Meeting of the Parliament

Meeting date: Thursday, March 29, 2012

Official Report 1082KB pdf

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Local Energy Companies

The next item of business is a debate on motion S4M-02523, in the name of Patrick Harvie, on local energy companies.

10:25

When the Greens bring motions to the chamber for debate, we usually take what we laughingly call a soft-and-spiky approach. We lodge one consensual and constructive motion that seeks cross-party support, and another that might be a wee bit more confrontational. For some reason I usually end up with the confrontational one—I cannot think why that might be.

Today, we are doing it a little bit differently. We genuinely hope that the motion on local energy companies, like the motion on cycling, can move forward an argument on a cross-party basis. There should be political support from across the spectrum for local energy companies.

I begin by mentioning Jonathon Porritt, who spoke at the opening of the Scottish Renewables conference this week. He can speak the language that an audience full of professionals will readily understand while saying something really revolutionary. He said,

“We are in the very early stages of the most radical transition in the history of mankind”,

and he set out a vision of a 2020 target of 100 per cent equivalent of our electricity consumption coming from renewables, and a longer-term vision of an entirely renewable future. The Scottish Parliament should be proud of its commitments on climate change and renewables, but in those “very early stages” of the transition, we are missing a trick.

That transition or transformation in our energy system will require a huge amount of work and, no doubt, many will see it as an opportunity to make a lot of money—indeed, that is happening already. To be sure, the private sector has a central role to play, but the Greens have brought the debate today to develop the case for keeping a share of this new, growing industry in the hands of the public and communities, and to call for the Government to take a more proactive approach to ensure that that happens.

If we do that, two of the many benefits that could be achieved go way beyond the renewable energy targets alone: it would generate revenue for public services; and it would build public support for an important industry that can be made to serve the common good. The transition that we seek and need will take place only with public support, yet there is a growing perception of private sector profiteering. Sometimes that perception is accurate, and sometimes it is needlessly fuelled by those who are opposed to the action that we have to take on climate change.

The profits of the renewable energy industry are certainly significant, as is the contribution made by the public through taxation and energy bills. The danger is that a reaction to that situation will prevent us from making the transition to a sustainable energy future that we need to make. It does not have to be that way. We can build public support by sharing the economic benefits of the industry.

Revenue could be generated for local authorities and other parts of the public sector, which could have huge benefits. I was recently at a site at Laurieston on the south side of Glasgow—next to the Citizens theatre, for members who are familiar with that area—where a huge amount of housing is about to be built. Some of it will be social housing, and some will be private sector housing and therefore for sale. That is exactly the kind of area where, if the public sector could make a bit of extra investment, we could build in transformational technologies using really low-carbon and genuinely passive housing standards and microrenewables to achieve a long-term energy supply for the community. With the power of the public sector, we could generate energy, yet we do not do such things because local authorities do not think in that way.

That said, there are some examples of local government trying to develop models. I will run through a few of them. Perhaps the most familiar example to members of this Parliament is Aberdeen Heat and Power, which is a not-for-profit company that was set up by Aberdeen City Council 10 years ago. The carbon emissions from the buildings involved have been reduced by about 45 per cent, and typical fuel costs to tenants have been reduced by more than 50 per cent.

Down south in Woking, Thameswey Energy Ltd, a company that is wholly owned by Woking Borough Council, aims to promote energy efficiencies, develop new technologies, produce and supply energy and acquire and hold interests in other companies. The council recently set up a joint-venture company, as it recognised that a wholly owned public company is limited by some of the constraints on capital controls that are imposed by central Government. Therefore, the different model of a joint-venture company has been adopted.

In Islington, the Bunhill energy centre is investing in local energy generation and reducing energy costs to households and businesses, as well as the carbon footprint. Sheffield has one of the largest district energy networks in the United Kingdom. It started out serving just a few buildings and now serves more than 140 buildings, reducing carbon emissions by about 21,000 tonnes every year. I do not have time to read through all the examples that I have, but there are similar schemes in Bristol and Norfolk and elsewhere in England and Wales. However, very little is happening in Scotland.

The Aberdeen combined heat and power scheme has got it right in my opinion. In part, the expansion in recent times has been down to the £1 million grant that was received from Government, which was most welcome. Does Mr Harvie agree that, although lessons should be taken from Aberdeen and exported elsewhere, that should not be down to Government insistence, and that it should be up to local authorities to move forward in their own way?

That gets to one of the central issues. There should not be insistence, but there should be strong and compelling leadership at local and central Government level, in which the minister has a crucial role. I am slightly disappointed by the Government amendment, which deletes significant aspects of the motion that detail the role that local energy companies could play.

The Government amendment discusses a document that has been produced by the Convention of Scottish Local Authorities and the Scottish Futures Trust. I have seen the draft of that document, which was dated June 2011, and which was on the Scottish Futures Trust website. Just yesterday, the final version, dated August 2011, was added to the website. It is encouraging that my motion led to at least some action being taken before I even got to my feet to speak. However, if the Government does not proactively give leadership on the issue and does not even put up information on the website, we will not make progress. In conversation with my office yesterday, the SFT was keen to emphasise that no local authority has produced proposals recently, but that is no great surprise if the leadership is not there and information is not being circulated.

The forms of support that are needed from Government include financial support. As Kevin Stewart mentioned, such support has been given. We also have the renewable energy investment fund, which was announced last week and which will have elements of district heating and community renewables within its remit. We need to define the term “community” clearly because of the wide range of models that I talked about and the different balance of cross-party support in local authorities for different business models. Some promote wholly owned companies, some tilt more towards the private sector, whereas others prefer co-operatives, community interest companies or social enterprises. All those models are good, but they all need leadership if they are to happen.

As well as financial support, leadership needs to be about bringing together skills and experience and building partnerships to ensure that local authorities can make progress. At present, local authorities have a difficult balancing act just to provide basic services.

A report back from Government to Parliament on the issues would be of great benefit, so I am happy to support the Labour amendment. We need a proactive approach from Government on the issues, and a report back would certainly help to keep them on the agenda. Even better would be a commitment to a number of projects that could be developed during this parliamentary session. Shortly, Scotland will elect councils for another term in office. By the time that the councils that we elect in May have completed that term, the natural and default situation for every single one of them should be that they are working with a local energy company of one model or another—wholly public, a partnership, a co-operative or whatever. Different councils will find different solutions that are appropriate for their areas.

