I refer to the application made by Aquamarine Power Ltd. ( the Company ), dated 17 th June 2011 for:

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1 Ms Megan Richardson Aquamarine Power Ltd. Elder House 24 Elder Street Edinburgh EH1 3DX 14 February 2012 Dear Ms. Richardson, CONSENT FOR THE CONSTRUCTION AND OPERATION OF AN OFFSHORE DEMONSTRATOR WAVE ENERGY CONVERTOR ARRAY AT THE EUROPEAN MARINE ENERGY CENTRE (EMEC), BILLIA CROO, ORKNEY. Application I refer to the application made by Aquamarine Power Ltd. ( the Company ), dated 17 th June 2011 for: (i) consent under section 36 of the Electricity Act 1989 ( the Electricity Act ) for construction and operation of an extension to the Wave Energy Convertor (WEC) at the European Marine Energy Centre (EMEC), Billia Croo, Orkney, bringing the generation capacity up to a total of 2.4 MW. The consent is for construction of a further two WECs and for operation of the full three WECs for a maximum of 20 years. Description and background The Company is proposing to construct and operate a further two demonstrator wave energy convertors at the European Marine Energy Centre (EMEC), Billia Croo, Orkney. The scheme will then generate up to 2.4 MW of power from the sea and will involve the construction and operation of the following: Two additional Oyster wave energy convertor devices (making three in total) Interconnecting pipelines Consultation In accordance with statutory requirements, advertisements of the application had to be placed in the local and national press. Ministers note that these requirements have been met. Under Schedule 8 to the Electricity Act, the relevant planning authority is required to be notified in respect of a section 36 consent application and notification was sent to Orkney Island Council as the nearest onshore Planning Authority, as well as to Scottish Natural Heritage (SNH) and the Scottish Environment Protection Agency (SEPA) amongst others. 1

2 Orkney Island Council as the nearest onshore Planning Authority support the application subject to environmental monitoring taking place. This monitoring will be in the Environmental Monitoring and Mitigation Plan. Scottish Natural Heritage (SNH) did not object to the application however raised concerns surrounding potential impacts on birds and marine mammals, as well as effects of removing kelp from the area. SNH recommended that in any consent, an appropriate, detailed and agreed Environmental Monitoring and Mitigation Plan be put in place to minimise any potential impacts. SNH advised that the proposal could have an adverse effect on seabirds from Special Protection Areas in the vicinity and therefore an Appropriate Assessment was undertaken which concluded that no adverse impacts would occur as a result of the development on the concerned species. SNH consider that if appropriate mitigation measures are undertaken then the proposal shall not adversely affect the Favourable Conservation Status of the relevant species. If a European Protected Species Licence is required from the Scottish Ministers, it should be applied for in a separate application. The Scottish Environment Protection Agency (SEPA) had no objections to the proposed development but recommended that the mitigation measures outlined in the Environmental Statement be implemented. Scottish Fishermen s Federation (through the Orkney Fisheries Association) did not object, however they did raise some concerns. OFA advised that more frequent maintenance of the devices be carried out. OFA also commented that the project could have an impact on the spawning grounds of crabs and fish species with possible implications for the recruitment to the harvestable adult population. OFA advised that the Company set up a bond or compensation fund which could compensate fishermen for lost gear or damage to boats as a result of the devices. This is however not appropriate as the devices will be located within the EMEC test facility and properly marked in accordance with IALA Recommendation They also requested the design of artificial habitats for lobsters should be included where rock armouring was used. The Royal Society for the Protection of Birds (RSPB) made no objection to the proposal subject to appropriate monitoring of seabirds and marine mammals through the development and production stages. This monitoring will be in the Environmental Monitoring and Mitigation Plan Transport Scotland made no objection to the application. Historic Scotland made no objection to the application confirming there will be no significant adverse impacts on the historic environment features within their statutory remit. Marine Coastguard Agency (MCA) made no objection to the application subject to conditions being applied to ensure the Company adequately addressed all the MCA recommendations in the current Offshore Renewable Energy Installations Guidance on UK Navigational Practice, Safety and Emergency Response Issues and any annexes that may be appropriate. In particular the MCA recommended the creation of an Emergency Response Cooperation Plan (ERCoP). Further consultation between the company and the MCA has alleviated the need to condition this in the consent. The Northern Lighthouse Board (NLB) made no objection to the application subject to conditions relating to Navigational safety. One condition recommended by the NLB is contained within the attached S36 consent, the others are deemed more suitable for the Marine Licence and are contained there. 2

