenges but overall is on the up.
:06:15. > :06:17.While we need to take pause and say - well, OK, what is happening with
:06:18. > :06:21.things such as the electricity market, former regime that Scottish
:06:22. > :06:24.Renewables identify, we should realise the UK industry is doing
:06:25. > :06:28.well, there is a lot of ambition and plans and Scottish companies are
:06:29. > :06:33.also doing well as part of that. For example, Scottish Power, a large
:06:34. > :06:36.team, a headquarters in Gl serve serving their off-shore wind
:06:37. > :06:40.developments across the UK and further afield. -- headquarters in
:06:41. > :06:44.Glasgow. To be clear, you are saying investment in the rest of the UK did
:06:45. > :06:47.not fall last year? There have been some delays in investment and
:06:48. > :06:51.Scottish renewables, as they say there has been hiatus in investment
:06:52. > :06:56.while companies get to understand the new regime called the
:06:57. > :07:00.Electricitity Market Forum. Has the decline in investment in the rest of
:07:01. > :07:03.the UK been as steep as it appears to have been in Scot snrand There
:07:04. > :07:09.have been delays in some projects coming forward but equally we have
:07:10. > :07:14.been seeing consent. We saw the project in Barrow generate
:07:15. > :07:18.electricity today. And Scottish Power, whale it is difficult we are
:07:19. > :07:22.not seeing those projects in the water Scottish companies are be
:07:23. > :07:27.contributing to a UK success story and what will be a bigger success
:07:28. > :07:32.story in the future. David Hunter, it may have fallen by 50% but in
:07:33. > :07:37.Scotland they appear to have spent ?100 million, roughly, over the past
:07:38. > :07:43.couple of years. Given that we don't have a single - by marked contrast
:07:44. > :07:47.with England, a single off-shore array actually working in Scotland,
:07:48. > :07:52.what has the money been spent on? In preparation and development work. To
:07:53. > :07:56.give you one example. Scottish Power Renewables looking at the planned
:07:57. > :07:59.array that they recently pulled out of, obviously there is a lot of
:08:00. > :08:02.investment that goes into getting to the point where they realised that
:08:03. > :08:08.for technical reasons and environmental reasons, that couldn't
:08:09. > :08:12.go ahead. Obviously, you also see the developments with the world's
:08:13. > :08:16.largest turbine. This is experimental. Experimental. But, you
:08:17. > :08:22.know... In England they have got actual real off-shore arrays that
:08:23. > :08:26.produce real electricity that go into people's homes and help heat
:08:27. > :08:30.their homes. We don't have any of that. Not specifically in off-shore
:08:31. > :08:35.wind but there are other reasons that contribute to that. For
:08:36. > :08:41.example, the project transmit, Ofgem, the regulators review of the
:08:42. > :08:45.costs of connecting these off-shore wind turbines to the grid and
:08:46. > :08:49.Scotland has historically been at a disadvantage because the south of
:08:50. > :08:54.England, closer to people's homes, has been in effect, sort of
:08:55. > :08:58.subsidised with regards to the connection charges. It is much more
:08:59. > :09:01.he expensive in the Scottish Highland and Islands, at the moment
:09:02. > :09:06.now, that transmit regulation was meant to be announced before now,
:09:07. > :09:11.has been put off until March 2014 and has been pushed back a year in
:09:12. > :09:16.its implementation. So that can of alludes to some of the uncertainty
:09:17. > :09:22.that people maybe see with projects in Scotland. Stuart Hazell dine. A
:09:23. > :09:25.lot of people watching will say Scottish Renewables and UK
:09:26. > :09:28.Renewables talk a good game as always but this tough just isn't
:09:29. > :09:32.happening, is it? I think you have to look at a longer time-scale of
:09:33. > :09:36.the if you look over ten years there is a huge amount of progress. If you
:09:37. > :09:41.look into the future, we saw in the piece that the developers of
:09:42. > :09:48.off-shore renewables now can see their way to reducing the cost of
:09:49. > :09:51.that electricity by several tens of per cent. But they have said that
:09:52. > :09:55.before Tyne has not happened. But we have seen the price of electricity
:09:56. > :09:59.from on-shore wind decrease, so much so that it doesn't need very much
:10:00. > :10:04.subsidy. We have seen the price of electricity from other renewable
:10:05. > :10:08.energies fall so that they don't need subsidy. We are on a journey.