It would be bizarre—it would be unthinkable—if, in a few years’ time, local government did not see itself as having a role in public investment, not only in energy efficiency but in renewables. That investment can be paid back if local energy companies also have the power to become electricity retailers in the community.

There is the opportunity for a transformational vision, not just of meeting our renewable energy targets in Scotland but of local, public and community ownership.

I move,

That the Parliament reaffirms Scotland’s ambitious targets on climate change and renewable energy; considers that the private, public and third sectors, including co-operatives and community bodies, all have a role to play in developing a clean energy future for Scotland; is concerned by the growing perception that the renewables agenda is benefiting only big business, instead of serving the common good; believes that great public benefit could be achieved through the creation of public energy companies at local authority level with a remit to invest in publicly owned renewables, lease public assets to appropriate renewable energy developers and buy energy on the wholesale market to become a domestic supplier in the local community; believes that such public companies would generate clean energy as well as revenue for valuable new public services such as energy efficiency investment and support for community owned renewables projects and that the shared benefits would help to foster public support for renewable energy, and calls on the Scottish Government to investigate the concept of local energy companies and to provide assistance to local authorities and other organisations in developing proposals.

10:35

I am delighted to accept the invitation in the wording of the motion to reaffirm Scotland’s commitment to its ambitious, world-leading climate change targets. We will harness the best of our country’s assets—our people, our natural resources and our ingenuity—to ensure that Scotland leads the way in renewable and low-carbon energy.

As Patrick Harvie mentioned, public support is being built, and it will continue to be built. This week, 11,000 jobs have been created in the renewables sector, benefiting communities such as Orkney and the Highlands and many rural parts of Scotland.

Our draft electricity generation policy statement sets out an energy policy that will provide the key pillars of delivering secure and affordable energy and a cut in greenhouse gas emissions, achieving maximum economic benefit for Scotland.

Electricity is just part of the story. We need to reduce demand and improve energy efficiency. We also need to make significant progress on renewable and low-carbon heat, as well as sustainable transport. I commend to members a visit to the newly opened SSE centre at One Waterloo Street in Glasgow—a museum of modern renewable energy, where one can hire an electric car for an hour or so at a reasonable rate. Perhaps Mr Harvie might like to take up that option to learn to love the motor car, albeit the electric one.

While I acknowledge the perception in some quarters that the renewables agenda benefits only big business, that bears no relation to reality in Scotland. Our target for 500MW of community and locally owned renewables by 2020 could be worth up to £2,400 million to Scottish communities and rural businesses over the lifetime of those projects.

I am glad that the minister mentions the 500MW target. It includes local ownership, and not just community ownership. My motion is about community and public ownership. Will the minister confirm that the fund announced last week will not use the same definition and that, when it talks about community ownership, it will talk about genuine community ownership and not local/private sector ownership?

We clearly and explicitly want to encourage communities to own renewables schemes. There is no dubiety about that so far as I am aware. That is the best model—in which there is ownership, and not just the receipt of a cheque, albeit a bigger cheque than used to be the case, because the tariff is now moving up to £5,000 per megawatt. The best model—the one to which we aspire—is one in which communities have a stake in the ownership, such as Falck Renewables in Fintry. We want Scotland’s communities to benefit as owners and not just as recipients of cheques, no matter that that in itself creates great benefit. Once again, Mr Harvie and I are in agreement.

Our community and renewable energy scheme will provide some £25 million over the next three years to support community and locally owned renewables projects across Scotland.

The SFT and COSLA have been working to highlight examples of public sector involvement in renewables and the main commercial structures for local authorities to take forward those schemes. We welcome that work and we will support it where possible.

However, the suggestion that local authorities should form local energy companies to enter the energy wholesale market is a different matter. It raises a challenging and complex set of issues, in which market participants take on significant contractual and financial liabilities and are exposed to significant market and financial risk. That is extremely uncomfortable territory for public sector bodies on fixed budgets, which, they tell us, are already stretched to the limit.

The market is challenging for new entrants. The vast majority—up to 90 per cent—of wholesale electricity market trading happens between generation and supply businesses in vertically integrated companies: the big six are SSE, Scottish Power, RWE npower, EDF Energy, Centrica and E.ON. The remaining over-the-counter business happens either through third-party brokerage or on trading platforms for electricity products—power exchanges—where there are membership fees and other requirements. The key point is that taking part in that market demands that challenging credit and collateral requirements are met. Market participants must be able to access and agree credit, the cost of which fluctuates proportionately to their perceived capability to manage risk. They must post collateral as security for their trading activities and must have the institutional capacity and capability to understand how the market works. They must also properly resource their risk—that is essential in protecting consumers from the unacceptable costs of short-term or irresponsible trading and from a market player going bust. It is not an attractive proposition for a local authority.

I do not play down any of the problems and complexities that the minister has outlined. However, community development trusts have got into the market in recent years and have faced some of the issues that he has outlined, albeit on a smaller scale. Therefore, the issues that he is addressing are not insurmountable.

Those are suppliers of capacity, not retailers of electricity—there is a difference.

We are happy to look carefully at the emerging possibilities. The current market arrangements are not perfect—far from it. The lack of competition and the difficulties that new entrants to the market face are significant issues, which we want to address with the relevant bodies including the Office of the Gas and Electricity Markets. We support more competition in the market. However, as Liam McArthur and others will agree, it would be foolish and irresponsible of us to ignore the practical, serious and massive financial liabilities that can be associated with entering the market.

We are happy to accept the Labour amendment. Government is accountable to Parliament and it is correct that we should report to Parliament, and that is what we will do. That is a sensible proposal. To Mr Harvie, I suggest that there are real, significant and unavoidable barriers to and risks in local authority engagement in the electricity market and that a clearer and more obvious path is through public and community bodies playing a stronger role in developing renewable energy projects for the benefit of local communities.

