Scottish Water delivers again as a public service

Water charges in Scotland will increase by 1.6%, which is about £6 a year for the average household. This means the average Scottish Water household charge in 2015/16 will be £346.

Scottish Water, a public corporation, not the ‘company’ it keeps describing itself as, said that since 2009 its charges have reduced by 10% relative to the rate of inflation and are within price limits set by the regulator.

Charges pay for a £3.5 billion investment programme over the next six years which will further improve drinking water quality, protect the environment and support the economy and jobs in the construction sector.

Scottish Water chief executive Douglas Millican said: “Scottish Water continues to provide one of the UK’s best-value water and waste water services. Today’s announcement signals stability in water charges for the coming years and provides certainty for customers. Charges allow us to maintain investment – ensuring we continue to provide fresh, clearer drinking water for our customers while protecting and enhancing the environment and supporting the Scottish economy.

“It means that, by 2021, household bills will have fallen further in real terms – which is good news for customers the length and breadth of Scotland.”

Overall, in the six-year period from 2015-16 to 2020-21, Scottish Water charges must increase by no more than 1.8% below the CPI rate of inflation.

The capital programme helps provide clean drinking water and safely dispose of wastewater. A cause not helped by distilleries and golf courses who have been breaking environmental rules on water extraction as highlighted by Rob Edwards in the Sunday Herald.

The Scottish Environment Protection Agency (Sepa) has condemned the performance of distilleries and golf courses across the country as “poor” because they have broken the rules by taking more water than permitted. Farmers and other businesses have also come under fire. Sepa has further criticised more than 200 operators for failing to say how much water they used. They include more farmers, golf courses and distilleries as well as Edinburgh Zoo, Scone Palace in Perth and the US property tycoon Donald Trump.

So, Scottish Water remains a good example of what public service can achieve without the need to feed the profit motive. It’s just a pity they always want to hide their public service identity.



SNP running out of places to hide on fracking

It sometimes feels that fracking is the only energy issue in the UK at present. However, developments this week make it much less likely that we will see unconventional gas being used in Scotland or the rest of the UK.

Two weeks ago, here at Utilities Scotland, Dave Watson set out the shrewd politics behind Labour’s Smith Commission plan to devolve the licensing of onshore gas exploration – removing the Scottish Government’s ‘political fig leaf’. That was quickly followed by Jim Murphy’s pledge on a fracking moratorium in Scotland. He said:

“Scottish Labour would introduce a triple-lock system to halt any onshore fracking taking place in Scotland until environmental and health safeguards are in place. This involves:

•           A local referendum before final planning approval is given;
•           Halting any fracking in Scotland until the lessons of fracking in the rest of the UK are learned;
•           A comprehensive review of the baseline conditions before any planning application is granted; “

This was followed up by a UK Labour amendment at Westminster yesterday. Shadow energy minister Tom Greatrex MP said:

“Labour have tabled an amendment to the Infrastructure Bill that will stop shale gas extraction. It will mean that it cannot go ahead until the right protections for the public and environment are in place.”

Somewhat unexpectedly, this resulted in a spectacular last minute U-turn to save the UK government’s Infrastructure Bill. Energy secretary Ed Davey accepted the Labour amendment that stops fracking until 13 environmental loopholes in the shale gas regulations are closed. It seems that Tory and LibDem backbenchers recognised that local objections to fracking counted for more than the business interests they usually support. Anyone would think that an election was in the offing!

The SNP have spent the day desperately trying to highlight that MPs didn’t vote for their separate amendment. The very fact that they even tabled an amendment at Westminster is strange when the Scottish Government already has the power to ban fracking in Scotland. They did it for new nuclear power, but why not for fracking?

Part of the answer to that question came out in the Sunday Herald. The south Scotland MSP, Joan McAlpine, had protested to Nicola Sturgeon about the behaviour of the Scottish energy minister, Fergus Ewing, after he carpeted her for criticising the Duke of Buccleuch’s plans to mine coalbed methane at Canonbie in Dumfries and Galloway. She said Ewing’s undisguised support for developing underground gas was damaging the government’s credibility in communities across Scotland. Canonbie residents fear that they have been “sold out” in a “stitch-up” by the minister.