:10:09. > :10:14.When the Government announced its prices, its subsidy structure before
:10:15. > :10:23.Christmas for energy, off-shore wind, the subsidy was - I think the
:10:24. > :10:31.price was ?150 kilowatt per hour s that right, the actual price
:10:32. > :10:37.producing from a gas - A megawatt. Sorry. And the price for nuclear
:10:38. > :10:41.energy was ?90. It is uneconomic this stuff. It is not. These prices
:10:42. > :10:44.are set to attract a development to happen now. When that development
:10:45. > :10:48.happens now, then we can learn from that and the next development will
:10:49. > :10:54.be reduced in price. So, the only way that we get towards a cheaper
:10:55. > :10:57.price of electricity, is by serial development, development,
:10:58. > :11:00.development, gas, though, of course is being burned now and it is
:11:01. > :11:04.emitting high carbon. It is not what we want for the future. You have to
:11:05. > :11:09.compare oranges with oranges. Fine but if what Stuart Hazell dine said
:11:10. > :11:18.is true and these are market signals to attract investment why is it down
:11:19. > :11:21.by 50%? Taking on that point in terms of
:11:22. > :11:27.offshore wind, it is an expensive form of subsidy in comparison to
:11:28. > :11:34.Mordt -- most other sources like we've and tidal energy. The open
:11:35. > :11:38.question is how rapidly those subsidy levels will fall from what
:11:39. > :11:43.is currently more than three times the market rate. Professor Stuart
:11:44. > :11:49.Haszeldine mentioned solar power, if we had massive investment in that
:11:50. > :11:57.like we have in Germany, that would put the price down significantly.
:11:58. > :11:59.Offshore wind has been much more sticky and looking at onshore wind
:12:00. > :12:04.is well looking at that subsidy level. When you look at Germany you
:12:05. > :12:09.must take into consideration the exceptionally high energy prices
:12:10. > :12:14.that domestic consumers are paying as a result of these subsidies. We
:12:15. > :12:21.must make sure that the clean-up the energy supply but we keep a close
:12:22. > :12:27.eye on affordability also. Maf Smith, what is responsible for
:12:28. > :12:32.this? One of the issues is the fact we are going over to a new pricing
:12:33. > :12:38.regime for subsidies called contracts and there is an interim
:12:39. > :12:42.arrangement for the Scottish projects that have applied for this.
:12:43. > :12:55.They have been rejected. Is that the main reason for the fall in this?
:12:56. > :12:57.That is one of the main reasons and not Scottish projects came out of
:12:58. > :13:02.Final Investment Decision Enabling for Renewables successfully as a
:13:03. > :13:06.result of that. They did not get through was not because of the price
:13:07. > :13:10.differences so it is not that the projects were more expensive or
:13:11. > :13:16.difficult. Why didn't they get through them? There was a range of
:13:17. > :13:20.criteria that the government set, it is definitely not praise, however.
:13:21. > :13:25.We should not say that Scotland cannot compete. They Dookie sector
:13:26. > :13:29.is buoyant and is big ambition in Scotland for this kind of energy. We
:13:30. > :13:34.are confident those kinds of schemes will come forward in Scotland. If
:13:35. > :13:39.you book a few years ago when we installed some test turbines in the
:13:40. > :13:46.Moray Firth, we are now increasing manufacturing there. If it is not to
:13:47. > :13:51.do with pricing, could it be that the Department for climate and
:13:52. > :13:54.energy change is not following through because they are thinking
:13:55. > :13:58.that they do not know what will happen under the independence
:13:59. > :14:03.referendum and therefore they are having second thoughts? I do not
:14:04. > :14:10.think that has anything to do with it. It is in terms of the criteria
:14:11. > :14:13.for the application process. If Scotland does vote for independence,
:14:14. > :14:20.with Scottish projects be eligible for these new contracts? We would
:14:21. > :14:25.have to look at the details. If you ask Scottish companies now, they are
:14:26. > :14:31.part of the UK market and they will sell into that and all that markets
:14:32. > :14:35.changes. But if I was one of your member companies and thinking of
:14:36. > :14:40.investing in Scotland and they resume was changing to this new
:14:41. > :14:43.contract system which is a subsidy breakdown by the UK government, I
:14:44. > :14:50.would want to know Scotland voted for independence, will I get that
:14:51. > :14:54.new deal that I would negotiate ahead of 2017 or not? Surely your
:14:55. > :15:02.own members must be asking that question? And you have to ask the
:15:03. > :15:06.Scottish government their thoughts. ScottishPower Renewables are doing
:15:07. > :15:14.well in terms of developing projects internationally and around the UK.