3 Other responses One public representation was received during the consultation. The representation raised concerns surrounding the visual impact of the device being in a National Scenic Area. Scottish Ministers are content that advice from SNH and Orkney Island Council adequately cover visual impacts. Scottish Ministers are also content the application was appropriately advertised and that the Environmental Statement contained sufficient environmental information to allow a determination to be made. Environmental Matters Scottish Ministers have considered the environmental information contained in the Environmental Statement provided with the application and consider that the Company has had due regard to the desirability of preserving natural beauty, of conserving flora, fauna and geological or physiographical features of special interest and of protecting sites, buildings and objects of architectural, historic or archaeological interest, in accordance with paragraph 3(2)(a) of Schedule 9 to the Electricity Act. Also, in accordance with paragraph 3(2)(b) of Schedule 9, the Scottish Ministers have had regard to the extent to which the Company has complied with its duty to do what it reasonably can to mitigate any effect which the proposals would have on the natural beauty of the countryside or on any such flora, fauna, features, sites, buildings or objects. Decommissioning The Company should submitted to Ministers a decommissioning programme, in compliance with a notice served upon the Company by the Secretary of State pursuant to section 105(2) of the Energy Act The Company s Case Important criteria which you considered in selection of the demonstrator wave energy convertor site included economic viability, grid availability and ecological sensitivity You have developed the proposed design to minimise negative environmental effects whilst maintaining engineering and financial viability. The Scottish Ministers Consideration In assessing the application for the demonstrator Wave Energy Convertor Array, Scottish Ministers are obliged to protect the surrounding environment and have stipulated that an Environmental Monitoring and Mitigation Plan (EMMP) must be produced by the Company for the written approval of Scottish Ministers for the development. The EMMP will incorporate all monitoring and mitigation measures required associated with marine mammals, birds, basking sharks, shellfish and seals. The EMMP will be a live document that will be reviewed and updated as data from the demonstrator array is analysed. This will ensure that the monitoring and mitigation is robust and will not cause a detrimental impact on the environment. The EMMP will be signed off by Marine Scotland following consultation with SNH, the Sea Mammals Research Unit and any other ecological, or such other, advisors required at the discretion of Scottish Ministers. As part of your commitment to the development of alternative renewable energy technology you have identified the Billia Croo site to demonstrate a novel design of a wave energy convertor in a more accessible site. It is an opportunity to obtain a better understanding of the Oyster device and how it interacts in an array configuration. The data gathered from the site will be essential for both regulators and consultees to understand the interactions of species and habitats with the devices. This information can then be used to help refine the design for potential use in future developments. 3

4 Scottish Ministers are of the opinion that no works shall start on the development until a Construction Method Statement (CMS) has been submitted to and approved in writing by Marine Scotland in consultation with SNH and SEPA. The CMS shall be complied with and implemented as part of the proposed development unless revised to secure an equivalent or higher standard of protection/restoration with the prior written consent of Marine Scotland. Scottish Ministers have obtained advice on matters relating to protection of the environment through the Marine (Scotland) Act The Marine Licence is ready to be issued to you once the Section 36 Consent has been granted. Public Local Inquiry Paragraph 3(2) of Schedule 8 to the Electricity Act requires Scottish Ministers to consider all the objections they have received in pursuance of the Electricity (Applications for Consent) Regulations 1990 ( the 1990 Regulations ), together with all other material considerations, with a view to determining whether a public local inquiry (PLI) should be held and, if they think it appropriate to do so, shall cause a PLI to be held. In terms of paragraph 7A of Schedule 8 to the Act if the Planning Authority made a valid objection and did not withdraw it, the Scottish Ministers must convene a PLI, which must be confined to so much of the application as relates to land within the area of the authority whom the objection was made (except in so far as they direct otherwise). Orkney Island Council did not object to the proposal, even if they did a PLI is not a statutory requirement in this case due to the oyster being sited outwith its jurisdiction. In reaching the decision not to cause a PLI to be held, Scottish Ministers are content that adequate opportunity was afforded for public representation and that those with a right to make representations could have their representation properly taken into account. The Scottish Ministers have had regard to all other material considerations, and acknowledge that it would not be appropriate for a PLI to be held. Decision Scottish Ministers are content that they have had access to sufficient information to assess the likely environmental impact of the project to enable them to make a determination on the application. In reaching their decision, the Scottish Ministers have considered fully and carefully the application, the accompanying Environmental Statement, the representations made by statutory bodies in accordance with the Electricity (Applications for Consent) Regulations 1990 and the Electricity Works (Environmental Impact Assessment) (Scotland) Regulations 2000, as amended, as well as the responses received from consultees throughout the consultation process. The 2.4 MW project at Billia Croo, Orkney will provide sufficient power for approximately 1100 houses per annum during its 20 year testing. This increase in the amount of renewable energy produced in Scotland is entirely consistent with the Scottish Government s policy on the promotion of renewable energy and its target to meet 100% of demand for Scotland s electricity to be met from renewable sources by Determination Subject to the conditions set out in Annex 2, Scottish Ministers grant consent under section 36 of the Electricity Act 1989 for construction and operation of the Wave Energy Convertor Array in Orkney waters as described in Annex 1. 4