I move amendment S4M-02523.1, to leave out from “creation of public energy companies” to end and insert:

“work being done by the Scottish Futures Trust in partnership with COSLA to help local authorities realise this ambition, highlighting opportunities to provide exemplary community benefits from renewables schemes on the public estate, publicly owned renewables and the lease of public assets to appropriate renewable energy developers; believes that public sector involvement in the renewables sector can generate clean energy as well as revenue for valuable new public services such as energy efficiency investment and support for community-owned renewables projects and that the shared and community benefits would help to foster public support for renewable energy, and calls on the Scottish Government and the Scottish Futures Trust to continue to work with COSLA, local authorities and other organisations in developing proposals.”

10:42

I very much welcome the debate on local energy companies and hope that it will stimulate action. We will not all agree on everything, but I suspect that there is enough on which we agree for us to be getting on with. The Parliament set an ambitious target for a 42 per cent reduction in CO2 by 2020, and Labour believes that energy efficiency, with local heat and energy in our buildings and in our transport, must be part of the solution. I will not engage in a lengthy debate about the exact nature of the Government’s ambitious targets for renewables. Suffice it to say that we believe strongly in a balanced approach to energy supply that lets Scotland lead the way on renewables while remaining part of a United Kingdom energy market so that we can both export energy that we generate from renewables and use it ourselves. We must be able to export energy to the rest of the UK and import base-load when we need it.

The key issue is the need for a decentralised set of heat and power networks across our local communities. Such an approach would be a highly efficient way in which to generate heat and power and could provide much-needed base-load. We believe that it is the missing link in energy and heat supply in Scotland. If we had been elected to government last summer, we would have implemented radical plans for community renewables. We see local authorities as vital partners and key agents in leading the way.

The motion talks about the perception of renewables as being all about the benefits to big companies. It is vital that local communities and individual members of society are able to get direct benefits from the renewables revolution. Patrick Harvie mentioned some of the fantastic community projects that now exist throughout Scotland using co-operative, community trust and social enterprise models—whatever is appropriate locally. There is a big gap, however, caused by the fact that local authorities have not played their full part.

Council house tenants, housing association tenants and people who are on low incomes will never be able to benefit from technologies such as solar panels, solar water heating and combined heat and power schemes unless they are procured collectively on a mass scale.

I have mentioned many times the fantastic work that is being done in Aberdeen. I am glad that it has been namechecked today, but it should not be the scheme that we must always mention—there should be lots of others. That is why we need to put some political energy behind the process today.

Last year, our idea was to have a £100 million scheme that was based on the principles that Birmingham City Council adopted. Its model involved setting up a social enterprise company to bulk-buy solar panels for council house tenants. The council also reinvested in energy efficiency and in a new wave of solar panels across the city. It has now been joined by a host of other authorities. In north-east England, five local authorities are working together to do the same procurement work.

We would have worked with an initial 10,000 houses, alongside energy-efficiency work. We are not doing enough to address fuel poverty, and such an initiative would have helped to boost work in that area. Patrick Harvie referred to the new revenue that we could invest in such a process.

Fergus Ewing is right—it is an incredibly tough time for local authorities, which have had to bear the brunt of 89 per cent of this year’s budget cuts and are shouldering record debt levels. However, local authorities know local housing. We are not using their expertise and knowledge. They have the power to be transformative by establishing decentralised energy and heat networks. They are in charge of the planning framework for buildings and of transport and zero waste planning locally.

Local authorities could really make a difference. The levers are potentially at their disposal and they have the powers that they got under the previous Labour Government to buy and sell energy for their residents, but they have competing demands on their time. I say to the minister that the issue is not about him requiring local authorities to do things or ruling out what they can do but about transformational leadership to give them the capacity and the support to take on and lead on the agenda.

Will Ms Boyack give way?

No—I have only one minute left.

I welcome the minister’s support for our amendment. We believe that it is crucial that the Government comes back to Parliament. The cross-party group on renewable energy and energy efficiency regularly debates the issue, which needs to come back to the chamber and to committees. We need serious political momentum behind the decentralised energy and heat movement. Our local authorities are best placed to lead on that, but they are not doing so. Communities can do such work, but it is not happening on a local government scale.

The Scottish Government has a key role in leading on the issue. Patrick Harvie mentioned the local government elections. Glasgow City Council has done work on wind turbine development, which is producing energy and a sustainable income for the warm Glasgow fund. The City of Edinburgh Council wants to develop radical community co-operatives, and Dundee City Council wants to look at buying and selling energy.

The agenda is radical. We do not want just one or two local authorities to do such work. All of them need to engage with it, on their own terms. The minister could play a vital role in giving them a lead.

I move amendment S4M-02523.2, to insert at end:

“, and asks that the Scottish Government reports back to the Parliament on progress.”

I call Mary Scanlon, who has a strict five minutes.

10:48

I, too, thank the Scottish Green Party for bringing the debate to the Parliament. I agree with most of Patrick Harvie’s motion—I am sure that he can guess the two or three lines with which I disagree.

There is no doubt that much can be gained from local energy companies and that the topic merits further discussion and consideration. We can learn from experience, as highlighted by Kevin Stewart. I will highlight a good experience and a bad experience. I find quite exciting the enhanced support that is now in place for local energy companies that the Government’s amendment highlights. I noted the minister’s comments about local authority energy companies.

As well as the private, public and third sectors, co-operatives and communities can work together to produce clean energy. I will give two examples: the Isle of Eigg, which is a blueprint for success, and the Caithness Heat and Power project, which is run by Highland Council but which cannot be deemed a success in any form.

Highland Council proposed to tackle fuel poverty in Wick by forming a new limited company—Caithness Heat and Power—to establish a woodchip scheme to provide electricity and cheaper heating for tenants. Those aims were worthy. The scheme started in Pulteneytown in 2004 to provide a renewable heating system for up to 500 houses.

There is no doubting the good intentions behind the project. However, after several years, many problems and an Accounts Commission investigation, it was found that there was a lack of appropriate risk management, and that Highland Council had faced many other problems, from the project’s inception in 2002 through to its delivery.

Caithness Heat and Power was abandoned in 2008. At the time, it was said that

“the technology originally chosen for the project is not capable of reliably and economically fulfilling its objectives.”

Although the project cost £14.65 million, the company was transferred in December of last year for £1. Caithness Heat and Power experienced technological and financial problems, with Highland Council having to pay back a £2.9 million grant and also having to pay to reconvert the 247 properties that had been modified at a cost of £2.3 million. Highland Council tried to recoup money from the £14.65 million project by selling off 14 lots online last year, including a boiler and a woodchip drier.