Utilities Scotland has also previously highlighted the actions of Ineos in buying up exploration licenses. It is inconceivable that they would have made that investment if they believed the Scottish Government was opposed to fracking.

If you cut through the political froth it simply boils down to this. The SNP has been trying to face two ways on fracking for years. Telling communities that they share their concerns, blaming Westminster when they have always had the power to block fracking here in Scotland immediately. They have now run out of places to hide and we await Fergus Ewing’s statement in the Scottish Parliament tomorrow with interest.





Fergus Ewing announced a moratorium to allow for public consultation. The political pressure triumphed over the political games, when it became clear that the public now understood that the Scottish Government had the power to act. The Westminster blame game ran out of steam on this occasion. It remains to be seen how long this will hold, but it’s a fair bet that we won’t see fracking in Scotland this side of the 2016 election. That at least, is a result.

Why energy bills should be falling faster

Energy prices are back in the news as politicians call on the energy companies to reflect the oil price fall in their gas and electricity prices.

EoN were first out with a gas price cut, followed by British Gas and now ScottishPower. The Prime Minister claimed this undermined Labour’s price freeze, although just how a cap stops a price cut isn’t really explained. Ed Miliband described the 5% fall as “too little, too late” when wholesale prices were falling by approximately 20%.

As oil prices have more than halved, why haven’t the energy companies been quicker to pass on the savings to consumers?

It is certainly the case that wholesale reductions don’t have a similar impact on retail bills. Primarily because wholesale costs only make up half the average consumer bill. Only 30% of the gas in Europe is now bought on the price of oil, probably even less than that in the UK. Companies also buy a lot of supply in forward markets, up to two years ahead of use. In the longer term, companies will point out that the Autumn Statement says levies on energy companies are set to rise by £6.3bn over the next seven years.

However, falling prices do give some headroom for reductions and there is a suspicion that companies are defending their retail margins after the mild 2013/14 winter. Gas demand was down 10-20% last winter.

A 25% drop in forward wholesale prices for gas should drive at least a 10% cut in retail prices. Ofgem estimates that the supply margins of the Big Six have doubled in the last twelve months, increasing from 4% (£49) in 2013 to 8% (£105) today. The average household’s annual energy bill is now £260 higher compared to 2010 and the poorest 10% of households have seen their energy bills rise nearly twice as fast as other households. Hardly surprising then that Ofgem has referred the energy companies to the Competition regular stating: “We found that suppliers do not adjust their prices as quickly when costs fall compared to when wholesale costs rise… “. Typically masterly understatement from the toothless regulator!

We are also not seeing reductions on the scale expected because companies are more focused on share price than consumers. Every 1% off retail prices cuts around 5% off SSE’s earnings per share. Another by-product of a privatised industry. Smaller companies are able to respond to wholesale price changes more quickly because they have less risk. Another argument in favour of a more diversified ownership model that includes local authority energy generation.

Labour’s solution is to give Ofgem (or its replacement) the power to make energy companies pass on cuts in the cost of oil and gas to bill payers. Ed Miliband said: “Let’s reduce energy bills for consumers. We can do that as well as having this freeze to make sure energy bills don’t rise.”

The SNP has not taken a strong line over the energy companies, but instead have been calling for an increase in the Winter Fuel Payment. Chic Brodie MSP said: “Energy bills have increased by over 37% since 2000-01 and if winter fuel allowance had increased by inflation since 2000-01, pensioners would be £76 better off in 2014-15 than they are”. This allowance is to be devolved to Scotland under the Smith agreement.

Whatever the economics say, Miliband and Osborne both calling for price cuts is going to keep the energy companies spin doctors busy in the run up to the General Election.

Fracking – over to you!

