Consultation on a Scottish Energy Strategy: The Future of Energy in Scotland

ABB endorses the priorities set out in Chapter 3, however, we note that there is little mention in the strategy about the importance of interconnectors, nor about the value that digital controls and data can bring to energy systems.

Energy storage technologies could become one of the defining features of the future energy landscape, as they allow the integration of renewable energy into grids, tackle the issue of intermittency, and reduce peak power demand.

Innovative, practical, working technologies are available now and have enormous potential to deliver energy cost savings and efficiencies.

The use of modern power electronics in networks can remove the need to reinforce upstream networks, potentially saving significant investments and reducing overall network costs. ABB has been involved in a number of these projects, for example our involvement with Western Power Distribution (WPD) to deploy a flexible power link to connect two previously incompatible distribution networks. It has been estimated that if all of the methods suggested in WPD’s Network Equilibrium project are implemented it would release over 11GW of capacity across the UK network, saving around £1.5 billion compared to traditional reinforcement solutions.

In order for the Scottish Government to be able to deliver the vision, it is imperative that there is a joined up approach between the Scottish Government, Ofgem and BEIS. While this section recognises the range of technologies available, it does not explore the value that digital can bring to a more efficient energy network.

ABB believes that transport represents a huge opportunity to reduce energy consumption and to utilise renewable energy. Reducing commercial and industrial consumption has an important role to play, along with ensuring that local heat systems work. It is important that the Scottish Government recognises the value of energy storage.

Surveys help companies to understand the business case of investing in new technologies to make processes more resource and energy efficient. However, the key issue is that such technologies often offer a 7-10 year payback for industry. Currently, many companies will not move on efficiency improvements unless there is at least a 2 year payback.
ABB is not in a position to say whether the target is achievable, but notes that the target looks ambitious and will require both governmental and private sector expertise to achieve this ambition. ABB notes and welcomes the actions outlined by the Scottish Government on page 50. ABB can partner with or be commissioned by the Scottish Government to develop demonstrator projects.

The Scottish Government needs to facilitate the exploration of alternative, disruptive methodologies to find the lowest cost way of building, running and maintaining energy systems.

From a broad perspective, ABB believes the most effective way of limiting costs is to promote a coordinated technology platform that allows competition and encourages opportunities for different parties involved in providing services and networks to be able to participate.

Finally, it is important to note that the installed base of the electricity network still contains much aging equipment that is not highly efficient, for example there remain high loss transformers releasing large amounts of heat. Improved incentives are required for greater network plant efficiency and optimum use of reactive power flows to reduce network losses, resulting in lower network operating costs.

ABB does not have a position on what targets should be applied to encourage the full range of low and zero carbon energy technologies. However, ABB provides a wide range of low carbon technologies and systems and would be happy to work with the Scottish Government on understanding these technologies and how they could be best implemented. For example, ABB operates Copenhagen’s district heating system and we would be delighted to provide an opportunity for officials and ministers to visit the site.

ABB can facilitate greater integration of wind energy so it can co-exist with other technologies. The technology is available for creating a distributed network, allowing for greater use of renewable technology.

Technology can help lower the costs for onshore wind through lower connection costs. There is scope for potentially lowering connection charges through flexible local connection.

The Scottish Government can facilitate the network to accept more renewable sources by utilising the infrastructure at decommissioned thermal generation sites. ABB believes that large scale system stability technology is suitable for these sites, maximising the use of the energy infrastructure in place.

ABB does not have a view on this issue.

ABB believes that the priorities set out in Chapter 4 are important and we particularly welcome the focus on electric vehicles and enhancing competitiveness and improved energy efficiency in the industrial sector. In order to deliver these strategic objectives, ABB believes that the Scottish Government will need to work collaboratively with DfT, BEIS and HM Treasury, as many of the mechanisms for delivering these objectives lie with these departments.