The council is still pursing £152,000 of outstanding electricity bills, but the system’s design prevents effective disconnection of individual customers without affecting others. A local councillor stated last week in the John O’Groat Journal that the £152,000

“was not run up as result of people in fuel poverty struggling to pay their bills but by opportunists taking advantage of a flawed setup.”

I highlight the project because, as others have said, we have to learn from experience.

The community on the Isle of Eigg had the opposite experience and its scheme is undoubtedly an outstanding success. Diesel generators provided electricity to the community for decades, but Eigg Electric can now provide 24-hour power through three hydroelectric generators that produce energy from water as well as four small wind turbines and solar panels.

An essential consideration of the design and development of the project was that it should not impact on the natural beauty of the island. The cable routes, both grid and domestic, are buried—unlike the Beauly to Denny power line.

The total generation capacity of the system is about 164kW at any time. The system is designed to provide 95 per cent of the power consumed on the island and it allows for population growth. Residents of Eigg can use only what they produce and, to ensure that no one goes short, each house has a maximum use limit of 5kW and each business a maximum use limit of 10kW at any one time. People spread their use throughout the day, the system is simple and meters are used to display electricity usage at all times, with surplus power distributed to community halls.

Eigg is an excellent example of full support being given, altruism and partnership in the community as everybody pulls together for the common good.

I will cover the other points when I sum up.

10:53

A few years ago, I was lucky enough to be invited to a community conference on the island of Gigha, just after the people there had switched on their three wind turbines—the dancing ladies of Gigha—which are Scotland’s first community-owned wind turbines. We were taken out to see the turbines on a warm sunny day, with a few puffy white clouds lazily floating across a blue sky. Cattle grazed peacefully beneath the turbines and the turbines turned gracefully in the warm breeze. I felt as if I was in a Dali painting. Everybody was smiling.

Another kind of energy and another kind of power was being kindled on Gigha that day: community power, because a community had been empowered at last to tackle its long-standing problems and was generous enough to want to share its new-found knowledge and empowerment with other communities.

I have some sympathy with Patrick Harvie’s motion, but I am afraid that I cannot support it as it stands. Nothing stands in the way of any local authority that wishes to take up his suggestion, but I fear that local authorities are not always well equipped to follow that route. I am concerned, too, about Patrick Harvie’s antipathy towards business, and big business in particular. As with all things, there are some bad businesses—large and small—but also some very good ones.

The Government has set some very ambitious targets for climate change and renewable energy generation, but it cannot achieve those targets on its own—no Government can. We must enlist businesses, large and small, and communities at all levels to help us to meet those targets. That is a great and a common endeavour.

With infinitely renewable energy, which in time will become inexpensive, we can solve many of our other problems. We can create not only jobs but fulfilling careers, we can create prosperity and we can end fuel poverty.

Will the member take an intervention?

No, I have only four minutes.

Little Scotland can, by becoming the world’s laboratory, make an unparalleled contribution to mankind in solving the problem of our renewable energy supply and exporting the technology and the knowledge across the planet. However, we will not achieve that through the narrow-minded exclusion of big business, because business excels at innovation—

Will the member give way?

No, I am sorry—I have only two minutes.

Business excels at investing in new technology, and if we are to fulfil those targets and achieve all the benefits that come with that, we will need the massive investments that only big business can provide.

We can do that while ensuring that our communities also benefit by undertaking their own renewable projects or by collaborating with business in joint projects. In fact, we are increasingly doing that, and I commend our Government for setting another ambitious target of 500MW of community energy by 2020.

For those reasons and more, I am pleased to support the amendment in the name of the minister, Fergus Ewing.

10:57

I hope and believe that the Parliament will reaffirm Scotland’s ambitious targets on climate change and renewable energy, and I am happy to continue to commit to that position on behalf of my party.

The renewable energy target follows on from the climate change target, and the reasons for tackling climate change are well rehearsed and become more apparent every day. I am proud that Scotland, through the Parliament, is leading the way in tackling climate change and I am happy to reaffirm my commitment to the targets that have been set.

The motion that Patrick Harvie and the Green party have lodged is right: there is a growing perception that the renewable energy agenda is benefiting only big energy companies or wealthy landowners, while local people often feel that they suffer from the consequences. In the case of large-scale wind developments, for example, communities often see little or no benefit.

People are becoming more concerned that the renewables agenda is pushing up their electricity bills. With one in three people affected by fuel poverty, that is already a massive issue that will keep getting worse as earnings remain static and energy prices continue to rise.

Will the member take an intervention?

I am sorry, but I am tight for time.

It is right that we should push for the creation of public energy companies that are publicly owned and publicly controlled and which deliver the benefits of renewable energy in our communities in the form of locally generated electricity, which is more efficient because of reduced transmission losses. The profits from the sale of the electricity can be reinvested in additional renewable developments or in adapting homes in our most deprived communities to reduce energy consumption, to help to lift people out of fuel poverty and to ensure that people do not have to choose between heating and eating.

Regardless of whether profits are reinvested in further renewable projects or in energy conservation methods, the revenue that is generated is, due to the nature of renewable electricity generation, also renewable and can be used to continue to stimulate the local economy. That would be a welcome boost to engineers who are looking for employment, or to builders who are currently looking for work as a result of the lack of new housing developments. Alternatively, profits could be invested—as the motion suggests—in providing front-line services at a time of reducing budgets.

Programmes to reinvest profits in new renewable projects or housing improvements can be supplemented by modern apprenticeship schemes, which many local authorities are running. As alluded to in the motion, it is hard to imagine a scheme that could contribute to so many Government priorities: reducing emissions and energy consumption; boosting sustainable economic growth; reducing fuel poverty; and increasing employment generally and youth employment in particular. That can all be done in a sustainable manner by a publicly owned and controlled company. It is enough to make me smile just to be talking about publicly owned companies in Parliament, although that sentiment might not quite be shared across the Parliament.

I am glad that the Green party lodged the motion, because it has given us the chance to debate public ownership and the change in public perception that could be achieved if the renewables revolution was being driven by the public sector to benefit communities and not big business, with profits being reinvested in reducing fuel consumption and fuel poverty rather than electricity bill premiums delivering dividends for shareholders.

