By Richard Turnbull, Energy lawyer and Partner at law firm TLT
The new Scottish energy strategy was published on 20 December 2017, with the aim of sourcing 50% of all energy in Scotland from renewable means by 2030 and increasing energy efficiency by 30% within the same timeframe. To date, the industry has focused on decarbonising electricity; the new targets will shift the focus towards heat and transport.
The government has several priorities that underpin these targets. It wants to improve the energy efficiency of Scotland’s buildings, industrial processes and manufacturing and offer businesses secure, resilient and flexible energy supplies.
There will undoubtedly be supporting legislation to implement the new strategy but also incentives such as business rate reliefs, energy efficiency grants or loans and low carbon innovation and implementation funds. We are also likely to see a change in planning policy and building regulations to support low carbon development and energy efficiency improvements to existing buildings.
Now is the time for Scottish businesses to revisit their green credentials and put carbon reduction measures in place. There are simple measures that can be quickly implemented, such as smart metering, energy efficiency policies (including turning off monitors at night, using less paper and recycling waste) and replacing inefficient lighting with LED bulbs.
Another relatively quick fix is to switch to an electricity provider that offers a Renewable Energy Guarantee of Origin (REGO) backed supply. The REGO scheme is administered by Ofgem and offers transparency about the proportion of electricity a supplier sources from renewable generation. The supplier must ring fence your equivalent usage and source that proportion of power from a renewable generator.
Businesses already have energy efficiency obligations for commercial premises under the Assessment of Energy Performance of Non-Domestic Buildings Scotland Regulations 2016, which in short require businesses to establish and implement an energy efficiency improvement action plan for certain buildings. The regulations are relatively toothless at present, but are likely to be tightened under the new strategy with a greater emphasis on implementation and enforcement.
There are more radical measures that can be taken to decarbonise heat supplies. District heating schemes are increasingly popular and well supported by government policy and funding. Becoming a stakeholder in a district heating network can not only reduce your carbon footprint but can also provide a cost effective and sustainable heat supply. Heat pumps (air, water or ground source) can also be used to transmit thermal energy around commercial premises with attractive subsidy payments available through the Renewable Heat Incentive.
There are also a host of renewable technologies that can be integrated into businesses to meet electricity demand and decarbonise electricity use. The most appropriate technology depends on your business needs, however examples of successful deployment in Scottish businesses are solar (ground or roof mounted), wind turbines, energy from waste systems such as combined heat and power boilers, and anaerobic digesters and hydro power. Despite the recent curtailment on subsidies for the deployment of these technologies, costs are falling, giving shorter pay back periods and a renewed interest in deployment.
The rapid development of battery storage technology now means that this can be co-located with a renewable energy source to store power until it is needed. The key commercial benefit is of course avoiding peak time charges and guaranteeing a long term supply of power and heat for your business. With energy costs accounting for up to 25% of the overheads for heavy industries, the ability to avoid unpredictable pricing and reduce dependency on the wholesale electricity market is a huge step towards becoming a sustainable business. Energy storage also has wider benefits such as power price arbitrage and triad management.
Decarbonising transportation is another key priority for the Scottish government. Businesses will be aware of the incentives around the electrification of vehicles and the recent budget commitment of £400 million for the creation of a national electric vehicle charging network. However, hydrogen powered commercial vehicles should also be considered. For example , surplus electricity generated from a renewable source can be converted through electrolysis and stored as hydrogen for use on vehicle fleets.
For further reading, businesses should visit the Energy Saving Trust (EST) website. There is also financial support available through government initiatives such as the Low Carbon Innovation Fund, interest free loans and grants administered by the EST including a low carbon transport business loan, an SME loan scheme for energy efficiency and a Renewable Energy Investment Fund that is administered through Scottish Enterprise.