On energy infrastructure specifically, the required investment needs to be directed towards new technologies that support a smarter, more digital and more flexible grid. ABB welcomes the UK’s National Infrastructure Commission’s ‘Smart Power’ report, with particular reference to its suggestions on interconnectors and energy storage.

ABB does not have a particular view on the proposed mechanisms that the Scottish Government proposes to use to achieve these targets. However, ABB would be happy to work with the Scottish Government and to showcase how technologies are used in other European nations.

We welcome the fact that the Scottish Government is looking at smart, local energy systems. We would encourage the Scottish Government to look particularly at Germany, where many Community Energy Schemes have developed in relatively small, contained geographies – i.e. local communities rather than larger districts or regions. The Scottish Government should examine such examples to see whether applications in Scotland could work in helping to limit energy costs naturally.

ABB does not have a view on energy efficiency targets. However, ABB does can assist with surveys of important sectors that can help develop and frame appropriate targets.

ABB strongly supports the Scottish Government’s vision of developing smart, local energy systems. There is significant scope for Scotland to develop local energy systems, which are focused on the needs of the community and look at all aspects of energy, rather than just one type of energy source and supply.

It is important when considering the priorities that demonstration models need to take a whole system approach. In developing this strategy, the Scottish Government needs to enable both companies and communities to access data and information, so transparency is vital. Much of this cannot be achieved without some form of planning around energy to ensure the infrastructure required is delivered.

ABB has a wide range of expertise in the development and delivery of smart, local energy systems and much can be learned from our European neighbours and good examples from the USA (eg New York).

In Germany, significant community energy system ownership exists, owing much of its growth to technical and commercial developments as well as the “peer-to-peer” trend and its inherent advantages in terms of engaging with the community and customers directly.

Very significant levels of renewables in Germany are community owned, currently community-owned energy in the UK is negligible in comparison.

ABB would also suggest that some thought should be given to the idea of DSOs having a coordination role not merely over the electricity supply, but the whole energy supply. Such a co-ordinated approach to energy system planning would maximise the efficiency of multi vector energy supply and infrastructure, whilst optimising infrastructure investment.

Building flexibility into future arrangements and the evolution of new models built on experience from pilot schemes would allow new models to emerge if required. Any operating model will require full transparency and availability of relevant system data to the market participants.

There are many models of Government-owned energy companies around the world. ABB works with both state run and private energy companies.

Ensuring there is sufficient finance available for transformational change to Scotland’s energy systems is vital if the nation is to achieve the step change envisaged. Such a bond could be a pump primer for further investment. Any new funding model will need to ensure that investors are rewarded appropriately.

ABB is happy to work in partnership with the Scottish Government to help deliver the vision. The Scottish Government needs to provide an environment where partners can feel secure in their long term investments, whilst at the same time ensuring there is flexibility in the system to enable change and new technologies to be brought on-stream. It is however vital that the investment and long term planning are in place to ensure that the vision can be delivered.

ABB does not have a particular view on this, however, as with most strategies, ensuring regular review periods and a strong focus on implementation will be vital to ensure delivery. The strategy will also need to be flexible enough to meet changes both to the global marketplace, but also to technology changes. It would be helpful if reviews by the Scottish Government could be appropriately synched with Ofgem and BEIS reviews to ensure a joined-up approach.

The Scottish Government should examine our international competitors closely – benchmarking the best in class in the world to guide policy in these areas. For example, how are Scandinavian governments incentivising high quality building standards, or why are German manufacturers more willing to upgrade to more efficient manufacturing technologies? If it is down to policy, we need to ask whether we can emulate such policies. If it is down to culture, the Scottish Government needs to identify the correct incentives to stimulate a “mind shift” in the market – such as the aforementioned financial incentives – and to sustain it.

Engagement with the public is important. ABB can support engagement through our monitoring tools, but the focus needs to be on sharing data and information, along with sharing the results of innovation and new models of energy systems.