I hope that the Parliament can unite around the principles of the motion and that members will also agree to the amendment in the name of Sarah Boyack, so that we do not lose the opportunity to track the progress of the concept and possibly give members the chance to feed into the development at a future stage.

11:00

The city of Aberdeen is recognised as the oil and gas capital of Europe, and my constituency of Aberdeenshire West hopes to become the renewables capital. That is our mantra.

It is important that big business supports the renewables industry and uses its expert knowledge, skills and workforce to take it forward. There are many good community projects in Aberdeenshire West. For instance, as I mentioned in the chamber a couple of weeks ago, Grampian Housing Association and Huntly Development Trust have come together to work on a wind turbine project to generate local power for the community. The money that will be generated in the community will go into building affordable houses and other projects in the community. The project is wholly community owned. It is community based, community driven and community supported.

Also in my constituency, in Hill of Banchory, within the next eight to 10 weeks a biomass heating scheme will come on stream, which will support more than 600 houses, using the natural resources in the area’s woodland estates. That is the way forward: local communities taking ownership and benefiting from such projects.

Since 2007, the Scottish Government has given at least 800 grants to community projects. That is progress. That is about supporting community initiatives. Although, as far as I know, Aberdeenshire Council has no plans to become an owner of local renewable energy suppliers, it has been involved in supporting communities. I give Patrick Harvie an assurance that I am happy to engage with Aberdeenshire Council to see what more it can do on renewables and support for community initiatives in Aberdeenshire West.

The small community of Finzean, which I am probably the first to mention in the chamber—it is a word I like saying—has a fantastic community renewables project: a biomass system that supports its village hall. It also benefits from three water mills that have been there since the 19th century and which have heritage status. They continue to operate, and the energy and power that they generate support the sawmills that provide the fuel for the community’s biomass system.

There is a lot to be said for community ownership, and I endorse the communities that have done that in my constituency. Again, I say to Mr Harvie that I will engage with Aberdeenshire Council and I am happy to engage with him to take that agenda forward.

11:04

I, too, congratulate the less spiky, new-style Patrick Harvie on bringing the debate to the chamber, and confirm that his motion and Sarah Boyack’s amendment will enjoy the support of the Scottish Liberal Democrats at decision time. The issues that the motion highlights have certainly featured in our previous energy debates, but they have struggled to enjoy the prominence that they deserve in what is undoubtedly a crowded market.

As we seek to underscore Scotland’s potential to lead the way in the development of renewables, harnessing our natural resources, exploiting our skills base and capturing jobs and wealth creation opportunities, perhaps there is a risk that we will convey the message that size and scale are imperative. It is certainly true that we should aspire to nurture indigenous enterprises that are world leading in all aspects of the renewable supply chain and energy efficiency, but we also need to be alive to the opportunities for our local communities from the move to a low-carbon future. In his motion and speech, Patrick Harvie set out very well some of the ways in which that could happen that are applicable across the country, but I will pick up the minister’s implicit invitation and use Orkney to illustrate some of what is already being achieved and the potential for realising more of the objectives that are set out in the motion.

Orkney is fiercely proud of our place at the centre of the global development of marine renewables. Likewise, we take nothing but satisfaction from the interest that is now being shown by the likes of Siemens, Voith, Kawasaki, Scottish and Southern Energy, Scottish Power, E.ON and others in the various wave and tidal projects that are being progressed in the waters around our islands. If we are to avoid those technologies and industries going the same way as onshore wind in the 1970s, it is vital that we are able to demonstrate at scale what the devices can achieve. The involvement of such major industrial and energy companies in that process increases the chances of making that happen in the timescales that we need to see.

Will the member take an intervention?

I am sorry, but I do not have enough time.

Patrick Harvie is right: we need to do more to demonstrate how the renewables agenda can and will serve the common good. Like Sarah Boyack, I am a strong supporter of a more decentralised model of energy generation, and I think that the potential for using smart grids has been underplayed over recent years. In Orkney, the establishment of a regulated power zone has allowed far greater flexibility in how we use our grid capacity. As a result, we have been able to unlock and unblock a host of renewables projects in the islands, many of which are community owned, that otherwise would have struggled to gain access to the grid. In turn, that has encouraged increasing numbers of community bodies, development trusts and co-operatives to bring forward projects. Most of the smaller islands in Orkney now have turbine developments that they own and from which they derive invaluable sources of revenue.

The capacity of local and community-owned projects in Orkney totals over 14MW, and more projects are in the pipeline. Orkney Islands Council has taken a stake in one of them, which demonstrates the role that local authorities can and should play in the development of the sector.

Of course, flexibility in the models that might be adopted is key, but as last year’s report by COSLA and the Scottish Futures Trust highlights, there are plenty of examples of what works from across the country, including partnership and arm’s-length options. As Patrick Harvie observed, most of the examples appear to be from south of the border, sadly, but whatever the model is, the benefits—from better utilising assets and hedging against future energy costs to generating much-needed revenue and addressing issues such as fuel poverty—can be considerable.

Orkney is showing itself to be particularly innovative in that respect. Care4Energy Ltd, which is a local co-operative venture that involves public, private and voluntary sector stakeholders, including the council, is being established, and fuel poverty reduction and the provision of access to affordable energy for all in the island community will be among its aims. I am happy to provide the minister with more details about Care4Energy and the objectives behind it. It further illustrates how the common good can be well served by co-operative endeavour and full engagement by local authorities and the public sector.

I congratulate Patrick Harvie again on securing the debate, and look forward to seeing a renewed focus and leadership on this aspect of the renewables revolution.

11:08

I, too, thank Patrick Harvie for bringing the issue of local energy companies to the chamber for an important debate.

We should remind ourselves of the Government’s ambition to increase dramatically the amount of energy that is sourced from renewables by 2020. It is clear that local energy companies have their merits in contributing towards meeting that aim. The Government says that it wishes to maximise the benefits for communities from renewable energy. In that regard, it is interesting that Patrick Harvie suggested that the debate might be confrontational. It has not been particularly confrontational, and it does not need to be, as there is a lot of common ground on the issue. Indeed, that was highlighted in his questioning of the minister after a statement on the renewable energy investment fund. Mr Harvie invited the minister to ensure that a wide range of bodies would be considered to be eligible to benefit from that fund, and the minister readily did that.

