First Minister Humza Yousaf is urging Rishi Sunak to provide a market mechanism that will release millions of pounds of investment into hydro-electric schemes in Scotland.

In a letter to the Prime Minister, Mr Yousaf has called for more support for energy technologies such as pumped hydro storage which is currently the only major renewable electricity technology ineligible for UK Government support.

His approach to Downing Street coincides with a visit to Sloy Power Station, Britain’s largest conventional hydro power plant, which SSE wants to convert into a pumped hydro storage facility.

At the flick of a switch, the converted scheme on the banks of Loch Lomond could provide firm, flexible renewable energy for up to 160 hours non-stop, enough to power around 90,000 homes for up to one week.

It is expected a planning application could be submitted to the Scottish Government by late 2023 or early 2024 with commissioning by 2028. 

SSE and Drax are among a number of companies with plans to flood Scottish glens and hollow out mountains to build up to six pumped storage hydro-electric stations.

The companies say the £8 billion investment in clean energy would increase the UK’s existing hydro infrastructure threefold and create up to 15,000 jobs.

They are lobbying the government for financial support on the back of a report by Scottish Renewables and BiGGAR Economics into the potential economic benefits of the projects.

Despite the growing need for storage as Britain builds more intermittent wind and solar power, no new projects have been commissioned since 1984.

In his note to Downing Street, Mr Yousaf says: “Industry representatives have been clear that in order for long duration energy storage solutions to progress they require a cap-and-floor mechanism that ensures a minimum level of revenue.

“UK Government inaction on this issue represents a significant obstacle to deployment, and risks failing to secure the economic benefits of pumped hydro storage projects.”

Mr Yousaf points out that this would allow pumped hydro storage projects across Scotland, that have already secured planning permission, to begin construction immediately.

Pumped storage hydro projects can provide flexibility to the grid and help to ensure a secure electricity supply through balancing intermittent renewable electricity generation. 

The First Minister has called for the UK Government to find a legislative solution.

He says: “I am concerned that slow action in this area is dampening investor confidence and preventing projects that are essential to the joint goals of our governments from coming forward.”

Letter in full

Dear Rishi,

Call for UK Government to support pumped hydro storage through a market mechanism

To tackle the climate emergency, we need to rapidly and fully decarbonise our electricity system. We fully support the UK Government’s ambition for decarbonised electricity by 2035. I am pleased that our governments are already working together to accelerate the net zero energy transition. But we know there is more to do.

As you know, Scotland is a global leader in the deployment of renewables, and as we expand deployment both onshore and offshore, Scotland’s renewable resources will play an increasingly important role in the transition to a net zero GB electricity system.

While additional deployment of renewables will play an important role in lessening dependence on fossil fuels for electricity generation, large-scale, long-duration energy storage is also absolutely critical to achieving our collective goals. It can help to integrate and maximise our significant renewable electricity generating capacity, ensure security of supply and manage constraints across the grid.

With this in mind, I am calling on the UK Government to support the development of long duration energy storage (including pumped hydro storage) through an appropriate market support mechanism. 

Industry representatives have been clear that in order for long duration energy storage solutions to progress they require a cap-and-floor mechanism that ensures a minimum level of revenue. With an appropriate market support mechanism, several pumped hydro storage projects across Scotland, that have already secured planning permission, could begin construction immediately. This would provide vital resilience and flexibility as thermal generation starts to retire. 

Pumped hydro storage is currently the only major renewable electricity technology ineligible for UK Government support. UK Government inaction on this issue represents a significant obstacle to deployment, and risks failing to secure the economic benefits of pumped hydro storage projects.

A UK Government consultation in 2022 identified pumped hydro storage as the most well-established large-scale, long-duration electricity storage technology in the UK. It also committed to develop appropriate policy to support investment and ensure the deployment of sufficient large-scale, long-duration energy storage to balance the overall electricity system by 2024.

I am concerned that slow action in this area is dampening investor confidence and preventing projects that are essential to the joint goals of our governments from coming forward.

You will also be aware that planning and consenting timescales are raised by industry as barriers to rapid deployment. Work by the UK Networks Champion, Nick Winser, and others is already providing insight into how timescales can be accelerated.

One key barrier is the Scottish Government’s lack of devolved powers to reform the consenting regime in Scotland for grid projects and large scale electricity generation, the framework for which is set out in the UK Electricity Act – and which neither the Scottish Parliament or Scottish Ministers can amend. As you know, the Act dates from 1989 and its provisions on these matters are sorely outdated.

The Scottish Government has proposed solutions to the UK Government that would enable changes required, and we continue to call on the UK Government to urgently find a legislative solution to accelerate the consenting process.

Whilst we believe legislative change is essential, we are also doing everything in our power under the existing regime to accelerate consenting processes in Scotland. We are continuing to review the current framework, and are considering options and engaging with key stakeholders to streamline our processes and make efficiencies in existing consenting processes.

I would be grateful to hear from you on how the UK Government plans to accelerate progress on these important issues.

Humza Yousaf

First Minister of Scotland