Ignacio Galán, the chairman and chief executive officer of Iberdrola, has outlined a strategy for further multi-billion pound investments in renewables in the UK, with a strong focus on Scotland, in a lecture at the University of Strathclyde.
Mr Galán was delivering the fourth James Blyth lecture at the university, in which he gave a detailed analysis of future prospects for renewables investment and the policy changes required to make this happen and facilitate cuts in greenhouse gas emissions.
He warned of the importance of a solid and stable regulatory framework if renewables investment plans by Iberdrola, owners of Glasgow-based ScottishPower, and other energy companies are to become reality.
These projects could include new pumped storage capacity through an doubling in size of ScottishPower’s existing 440MW facility at Cruachan as well as further large offshore wind capacity, together with onshore wind and conventional gas-fired generation.
Mr Galán said that new pumped storage and gas-fired generation capacity were both essential to manage the stability of the power system in the UK by matching supply with demand, given that output from renewables such as wind and solar is variable.
Mr Galán said that pumped storage was the “most efficient energy storage system”, and added: “It is important to have a regulatory framework that ensures the economic viability of these facilities. If this was the case in the UK we could develop our plan to increase the capacity of ScottishPower’s Cruachan pump storage plant, already the largest in Scotland.”
In a wide-ranging lecture, Mr Galán also laid out a positive scenario for offshore wind generation, based on the scope to reduce costs sharply and make it competitive with other generation technologies.
He acknowledged that currently investment costs for offshore wind are significantly higher than for onshore wind, but added: “I firmly believe that significant cost reductions will be achieved over the next five years.”
Mr Galan said a key issue in optimising costs for offshore wind will be larger turbines, noting that 8 MW prototypes are currently under consideration, and that Iberdrola has major projects currently under development including ScottishPower’s planned East Anglia One scheme in the North Sea, which could total up to 1,200MW. He recalled that ScottishPower recently opened its first offshore wind farm in the UK, the 389 MW West of Duddon Sands installation near Barrow in Furness.
Another source of efficiency for offshore wind will be through more efficient foundation designs. Here ScottishPower is currently collaborating with the University of Strathclyde to develop floating foundations for use in deeper waters, working alongside the Offshore Renewable Energy Research Centre in the TLP WIND project, Mr Galán said.
At the policy level, Mr Galán said it was essential that governments right across Europe, including the UK, put in place strong market-based frameworks to encourage more investment in renewables, and thus deliver reductions in greenhouse gas emissions. The EU has a binding target of reducing carbon emissions by 80% by 2050, compared with 1990 levels, and 40% by 2030.
He said: “A strong market based CO2 price signal would increase the relative competitiveness of certain renewable technologies without distortions.”
A key change to the European Emissions Trading System (EU ETS) that should be made urgently was to bring forward the introduction of a Market Stability Reserve, which will effectively create a floor price for permits to emit CO2, from 2021 to 2017, Mr Galán told his audience.
Iberdrola is investing a total of €9.6 billion from 2014-16 across its global business, of which the largest proportion, 41% or €3.9 billion, is in the UK. Between 2012-14, Iberdrola invested around €4 billion in the UK. Looking further ahead, Iberdrola intends to invest more than £10 billion from 2015-2020 in the UK, of which around 55% would be in Scotland, creating and supporting thousands of jobs.
Such projects include some already scheduled to upgrade long distance transmission networks to allow them to channel the output from Scotland’s wind farms more efficiently to other parts of the UK, alongside investment in local distribution networks.
During his lecture, Mr Galan urged engineering students to take up the challenges faced by the energy sector today, in particular that of developing technology to help ensure a more sustainable world for future generations. He said Scotland has a proud tradition in this regard.
“Scotland and Scottish engineers have a long history of leading the world in engineering innovation. Glasgow and Scotland are still leading the way in sectors like renewable energy, with multinational companies setting up here to tap-in to this stream of engineering talent," he said.
"With huge global investments to decarbonise the energy sector and modernise electricity grids, engineering graduates have a world of opportunities in front of them." Mr Galan said. "Demand for good engineers is far greater than the supply and we are one of very few sectors offering lifelong career opportunities and employment."