There is a lot of common ground in our starting positions on the contribution of local energy companies to the renewables agenda. That has been demonstrated by the Government’s actions in the past and during the debate. The Government’s willingness to agree to the Labour amendment will ensure that the Parliament is kept abreast of work to foster local energy companies. I look forward to hearing more about the matter.

The motion says that there is a perception that the renewables agenda benefits only big business. I probably agree; that is an unfortunate perception. Many large companies are investing considerably in renewables infrastructure and Patrick Harvie was right to say that much of that work is good, although there are perhaps some issues in that regard.

However, it would be wrong of anyone to believe that the renewables agenda is benefiting only big business. The Government’s ambition to fund and support the development of 500MW of community and locally owned renewables by 2020 will benefit communities. I was interested to hear about the community and renewable energy scheme, which is making a positive contribution by providing loans for the development of infrastructure. Of the 42 projects for which funding was announced in October 2011, 29 are community owned.

I instinctively have much sympathy with Patrick Harvie’s position on publicly owned companies, but we should reflect on two issues. First, it needs to be demonstrated that local authorities want to enter the market. A criticism that is often made of this Parliament, rightly or wrongly, is that we encumber local authorities with a burden of responsibilities that they do not want. Secondly, I take on board the minister’s comments about the limitations—fiscal, rather than legal. We can perhaps return to the issue in the future. I support the Government amendment.

11:12

I disagree with Patrick Harvie; he has not been confrontational this morning—I am sure that members who remember debates on similar subjects in the previous session of the Parliament agree. He has made a positive contribution to the debate; indeed, the Green party has brought two positive issues to the Parliament this morning for us to debate.

Like Patrick Harvie, I am a member of the Economy, Energy and Tourism Committee. Our current inquiry into the achievability of the Government’s renewables targets has thrown up two vital issues in relation to today’s debate: planning and the need to engage communities in renewables projects; and the need to ensure that we have the people, the skills and the resources to deliver projects and deliver on the targets.

If initiatives such as those that members have described and those that are mentioned in the Greens’ motion are taken forward on such a basis, we will ensure not only that cost-effective energy can be supplied in a way that is relevant to the needs of communities but that there are employment opportunities for people in schemes and that individuals who are engaged in the planning process will see the positive impact of renewable energy on them and on the wider community.

We are rubbing up against a key factor just now in this country. In general, people support the wider green agenda and what the Government is trying to achieve through renewables. However, there are concerns—sometimes fuelled by less responsible people in positions of influence—particularly around planning, cost and the employment opportunities that will be created. The debate addresses those issues specifically.

There is a role for the Scottish Government to play, as has been mentioned. There are examples of how, by providing small pockets of funding, it can facilitate change and make things happen. I will give an example from my area. The Fife works project is about giving vocational training opportunities to people in the workplace. As well as receiving funding from the Scottish Government, the project has been supported by the council and the housing association. Because of the Scottish Government’s facilitation, it is delivering and meeting local needs.

Another example is the union learning fund projects, which have been going for about 10 years. Small bits of Government funding are bringing together partners from the public and private sectors and the trade unions, which enables them to go to colleges, to come to collective arrangements and to drive down costs. There is a role for Government to play in that regard. It is not always about throwing money at something; it is about ensuring that the structures exist to get the best out of what is there.

We will not always be where we are now. There are good projects that are looking at where the opportunities might lie in the future. The University of Edinburgh is taking forward the heat and the city project, which is a good example of scanning the horizon and seeing what we can do on district heating. Patrick Harvie mentioned a great number of initiatives across the country. I would like to mention the Ecology Centre in Kinghorn in Fife, which educates young people on the needs of the environment. The centre has brought forward a proposal for wind turbines so that it can be sustainable and continue to provide opportunities.

I am happy to support the motion.

11:16

In my opening speech, I highlighted good and bad experience. Caithness Heat and Power could have benefited from the advice that is now available from Highlands and Islands Enterprise, which set up the Highlands and Islands Community Energy Company in 2004. That expertise and experience should help more local communities to develop clean energy. Last week, for example, it helped the Light House community cafe in the Hilton district of Inverness to benefit from solar installations to reduce its energy bills. As the cafe has fridges and freezers on all the time, those installations will reduce the charity’s overheads enormously.

There are undoubtedly benefits and merits in local energy companies. Given the experience of Highland Council, I am pleased that Westminster has introduced enabling legislation—the Sale of Electricity by Local Authorities (Scotland) Regulations 2010—that permits local authorities in Scotland to sell electricity that is generated from specific renewable sources. The partnership between COSLA and the Scottish Futures Trust confirms that the regulations have promoted significant interest in how such projects can be taken forward.

The first project to take advantage of the enabling legislation was a wind farm in Bristol. However, the Forestry Commission is establishing six development partnerships across Scotland, and Scottish Water is progressing a number of renewables initiatives.

The “Report on the Commercial Aspects of Local Authority Renewable Energy Production”, which was produced in August 2011 by COSLA and the Scottish Futures Trust, gives a raft of advice on the appropriate commercial structure for a project, procurement contracts and tendering, as well as the use of frameworks for the design, installation, operation and maintenance of renewables facilities. When I read the report, I felt that if that advice and support had been available at the time of the Caithness Heat and Power project, the end result might have been quite different.

The report highlights further themes for exploration and research. It would appear that we are building up expertise and experience in the development and management of community energy projects, which, in future, will surely overcome the problems that, unfortunately, were experienced in Caithness.

I could not help but link community energy to the big society idea. As was stated about a month ago in Scotland on Sunday, Philip Blond, the director of ResPublica and the man behind David Cameron’s big society idea, has cited examples of community energy projects in a new paper by his think tank. The paper, “Re-energising Our Communities: Transforming the energy market through local energy production”, is excellent in showing how communities can work together to produce energy for the common good. Blond argues that community enterprises utilising renewable energy sources are the best way in which to tackle the problem. He highlights in that regard, as I have done, the Isle of Eigg Heritage Trust in the Hebrides.

Will the member give way?

I will do so in a second.

The member is in her last minute.