:15:15. > :15:21.Scottish companies are supplying and installing schemes around the
:15:22. > :15:28.country. The UK market is doing well and companies are confident of
:15:29. > :15:36.investing into that market. What do you think, David, should Scotland
:15:37. > :15:40.vote for independence that will have an effect. If Scotland votes for
:15:41. > :15:48.independence, what happens to this arrangement? I think without
:15:49. > :15:54.sensationalising it there is uncertainty, not dissimilar to the
:15:55. > :15:57.arguments for the sterling zone, there are respectable arguments on
:15:58. > :16:02.each side of the debate and fundamentally overall I do not think
:16:03. > :16:07.it has constrained interest in the renewable investment over the last
:16:08. > :16:13.few years with in Scotland, a lot of projects have still gone at it. You
:16:14. > :16:21.do not think this fall in offshore wind farms is connected? It is still
:16:22. > :16:25.an open question and it is difficult to see how it can be resolved unless
:16:26. > :16:29.and until we get down to the negotiation stage. It is not to say
:16:30. > :16:35.that there would be an issue because they are strong arguments on both
:16:36. > :16:40.sides. On one said of the coin you have legally binding renewable
:16:41. > :16:43.targets that can arguably be more easily met with Scottish Renewables
:16:44. > :16:51.but on the other side you have a case that if France had developed
:16:52. > :16:55.renewables, would the UK data import rather than the out subsidies to do
:16:56. > :17:01.so? Just to finish this point, because I think it is an interesting
:17:02. > :17:06.comparison, another aspect here is the proposed energy price freeze put
:17:07. > :17:10.forward by the opposition, which definitely set the cat among the
:17:11. > :17:15.pigeons in terms of the number of big energy companies that said that
:17:16. > :17:21.could be a factor. Whether it is specifically offshore wind,
:17:22. > :17:30.generally speaking, they have said that they have put off investment
:17:31. > :17:34.and -- plans until 2015 because if they are getting bashed about left,
:17:35. > :17:39.right and centre, and you are telling them that the praise you can
:17:40. > :17:48.charge is controlled by the costs you incur but the subsidies and, are
:17:49. > :17:52.you going to invest? I think going forward we are looking at a couple
:17:53. > :17:55.of difficult years because the price of electricity at the moment is
:17:56. > :18:03.artificially cheap because they are storming -- we are burning cheap
:18:04. > :18:08.coal. Those plans will close and we have seen one close in Scotland
:18:09. > :18:12.already by 2022 they will all be gone and the price of electricity
:18:13. > :18:19.will rise to the level of gas which is better but said more and probably
:18:20. > :18:23.even more because of renewables. Therefore we must build more
:18:24. > :18:33.renewables to satisfy the European target of 27% by 2030. The pathway
:18:34. > :18:37.for renewables is clear. Have you just said our electricity bills will
:18:38. > :18:43.rise by 50%? Yeah-mac that is correct, . -- that is what they
:18:44. > :18:47.said. Now, a quick look at tomorrow's
:18:48. > :18:56.front pages. The Daily Telegraph, the First Minister claims Mark
:18:57. > :19:02.Carney's predecessor new the Treasury would change after a Yes
:19:03. > :19:09.vote. The Guardian, huge swathe of GCHQ spying illegal, the suggestion
:19:10. > :19:15.that the agency was allowed to commit serious crime with impunity.
:19:16. > :19:23.Also touches on the Andy Coulson phone-hacking trial. The independent
:19:24. > :19:24.also talks about Andy Coulson and hacking trial.
:19:25. > :19:34.That's all from me. Goodnight.