5 In accordance with the Electricity Works (Environmental Impact Assessment) (Scotland) Regulations 2000, as amended, you must publicise this determination for two successive weeks in the Edinburgh Gazette and one or more newspapers circulating in the locality in which the land and seabed to which the application relates is situated. The Scottish Ministers decision is final, subject to the right of any person with title and interest to apply to the Court of Session for judicial review. Judicial review is the mechanism by which the Court of Session supervises the exercise of administrative functions, including how the Scottish Ministers exercise their statutory functions to determine applications for consent, the rules relating to the judicial review process can be found on the website of the Scottish Courts the relevant Chapter is Chapter 58: Your local Citizens Advice Bureau or your solicitor will be able to advise you about the applicable procedures. Yours sincerely James McKie Leader Licensing Operations Team Marine Planning and Policy Division Marine Scotland Authorised by the Scottish Ministers to sign in that behalf 5

6 Annex 1 Description of Development Billia Croo, Orkney: Oyster Wave Energy Convertor Demonstrator Array The Company is proposing to construct and operate a further two demonstrator wave energy convertors at the European Marine Energy Centre (EMEC), Billia Croo, Orkney bringing the total to three. The scheme will then generate up to 2.4 MW of power from the sea and will involve the construction and operation of the following: Two additional Oyster wave energy convertor devices (making three in total) Interconnecting pipelines 6

7 ANNEX 2 CONDITIONS Part 1 Conditions applying to section 36 consent 1. The consent is for a period from the date of this consent until the date occurring 20 years after the date of the Commissioning of the Development. Written confirmation of the date of Commissioning of the Development shall be provided by the Company to the Scottish Ministers and Marine Scotland no later than one calendar month after that event. Reason: To define the duration of the consent 2. The Commencement of Development shall be no later than 2 years from the date of this consent, or (in substitution) no later than such date as the Scottish Ministers may hereafter direct. If Commencement of Development does not occur by such date, then by no later than the date occurring 6 months after such date, the site and the seabed shall be fully reinstated by the Company to the specification and satisfaction of the Scottish Ministers, following consultation with SNH. Reason: To ensure work is undertaken within a reasonable time period 3. The Company shall not be permitted to assign, alienate or transfer this consent to any other person, legal or otherwise, without the prior written authorisation of the Scottish Ministers. The Scottish Ministers may grant consent (with or without conditions) or refuse such authorisation as they may, in their own discretion, see fit. The consent shall not be capable of being assigned, alienated or transferred otherwise than in accordance with the foregoing procedure. Reason: To ensure obligations under the consent continue to apply 4. The Development shall be undertaken in accordance with the Application and Environmental Statement, (except in so far as amended by the terms of this consent and direction or as subsequently agreed in writing by the Scottish Ministers in consultation with Orkney Islands Council, SNH and SEPA when it will be undertaken in accordance with the Application and Environmental Statement, as amended). Reason: To ensure the development is carried out in accordance with the application documentation 5. The Company shall not commence the Development permitted by this consent, until the Company has submitted to the Secretary of State a decommissioning programme in compliance with a notice served upon the Company by the Secretary of State following consultation with the Scottish Ministers, pursuant to Sections 105(2) and (5) of the Energy Act Reason: To ensure that a decommissioning plan is submitted to the Secretary of State following consultation with Scottish Ministers before any construction commences. 6. In the event of a serious health and safety, environmental or construction incident occurring on site during the period of consent, the Company must notify Scottish Ministers within 24 hours of the incident occurring, or as soon as practicable thereafter. Reason: To ensure Scottish Ministers are informed of a serious incident occurring on site 7