Also highlighted is the Fintry Renewable Energy Enterprise, which the minister highlighted.

You are just about to close.

Okay.

I agree with Patrick Harvie that leadership is required, and I thank him for the debate.

Many thanks, and sorry, Mr MacKenzie.

11:20

This has been an excellent debate. The motion captures the spirit of where a lot of our constituents are at the moment and reflects the change in the world that we live in. Energy supply and energy costs are absolutely fundamental for our communities and our society as we go forward. Where people have a stake in renewables, the attitudes are very positive. Members from across the chamber have talked with pride about communities that they know and understand. Whether in Eigg, Fintry, Gigha or Aberdeen, people understand the power of local energy production and the benefits that can come from it. That understanding transforms attitudes, and we should use that.

The problem is that energy costs are huge and are not going to get cheaper. The six big companies hold sway over the costs that we all pay. We can see the appetite for change expressed in the Which? magazine campaign to get a better energy deal for people, with more than 200,000 people signing up to the switch campaign.

We can act on the issue too. It would be a great pity if that community element of Patrick Harvie’s motion was rejected, because there is a potential role for local authorities and Dundee Labour is campaigning on that aspect. Taking a decision on the risk involved would be up to local authorities, but it would be good to help them with the process, because fuel poverty scars far too many households in this country. A third of our households live in fuel poverty, and we all know that that is a disgrace. The motion gives us an agenda for tackling that situation—which I believe is a crisis, as does Citizens Advice Scotland.

The situation needs political action, because 80 per cent of the houses that will be there in 2050, which is when we need to have met our 80 per cent carbon reduction target, have already been built. The agenda is therefore difficult because it is about not just new houses but existing houses. What the motion proposes is a transformative agenda, but it needs leadership because it is hard to achieve. It is about communities collectivising and pulling people together. I believe that if the Scottish Government put the same effort into promoting community, city-based and town-wide schemes as it puts into the big-scale renewables, it could make a huge difference. Over the past 12 years, successive Governments have put massive energy into community renewables and we can see the fantastic results in our communities in the Highlands and Islands. However, we need to ensure that that happens across the whole country, which is when we will see results.

I propose that the minister holds a summit with local authorities to talk about the agenda after the dust has settled following the local council elections. We will have a raft of new councillors and there may be changes in local authority administrations. We should give them a bit of time to settle down, but we should use the time between now and then to do some work so that we kick the process up a gear, to pick up on something that was said in the previous debate today.

The Energy Saving Trust has done a huge amount of work, but there is expertise across the UK. Local authorities need to be given support, but I would be the last person to be prescriptive about what they should do. In that regard, I want to pick up on the point that Jamie Hepburn made, because it is not about telling them what to do. The motion in front of us talks about a variety of models. We should let each local authority choose what is right for it but give it the expertise. We have given local authorities legislation on climate change and they are now meant to be working towards targets on carbon reductions. We have given them renewables targets, so we should let them be part of the process and give them assistance.

There are great examples of schemes and we need to know what has worked and why. Claudia Beamish has just told me of a scheme in the Borders and there are examples in Aberdeen, Glasgow and in Highlands and Islands communities. There is a lot out there to learn from. The bit that we have not cracked in Scotland is the city-wide level. In that regard, work has been done in Birmingham that we could learn from.

So, let us move forward together. This is an agenda where we are missing a trick.

You must close.

Jobs could be created. Mark Griffin and John Park mentioned that. Let us work with the further education sector and the building sector and look at trades and skills, because there is something for everyone in the agenda.

Please close.

I hope that the minister will take a lead on the agenda.

11:25

The debate has been excellent, and I am grateful to the Scottish Green Party for bringing the topic to the Parliament.

Many members of all parties made useful and informative speeches, and the debate has been revelatory of just how much activity there is in the field in communities throughout Scotland. We have heard from members about schemes from Orkney, Finzean, Aboyne, Glasgow, Eigg and Caithness. That is a sign of the success of such schemes and the growing interest of communities throughout Scotland in them.

As minister, I want to work with all parties in pursuing the objectives that the Government has set out. I am especially keen to continue to work with the Green party. The principal reason why we could not accept the motion, although we approached it from the standpoint of wishing to work as closely as possible with the Greens, is the statement that local authorities should

“buy energy on the wholesale market to become a domestic supplier in the local community”.

We do not rule that out—there is no regulatory barrier to it; it is possible, legal and permissible. However, it is important to separate the two issues.

We all recognise that locally owned generation projects, projects that provide local community benefit and projects that local authorities lead and drive forward through ownership or working with local communities are all good things. Where I differ from Patrick Harvie—it is a genuine difference—is that I think that it is extremely risky for local authorities to enter into the retail and wholesale markets and I am not convinced that it would be wise and prudent for them to do that.

However, if Mr Harvie wishes to discuss the details of the proposal with my officials, I would be delighted for him to do so. I make that offer to him and hope that he takes it up because we are most sincerely determined to continue to work with him and his colleagues—and all parties—on matters on which we are fundamentally in agreement.

I have lots more technical stuff, but I will leave it because, were I to go into that territory, I would not have time to deal with anything else. I put it to one side.

To respond to Sarah Boyack’s point, we are, and have been, giving a lead. I will spell out the facts, because facts speak louder than words. Since May 2007, more than 800 grants for community renewables, worth some £16 million, have been allocated through the community and renewable energy scheme—CARES—and its predecessor. I acknowledge the work that Sarah Boyack did in her time. She gave a lead; we are following that up and giving an equal lead.

In 2011, we launched the CARES loan scheme. Grants are no longer permitted under the feed-in tariff—FIT—rules, so loans it has to be. They are for pre-planning costs and the scheme has a budget of £7.75 million. I inform members that 42 projects producing 56MW of renewable energy have been offered loans totalling £4 million.

From April—next month—there will be a public register of community benefits, which will provide transparency about the community benefits that companies offer. That will move us into a new era. The public estate is giving the lead and offering a higher financial response—£5,000 a megawatt for the Forestry Commission and, from next month, community-owned schemes in which the public sector is involved will require a much higher contribution than that.

We are driving up the tariff and companies are following. From meetings and discussions that I have had with companies, and not just big companies, I can report that many—probably not all, but many—desire to move away from paying as little as possible and want communities to feel that they are involved and valued, not exploited and abused. That is a very good thing and I strongly welcome it.

