Power of Scotland: Energy Policy in Scotland

Author: Dr Stuart Paton is an adviser to the oil and gas industry and former chief executive of Dana Petroleum.

Reforming Scotland: This is the latest in a series of individual contributions to the publication, ‘Reforming Scotland’, which aims to set out a possible vision for Scotland’s future which can inform and influence the policy debate in the coming years. The contributions are by people from a range of different backgrounds and political perspectives who have looked at how policy could be reformed across a range of different areas and they represent the views of the authors and not those of Reform Scotland. They are published under the banner of our blog, the Melting Pot, since they are in keeping with the shorter pieces done by various people for this which can be found on our website reformscotland.com

Excerpt

In 2014, Scotland generated c.50GWh of electricity, of which 38% was from renewable sources, 33% from nuclear and 28% from fossil fuels (coal, oil and gas). Scotland consumed 31GWh which meant that, taking into account generators’ ‘own use’ and transmission losses, 12GWh (24% of generation) was exported to the rest of the UK. The exported power is obviously a good source of revenue for Scotland, and has a significant impact on the rest of the UK’s renewable energy obligations where much smaller proportions of electricity are generated from renewable sources. It is also worth noting that installed renewable energy capacity is increasing rapidly having grown from 5.8MW at end 2012 to 7.1MW by Q2 2014 and to close to 8MW by Q2 2015, with at least another 4MW already consented.

The Scottish Government states that Scotland is on track to meet its objective of having zero emissions from 100% of gross electricity consumption (which is Scotland’s consumption plus generators’ own use and transmission losses) by 2020. In fact, on average, Scotland already generates 100% of gross electricity consumption from renewables and nuclear (which is a zero carbon emitter and will be in place until at least 2023). Further, currently installed and planned onshore windpower could in principle generate 100% of the county’s energy requirements by 2020. Scotland chooses to have an overcapacity in power generation which is then exported to the rest of the UK. So, there is an argument to be made that no further generation capacity is required in the short to medium term.

The key risk with this approach is the provision of base load electricity when wind is such that there is no generation. In a small country like Scotland, we will have days (sometimes cold, calm days in mid winter) when the whole country will have effectively zero wind generation. And, of course, this problem is not solved by installing further wind generation. At present, the problem of base load capacity is satisfied by nuclear capacity, fossil fuel generation and imports. However, in the future, post the planned decommissioning of the two Scottish nuclear power stations it is likely that electricity will be imported from England (which will continue to generate nuclear and already imports approximately 5% of its power from mainland Europe, including largely nuclear France). Therefore, without new, non-wind reliant, generation capacity, Scotland will not have base load capacity.

Further, the ‘rush for wind’ is underpinned by a number of other problems. Firstly, Scotland now has 2,315 onshore wind turbines with a further 405 under construction. Windfarms dominate the landscape in large parts of the country, particularly in the Borders, Aberdeenshire, round Glasgow and increasingly in Perthshire. These windfarms, often on an industrial scale, and the associated requirement for high voltage power lines, are probably visible from a third of Scotland including a large proportion of highland Scotland and an increasing proportion of wild land is affected. Recent proposals, for example, to construct Stronelairg in the Mondahliath, at Talladh-a-Bheithe on Rannoch Moor and at Glencassley, Sallachy and Caplich in the North-West run completely contrary to the Scottish Government’s stated aims to protect wild land. Some recent decisions made by the Scottish Government do suggest a change in attitude towards industrial scale windfarms in designated wild land. However, despite government claims, opposition to further large scale windfarms is extremely widespread and not just from local residents directly affected by the disruption, noise and visual impact. Interestingly, Fergus Ewing, the previous Scottish Government Energy Minister, was opposed to wind farms in his constituency prior to entering government. Secondly, the existing subsidies required for windfarms largely end up with large landowners on whose land the wind turbines are sited and who currently benefit to the order of several hundred million pounds per year. In many cases, the siting of wind farms is determined by land ownership, and therefore access to subsidies, rather than technical rationale. Although receiving much less attention than the visual impact, this has to be a concern to anyone interested in social justice. Thirdly, as stated above, the increase in wind generation is essentially increasing the amount of electricity exported from Scotland. Although local campaigners against wind farms often use the ‘we are already generating more than we use locally’ argument, the national question of should we be building more windfarms in Scotland, with the impact on the natural environment, to export power to England has not been asked. This is a major energy policy that has been progressed without an explicit democratic mandate.