8 7. At least three months prior to the Commencement of the Development on site an appropriately targeted Environmental Monitoring and Mitigation Plan (EMMP) shall be submitted to, and approved by, the Scottish Ministers in consultation with SNH and any other ecological, or such other, advisors required at the discretion of Scottish Minsters. The EMMP will outline, where deemed necessary, by Marine Scotland the specific monitoring and mitigation measures required associated with pollution prevention, marine mammals, birds, basking sharks, shellfish, seals and, if appropriate, should contain a kelp removal and regeneration monitoring plan. The EMMP will be a live document that will be reviewed and updated as data from the demonstrator is analysed. This will ensure that the monitoring and mitigation is robust and will not cause a detrimental impact on the environment. Reason: To ensure appropriate and effective monitoring of the impacts of the Development 8. The exposed part of the Oyster devices shall be painted yellow in accordance with IALA Recommendation Reason: To minimise risk to shipping traffic by ensuring high visibility of devices 9. (1) Prior to the Commencement of Development the Company shall provide to Scottish Ministers, for their written approval, details of the latching anchors, an assessment of their impacts and a mitigation plan to minimise impacts of said latching anchors.. (2) the mitigation plan as approved shall be implemented in its entirety unless otherwise agreed by Scottish Ministers. Reason: To minimise the impact of anchoring 10. Development shall not commence until a Construction Method Statement is submitted to, and approved in writing by, the Scottish Ministers in consultation with SNH, SEPA, Orkney Port Authority and Orkney Islands Council. Construction shall proceed in accordance with the approved Construction Method Statement unless otherwise agreed in writing by Scottish Ministers. The Construction Method Statement must be received 3 months prior to the Commencement of Development. The Construction Method Statement shall include information on the following matters: Working methods Operating hours Reason: To ensure proper management of the Development 11. The Development must at all times be kept in good repair. Reason: To ensure the devices do not become detached and impede other marine users. 12. In the event that the wave energy convertor installed and commissioned fails to produce electricity for a continuous period of 18 months, then, unless otherwise agreed in writing with the Scottish Ministers, the device shall be deemed to have ceased to be required. The Scottish Ministers shall have due regard to the circumstances surrounding the failure to generate and shall take the decision on decommissioning following discussions with the Company and other such parties as the Scottish Ministers consider appropriate. If deemed to have ceased to be required, the wave energy convertor and its ancillary equipment shall be dismantled and removed from the site by the Company no later than the date occurring 6 months after the said continuous 18 month period. Reason: To ensure the removal of non-functional equipment and plant 8

9 13. If, in consultation with SNH, it is deemed that a European Protected Species Licence is required from the Scottish Ministers the company must submit an application at least 3 months prior to the Commencement of Development. Reason: To ensure the protection of European Protected Species 9

10 Definitions 14. In this consent:- IALA Recommendation means IALA Recommendation O-139, On The Marking of Man-Made Offshore Structures, Edition 1, December 2008 Application means the application submitted by the Company on 17 th June 2011; Commencement of Development means the date on which any material operation comprised in the development begins to be carried out; Commissioning of the Development means the date on which the new Wave Energy Convertor Array first supplies electricity to the National Grid; the Company means Aquamarine Power Ltd. (Registered Company No. SC327622) having its Registered Offices at Elder House, 24 Elder Street, Edinburgh, EH13DX; "Construction Method Statement" means a set of procedures detailing activities to be undertaken, sequencing of activities, assessment of risks, and an outline of mitigation and contingency measures; Decommissioning means the dismantling and removal of the generating station and associated structures including the restoration of the site in accordance with the approved decommissioning plan as agreed with the appropriate authorities; Development means the construction and operation of a 2.4 MW wave energy convertor demonstrator array electricity generating station which will be situated at the EMEC, Billia Croo, Orkney; Environmental Statement means the environmental appraisal report submitted by the Company on 17 th June 2011; SNH means Scottish Natural Heritage; "Site" means the area of land outlined in the attached plan; and SEPA means the Scottish Environment Protection Agency. James McKie Leader Licensing Operations Team Marine Planning and Policy Division Marine Scotland Authorised by the Scottish Ministers to sign in that behalf 10

11 Location Map 11