I agree entirely with Mary Scanlon’s comment that we must analyse these things very carefully. Of course, the Eigg scheme has been very successful; however, the problem with the scheme in Caithness was that it was a bit too sophisticated. We must have an honest and open recognition of the need to proceed with great care. As many members have pointed out, the Scottish Government can play an important leadership role; however, it also has an important role in ensuring that advice is given. Indeed, we have provided substantial support to the Carbon Trust and other bodies to provide advice on all manner of schemes, including schemes for energy efficiency and reduction, which I believe are coming more to the fore partly because of the work that the Greens have been doing over the years and to which I pay tribute. Many people are talking about this. It is just not enough to say, “We’ll reduce carbon emissions and have more renewable energy”; we need to focus on the two different but related issues of cutting energy use and ensuring more energy efficiency. We are giving advice on these matters to people throughout the country and it is vital that we continue that work.

Will the minister give way?

No—the minister is in his last minute.

I am very sorry; I would have taken the intervention but I have only 20 seconds left.

I am looking forward to the time when, with the will of all members, the Parliament might have more time—perhaps another day in the week—to debate these issues. I felt that time was constrained this morning and that members wanted to say more. I strongly believe that if Parliament had another day to discuss these issues it would be an excellent thing. Indeed, even Mr Harvie would have more time to speak, which is something that I am sure we would all thoroughly enjoy.

In that spirit of good will and consensus, I am happy to contribute to the debate.

11:31

I thank all members for their speeches. I began by indicating that I would try to be a bit less spiky than I sometimes am but I am afraid that I am simply not willing to swap my morning coffee for camomile tea, so we will just have to settle for the standard that I manage to achieve. I have to say that I found it hardest to contain myself when Mary Scanlon suggested that we see this in the context of the big society, just as in the previous debate we were urged to see fans of cycling as fans of Boris Johnson. As members will understand, if we had thought that, we would have put it in the motion—but we don’t, so we didn’t.

Nevertheless, Mary Scanlon also mentioned certain successes and failures and talked about the need to learn lessons. I recognise and value that view, but we should also remember that lessons are only worth learning if we intend to put them into practice and I am glad that there is general cross-party support for the principle behind the motion that we need to be doing a great deal more of this activity in Scotland.

Patrick, do you agree that it would be very helpful if the big society extended to Scotland’s islands with regard to fair transmission charges?

I remind members not to refer to each other by their first names.

I certainly agree with the point about transmission charges, although I continue to be sceptical about the big society concept.

Sarah Boyack talked about the benefits of collective action on procurement of, for example, solar panels and other renewables and also emphasised the need for leadership. It is for Government not to impose but to empower, but that is still a proactive action that Government needs to take. Sarah Boyack was also open to local government having a role in buying and selling energy.

Mark Griffin said that even having a debate on local energy companies was enough to make him smile. I am delighted to have spread a little joy around the chamber this morning.

Liam McArthur highlighted the importance of demonstrating not only new technologies but how the industry can be turned to the common good and mentioned the community benefits that have flowed from the 14MW of projects in Orkney. I very much hope that, as part of its inquiry into the renewable energy targets, the Economy, Energy and Tourism Committee will be able to visit Orkney and learn not only about the exciting marine developments on the islands but about equally important work focusing on the role of the community.

Fergus Ewing mentioned the 500MW target for community and local ownership and said that, instead of communities simply being the recipients of cheques, the best model was community ownership. However, the term “local ownership” is still a wee bit ambiguous. Local ownership by small businesses is not a bad thing. It is a good thing, but it is different from what we call for in the motion, which is community and public ownership. The minister said that he is uncomfortable with some of our arguments about local energy companies becoming suppliers. I am grateful for the offer to discuss the details with him or with officials—I will certainly take that up—but he placed a great deal of emphasis on the barriers. What we need is the will to overcome those barriers. I do not pretend that doing so will be easy or that we can do it with a snap of the fingers, but the political will needs to be there to do it.

Let us talk about something that we could do that might take us halfway in that direction. I give as an example a project in the Netherlands that I did not have time to mention in my opening speech. It is called—I know that I am going to mispronounce it—met de stroom mee. Apparently, the rough translation is “go with the flow”. It involves the registration of 10,000 households who have agreed to let the project negotiate on their behalf directly with the energy companies. Using the bulk purchasing power of that many households, the project went on to secure bids from energy companies at a much lower cost per household than the average that they had been paying before. Such a project in Scotland would not go all the way towards what I am talking about, but it would certainly have a role to play, whether it took place in the private sector, the public sector or under a social enterprise model.

I restate the perception that I had when I visited Laurieston in Glasgow, which I mentioned in my opening speech. The investment that could be put in from either community or public sources to enable local energy generation or district heating is only going to be there if there is some means for the people who make that investment to get it back, and if they were able to become the supplier of energy to the community, that would enable them to do that. I am sure that there will be financial risks—the minister emphasised those—but we are also passing on a massive financial gain from the industry, and the private sector is surely not the only game in town. I hope that we will not be sceptical about the basic proposition of local energy companies and that we will move forward with the proposal.

Many members mentioned projects in their communities, more in the sense of community ownership than public ownership, whether that is Dennis Robertson bringing Finzean to the chamber or Mike MacKenzie speaking poetically about Gigha. Mike MacKenzie also suggested that I have an implied antipathy to business. Not at all. I was clear in my opening speech that we recognise the central role of the private sector, but if the renewables agenda is a common endeavour, as Mike MacKenzie described it, we need a sense that the benefits are shared for the common good. I want a renewable future for Scotland, but it would be a shallow victory if it led to yet another generation of increasing economic inequality in our society.

I am grateful for the general sense that we can do much more to progress the agenda. I am sorry to say that there is a growing perception that support for renewables is a matter of supporting big business on one side or big egos on the other. It does not need to be that way. The renewables transformation will fail to secure real social benefits and a fair share of the economic benefits throughout our society, as well as the vital achievements on climate change, if we do not question the ownership structure and not just consider how quickly we can achieve the targets.

I am grateful to members for their contributions to the debate, and I look forward to further discussions with the minister on the issues.

That ends the debate.