As a result of Brexit and policy decisions by the UK government, EU based companies rethink investments
THE executive board of the German energy group E.On will have an urgent session on Monday 8 August to investigate the viability of its onshore wind turbine investments in Scotland.
The announcement was made in the weekly Germany business newspaper WirtschaftsWoche, which reported that the board will at the next meeting discuss the possibility of stopping its project in Scotland.
Sources from the company told WirtschaftsWoche: "The political situation in Britain makes any investments uncomfortable and unstable."
Approximately 80 per cent of the civil engineering market in Great Britain said that the UK Government should review its renewables policy, particularly its decision to bar onshore wind schemes from accessing subsidies.
The news follows the UK Government’s decision in June to cease government-backed investment of wind turbines on land, which has led to the Scottish Government announcing legal action against the cessation of the onshore subsidy, which it considers "damaging and shortsighted".
In Scotland, the E.On construction which was due to start next year is part of onshore investments totalling around €4bn for 86 planned wind farm turbines.
According to the statement in the German paper, E.On had initially wanted to invest a two-digit sum of billions over a longer period of time.
The backdrop for the meeting has been the fallout over the changes in UK energy policy by the Westminster government which sees nuclear and shale as more profitable and efficient ways of plugging the UK’s energy gap over the next decade.
E.On has a total of 10,730 people working for it the UK and owns more than 15 per cent of the domestic renewables energy share.
E.On has focused much of its investment and plans in the south-west of Scotland and has in the past commended the Scottish Government's support for renewable energy.
The company currently operates three onshore wind farms, one offshore wind farm and a dedicated biomass power station at Steven's Croft, Lockerbie.
The projects across Scotland in the process of, or ready for, development are: Loch Urr, Quantans Hill Wind Farm, Afton, Lorg, Benbrack and Enoch Hill.
However, the chief executive of one of the key supply chain sectors to Scotland’s renewable energy industry previously warned that over 1,000 new jobs would be at risk unless the UK Government "reviews” its decision to axe onshore subsidies to new wind farm developments.
A recent report by the MPs on the House of Commons’ Scottish Affairs Committee on the renewable energy sector in Scotland warned that recent changes in UK Government policy have created uncertainty, threatening the industry’s prospects for future growth.
The report recommended that the UK Government should review its decision to bar onshore wind schemes from accessing subsidies, end uncertainty for the sector, and set out its view on whether a 'market stabilisation' mechanism for onshore wind could be introduced.
"This would help achieve the UK’s carbon emission targets, and at the same time protect businesses and jobs, many of which are located in remote and socio-economically sensitive areas of Scotland." Alan Watt
In addition, the trade association which represents over 300 contractors of all sizes, covering approximately 80 per cent of the civil engineering market in Great Britain, also said that the UK Government should review its renewables policy, particularly its decision to bar onshore wind schemes from accessing subsidies.
Alan Watt, chief executive of the Civil Engineering Contractors Association (CECA) Scotland, said: "Scotland is home to around 60 per cent of the UK’s onshore wind capacity, which is one of the cheapest means of generating renewable electricity.
"The renewables sector in Scotland is an exemplar of how a sector can thrive within a supportive policy environment.
"CECA welcomes this report and its recommendations, which if implemented would further allow the use of Scotland’s natural resources to provide part of a balanced UK energy portfolio.
"This would help achieve the UK’s carbon emission targets, and at the same time protect businesses and jobs, many of which are located in remote and socio-economically sensitive areas of Scotland."
"The renewables sector in Scotland is an exemplar of how a sector can thrive within a supportive policy environment." Alan Watt
In their report, MPs on the Scottish Affairs Select Committee revealed that the Department of Energy (DECC), which was abolished last month, had not carried out an impact assessment of the likely effect on unemployment in the Scottish renewables sector as a result of its decision to cut onshore wind subsidies.
Pete Wishart, SNP MP, chairman of the Westminster committee, said in the report: "Although the UK Government did undertake impact assessments of these policy changes, these did not consider the impact on Scotland.
"And the then energy minister was unable to present us with any evidence that the (UK) government had assessed the particular damage these changes would have on Scotland."
Last year, Scottish Renewables published analysis suggesting that the removal of the onshore wind subsidy 'could' put up to £3bn of investment and 5,400 jobs at risk as a result.
"The political situation in Britain makes any investments uncomfortable and unstable." E.On source
E.On has a total of 10,730 people working for it in the UK and owns more than 15 per cent of the domestic renewables energy share.
Domestically, in Germany, it has been a key player in Chancellor Angela Merkel’s "Energiewende" policy to boost renewables while phasing out nuclear and fossil fuels, which meant that for the first time in April this year almost all of Germany's power demand was met by clean power.
European countries are increasing the amounts of renewable capacity they possess in order to reduce their carbon emissions and boost their supply security. For example, last year Denmark’s wind farms supplied 140 per cent of demand.
Yet Monne Depraetere, an analyst for Bloomberg New Energy Finance, did say: "Renewables were only able to meet demand because of Germany’s strong export capability."
"We need assurances from the UK government that Scotland’s renewable energy future will not be set off course by Brexit." Mark Ruskell
Mark Ruskell MSP, the Scottish Greens’ climate, energy and environment spokesperson, said: "The Leave campaign failed miserably to explain what Brexit would mean for the future of renewable energy in Scotland, especially in relation to our partnerships with other European countries.
"Additionally, the new Westminster government led by Theresa May has had a disastrous start by abolishing the DECC, the department responsible for dealing with climate change.
"Severe cuts to the renewables sector, both as a withdrawal of public funding and through the uncertainty around Brexit will have a detrimental effect on Scottish renewables and employment.
"We need assurances from the UK government that Scotland’s renewable energy future will not be set off course by Brexit."
"Companies from across the EU, such as E.On can rest assured the Scottish Government is determined to ensure that success continues and, later this year, we will set out our ambitions for the technology in an onshore wind policy statement within our Draft Energy Strategy." Paul Wheelhouse
In response to the news about the meeting, the Scottish government minister for Business, Innovation and Energy, Paul Wheelhouse, said: "The Scottish Government is absolutely committed to supporting this industry, which is one of our most cost-effective low carbon energy technologies.
"We intend to work to influence the newly created UK Government department (BEIS) to deliver further environmental benefits and business opportunities by securing the sector’s long-term future and the strong contribution it can make to tackling global climate change.
"Achieving an attractive route to market for onshore wind is a critical objective in discussions with UK Ministers and stakeholders. We argue that a market stabilisation mechanism is essential, as this will give industry the certainty it requires to continue to invest.
"The growth of the renewable energy sector in Scotland and elsewhere in Europe demonstrates what can be achieved when Europe works together.
"Companies from across the EU, such as E.On can rest assured the Scottish Government is determined to ensure that success continues and, later this year, we will set out our ambitions for the technology in an onshore wind policy statement within our Draft Energy Strategy.
"We will continue to work tirelessly to maintain both Scotland’s position as a world leader in renewable energy and our place in the EU, in line with the clear wishes of the people of Scotland."
Picture courtesy of Arran Bee
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