The recent statements by the Scottish Government arguing against the UK Government’s plans to accelerate the end of the existing subsidy regime should be seen in the context of the arguments presented above. Further, from an economic point of view, if onshore wind is as competitive as the industry and Government claim, then it should not require continued subsidies (with the implications for household bills) which should instead be focused on nascent technologies.

Therefore, with the requirement for base load capacity and the increased pressure against further large scale onshore windfarm development, what are the options?

Firstly, there has been increased interest in offshore windfarm developments, either on fixed or floating structures. Despite the additional construction costs, subsea transmission lines and complexity of maintenance, windfarms are now commercially viable off the Scottish coast. The recent decision to overturn consent for 2.3GW from four fixed offshore developments due to the perceived impact on seabird migration is being contested by the Scottish Government who do seem to have some support from the RSPB who brought the challenge. The huge areas of potential development with more reliable wind conditions and distant from communities make this a viable alternative to onshore development.

Secondly, improvements in storage systems (whether it be batteries, phase change materials, pumped storage or other systems) and smart technology will allow balancing of electricity generation with demand. However, commercial, large scale solutions still seem some way off. There will be likely continued reductions in energy use (eg per unit of GDP) which will aid these approaches, although the potential significant increase in electricity requirements from a large scale transition to electric cars does not seem to be factored in to the UK or Scotland’s electricity generation plans.

Thirdly, the development of carbon capture and storage (CCS) should allow the continued long term use of gas and coal fired power stations. The proposed CCS project which was being developed by SSE and Shell at Peterhead Power Station showed considerable promise. With the expertise in geology in Scotland from the oil and gas industry, the apparently favourable geology and decommissioned gas fields, Scotland could become a leading developer of this technology both for its own power stations and for export. The announcement by the UK Chancellor in November 2015 to stop funding of the CCS ‘competition’ was therefore extremely short sighted. It will also have very damaging effects on any future collaboration with industry partners who have a range of other issues to consider without having to deal with ill-judged government decisions.

Thirdly, the development of unconventional gas, along with CCS in the medium term, provides potential local supply as discussed further below.

And finally, and most controversially, the construction of new Scottish nuclear power stations. The proposed power stations at Hinkley Point and Sizewell in England would generate 6.4MW of power, equivalent to the entire capacity of all the current windfarms in Scotland and equal to the capacity the Scottish Government suggest will be constructed until 2020. Despite the perceived high costs of nuclear power, the agreed strike price at Hinkley Point of £92.50/MWhr compares favourably with £95/MWhr for onshore windfarms and £155/MWhr for offshore windfarms. The total subsidy paid to windfarm operators for the last decade has been £10 billion which is less than the ‘subsidy’ required for new nuclear plant. Therefore, the cost argument, which is often used as an argument against nuclear energy is not valid. A key difference is the significantly larger investment on a single nuclear plant compared with a single windfarm because of the much higher generating capacity of the nuclear plant. Although there are cost and security concerns regarding the design and funding model proposed for Hinkley Point, neither of these are a given and indeed not being applied for other proposed plants in England and Wales.

Although there are some local groups objecting to the construction of new nuclear capacity, recent opinion polls show a majority of public opinion supports nuclear power as part of a balanced energy mix. The current Scottish Government is however opposed to new nuclear power stations with their key argument appearing to be on the risk of disposal. Although long term storage issues have to be resolved, short term storage of the relatively small quantities of highly radioactive waste is manageable. Further, as nuclear power is increasingly recognised as the only large scale solution in terms of tackling climate change, and new stations are constructed in England, Europe, the US and China, solutions will be found for this issue. In this respect, then commitment to new power stations in Scotland, with the existing expertise at Dounreay and the two plants, could give Scotland a niche expertise.

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