Catherine MacLeod
Columnist
We need to keep on the lights, heat our homes, and fuel our factories.
That can be taken as a given. What cannot be taken for granted is a
constant supply of energy, in either Scotland or the UK, without radical
intervention, matched by major injections of funding. Scotland, as part of
the UK, benefits from the shared opportunities of a single energy market so
it would be brave, if not foolhardy, to consider breaking it up.
Myths prevail about a separate Scotland’s potential contribution to the
energy needs of England, Wales and Northern Ireland so it may be timely to
say that each of these will neither be dependent on Scottish energy nor be
obliged to buy it if Scotland decides to go it alone. And if there was any
doubt about that, the European Court of Justice emphatically decreed this
week that no government must pay subsidies to renewable generators in
another country.
Scotland has huge potential in terms of renewables, and the sector could
bring great economic benefit to Scotland if it remains part of the UK. If
the UK is broken up there will be no certainty at all. Exploiting renewable
resources is expensive and, without a magic wand to wave it onto the grid,
someone has to pay. Wherever we live in the UK, a proportion of our energy
bills supports renewables so costs are shared amongst the UK’s 26 million
households. Of the money collected, Scotland receives around one-third
though it has only 8.3 per cent of the UK’s population.
If Scotland breaks away, 2.6 million households would have to bear the
funding load: either energy bills would rise dramatically or Scotland’s
Government would have to find the funding from the taxpayer’s purse. To
maintain existing renewables, far less fund its renewables target, the
Department of Energy and Climate Change estimates an increase of £189 on
consumers’ bills.
Also, the UK Government intends to support the electricity transmission
projects in Scotland to the tune of £6 billion over the next seven years;
spend around £92 million to supply gas to remote Scottish communities; and,
quite rightly, spend around £54m to protect 690,000 domestic consumers in
the north of Scotland from the high costs of distributing electricity to
sparsely populated areas. Some nationalists insist nothing would change;
cross subsidisation would continue. It is difficult to understand why this
would be so, or even why it should be. Consumers in England, Northern
Ireland and Wales already so object to the cost of energy so much that it
is high on the political agenda. The Scottish consumer cannot expect
hard-pressed English, Welsh or Northern Irish consumers to fund a subsidy
when paying their own bills is a struggle, and it would be an interesting
politician who made such a case.
Energy suppliers, making commercial decisions, will follow the price and,
if they can buy it cheaper from continental Europe, they will. One foreign
country will be the same as another in the boardroom and neighbourly
sentiment will count for nothing if it drives down the share price.
England already has 10 times more interconnection capacity with the rest of
Europe than it does with Scotland and, since there is nothing special about
Scottish low carbon power without the benefits of the single market, there
is no earthly reason to believe the status quo would prevail.
The only way Scotland would maintain and improve its market position would
be to drive down the cost of its energy, and that would mean diminishing
returns. England and Wales import more energy from France and Holland (5
per cent) than they do from Scotland (4.59 per cent) and they are growing
ever closer links with Belgium, France and Norway, on course to double the
English-European capacity by the end of the decade. The competition for
Scotland would be fierce.
The National Grid’s latest Transmissions Quarterly Connections Update says
England and Wales in theory can meet their renewable emissions targets
without any contribution from Scotland. So who would buy Scottish renewables?
It is reasonable to ask how Scotland’s renewables industry could flourish
outwith a single energy market. And it would be good to have an answer
based on fact, not supposition.
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