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Scotland’s Renewable Energy Public Sector Funding – Is it working?

Posted on Feb 21, 2014 by Dominic Dunnett  | Tags: renewable energy, scotland, investment fund, green energy, REIF  | 0 Comments

It is approaching 2 years since the announcement of a new £103 million government supported investment fund to drive the growth of renewable energy in Scotland.

The Renewable Energy Investment Fund (or REIF) was designed to compliment funding from the Green Investment Bank and aimed at supporting projects at an earlier stage of development in communities and rural businesses as well as wave and tidal developers. It was hailed as the fund to “allow communities all over to reap the benefits of a green energy revolution”. So has it?

So far, the Scottish Government has pledged to generate an equivalent of 100% of electricity demand from renewable energy by 2020. It has made steady progress, but REIF was expected to spend £16m in 2012-13 and has spent just £1.6m because "few projects were in a position to spend any money" (see the comprehensive report and graph below from Audit Scotland).

It is evident and generally recognised that renewable energy projects in Scotland are moving at a much slower pace than required to meet desired targets and this has been put down to factors such as current economic climate and UK Energy Policy.

Even with these slightly limp statistics however, the impetus and enthusiasm to develop the industry continues to grow. On a Community-owned level, Vijay Bhopal, Operations Director for the Sustainable Community Energy Network in Edinburgh is of the opinion that REIF “helps to smooth over a gap in the market which was in much need of repair”. With a large chunk of REIF’s budget heading towards Community-owned renewables, Vijay is certainly optimistic about his future relationship with the Fund.

There has also been a concerted to re-focus REIF. In the case of wave and tidal energy, initiatives such as the new £18million Marine Renewables Commercialisation Fund or MRCF (run in conjunction with the Carbon Trust) will provide a welcome boost.

REIF has so far fallen well short of the level of funding required to meet EU, UK and Scottish Government targets, but there is still time and certainly plenty of enthusiasm in the sector to help turn the tables around.

A final consideration is the uncertainty of Scotland’s future. If there is a Yes vote in September this year, there is no guarantee that the current incentives will remain as they are, which may in turn have a negative impact on the of value sites and projects.

 However, it is safe to say that all political parties in Scotland have shown support for the renewable energy industry which is lauded as being an area of Scottish expertise, national pride, and as being an international advantage. It is therefore highly likely that an equivalent scheme or a transitional period will be negotiated as a priority, should this happen.

Whether the National Grid will remain in place to sell the electricity produced or whether it will be divided up like George Osborne’s “CD Collection” is still a concern however. 

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