The UK Government has just announced plans to unlock investment opportunities in new, large-scale, energy-storage-capacity projects, the scale of which have not been built in the UK for over four decades.
The aim is to create a reliable backup to deliver the full potential of renewable energy – a critical component of Britain’s clean-energy transition – to address the intermittent nature of wind and solar power, by providing energy storage, grid-balancing and security of supply. This strategic move could lead to billions in energy system savings and, ultimately, much lower energy bills.
Beyond those savings, the long-term economic impact of these projects is equally significant. By creating well-paid local jobs for people of working age, we can reduce the need for commuting or relocation, support local services like primary schools and contribute to a thriving rural economy.
‘Water batteries’
There is, rightly, excitement about the benefits of expanding long-duration electricity storage such as pump-storage hydro (PSH). At Glen Earrach Energy, we are working on developing a PSH project based at Loch Ness.
Such schemes have been referred to as ‘water batteries’ because they use excess off-peak power to pump water uphill into a holding reservoir before releasing it back down to a lower reservoir to generate electricity when it is needed.
We believe that, as the UK’s largest and most water-efficient pump storage hydro scheme, we are part of the answer to how Britain reaches net zero. The energy system benefits of expanding long-duration electricity storage are garnering significant attention.
Calculating the community benefit
However, there is another very important part to the story, and that’s how communities in Scotland can benefit from onshore renewable developments. Angus MacDonald MP recently argued that Scottish projects should provide more substantial benefits to impacted communities. He also questioned the effectiveness of the traditional fixed-rate approach based on power, proposing that community benefit payments should be tied to a percentage of net revenues instead.
Individual pump storage hydro projects are larger in scale than traditional onshore renewables projects such as wind farms. For example, Glen Earrach Energy’s 2GW project has an energy output equivalent to the entire onshore wind farm capacity currently installed in the Highland Council area, roughly 800 wind turbines.
Applying the Highland Council’s social value charter, this project could deliver £3 billion over its initial 120-year lifetime (which can be extended) – equivalent to £25 million a year to the communities within the remit of the council charter. Following these principles, our project alone could provide nearly triple the total community benefit fund of £9.1 million distributed by the entire wind power industry in the Highlands last year.
Let’s unpick the scale of this. Were such a pump-storage hydro fund distributed across the entire Highland Council area, this would represent £216 for each household or £105 for every person living in the region, every year. If we then consider that there are at least 6GW of potential PSH projects in the Highland Council area, this amount increases to close to £660 per household or over £300 per person, annually.
Managing the funds
There is no doubt that communities should retain substantial value from the renewable infrastructure which is built in their midst. Ultimately, the scale of these projects presents a unique opportunity for communities to shape how they benefit and how projects maximise positive local impacts.
Given the potential challenges of large-scale community benefit funds, a tailored approach with strong community engagement is essential. There is a dose of scepticism over decisions about the Highlands taken without serious consultation with Highland communities. The debate over who benefits and how funds are managed must be addressed very carefully.
We have begun seeking views. Most community members who shared their thinking with us at our early engagement events have expressed a clear understanding of the need for large-scale energy-storage projects in Scotland.
They also added a note of caution, emphasising that any development must both maximise community benefit and minimise environmental impact. Unlike many other renewable and net-zero energy technologies, pump-storage hydro offers a unique advantage: the best projects can almost fully blend into the natural landscape once built.
Most water-efficient scheme in UK
It does, however, rely on moving a natural resource, water, up and down a hill. Many are rightly concerned about the effect on Loch Ness’s water levels, which is why we care so much about the water-efficiency of the scheme. We are proud to be the UK’s most water-efficient pump-storage hydro scheme.
What is the most appropriate way to calculate community benefit funds for PSH projects? Should we consider the method which was developed with wind farms in mind or explore an approach based on water volume abstracted or a percentage of net revenues? And, of course, it is difficult to talk about community benefit without defining community – a process that we need to do with, not for, communities.
These are the questions that we will be engaging in conversation about with local communities and other stakeholders over the coming weeks and into the New Year. Regardless of which approach is used, large-scale renewable energy projects have the potential to deliver meaningful, long-term benefits to the communities that host them.
Roads, sports programmes, affordable housing…
By bringing in additional financing to communities for infrastructure improvements – such as schools, roads, and healthcare facilities – and initiatives such as job training, education, culture, sport programmes and affordable housing, or reducing the cost of energy or simply providing a universal annual dividend, these projects can be transformational for the communities that host them.
It is only by working closely with residents, community organisations and groups, community councils, local councils, and stakeholders at Scottish and UK levels that we can ensure the positive impacts of such projects are felt and create value for generations to come. We look forward to doing exactly that over the coming months as we take the UK’s most water-efficient pump-storage project into the next stage of development.
Roderick MacLeod is director of Glen Earrach Energy