Some astute politics by Labour and Tom Greatrex MP puts decisions on fracking very firmly in the Scottish Government’s court.

The Smith Agreement proposes the devolution of licences for gas exploration. The political significance is that the Scottish Government Energy Minister, Fergus Ewing, has used the UK government’s plans on underground access rights, to give the impression that he opposes fracking.

This is simply a political fig leaf, as I explained in an article last November in Utilities Scotland; “Scottish Government already has planning powers that could end the prospect of fracking in Scotland now. They have used these powers to stop new nuclear power stations, but not fracking. Simply put, Ineos are making this level of investment because they are confident that the Scottish Government is not going to stand in their way.”

Labour MP Tom Greatrex pressed home this point by lodging amendments to the Infrastructure Bill requesting that full powers over shale gas exploration be given to the Scottish Parliament ahead of the general election. The coalition government did not back this as such, but instead pledged to exclude Scotland from the impending legislation.

Tom Greatrex said:

The Tory-led Government have belatedly conceded Scottish Labour amendments to force the devolution of the remaining secondary parts of the framework for shale gas in Scotland, effectively implementing these parts of the Smith Agreement prior to the general election.

“Whilst some in Holyrood would like to pretend that the Scottish Government is powerless to act over fracking, the truth is that already nothing can happen at all in Scotland without the approval of ministers in Edinburgh. Their control over the planning and permitting regime gives the SNP ultimate responsibility and an effective veto for shale gas extraction in Scotland.

“But in the context of devolved planning and permitting regimes, it makes sense for underground mineral access rights, which are essentially a secondary aspect of the planning process, should be devolved as well. Labour have won a major concession from the Government on this point, who will now exclude Scotland from changes being made in the Infrastructure Bill.”

Of course Scottish Labour isn’t opposed in principle to fracking either and has instead said it cannot go ahead unless we have a system of robust environmental regulation and comprehensive inspection. However, they are not the government making this decision.

Friends of the Earth Scotland Director, Richard Dixon put it well in his recent opinion piece in The Scotsman: “Circumstances are conspiring to ensure that in the next few months, the SNP will have to come off the fence and either decisively stop the unconventional gas industry north of the Border or admit that they are happy to let big companies like INEOS drill and frack significant parts of Scotland.”

Indeed, when you run out of others to blame – for government’s, real politics can sometimes be very difficult!




Security or insecurity of energy supply

Renewable generation in Scotland exceeded nuclear for the first time according to the latest government statistics. But this may not be as significant as some claim.

Wind and hydro power produced 10.3 terawatt-hours (TWh) of electricity in the first six months of this year. National Grid figures showed nuclear power stations generated 7.8TWh over the same period. In addition, 5.6TWh of electricity came from coal-fired power stations with a further 1.4TWh from gas-fired stations. Environmental campaigners described this as a “significant landmark”.

However, Paul Younger, professor of Energy Engineering at the University of Glasgow, said it was important to keep a sense of perspective. “It’s true that we’ve seen an increase in both the installed capacity and output of wind generation over the last year or so, but the 2013 closure of the coal-fired power station at Cockenzie and the downgrading of the gas-fired power station at Peterhead have had a much more dramatic effect on the percentage balance of generation sources. What we are seeing is a loss of capability in Scotland to generate on demand. Basically, nuclear generates steadily, 24/7 and we can increase generation from coal and gas as and when we need it. We desperately need not to lose sight of that. Otherwise, we will be relying on importing power from England, or else facing blackouts. That would bring a backlash against renewables which I do not want to see.”

Iain Macleod from Scientific Alliance Scotland makes similar points about the need for a balanced energy policy in his Scotsman article. He also makes the case for adequate control systems rather than relying on the market. He said:

“The negative effect of renewable energy on the risk that supply will not meet demand has to be considered on a system basis. Reliable technology exists that can be used to keep this risk at an acceptable level. But in order to do this, a central authority is needed to do the calculations and take action to ensure that the necessary generation capacity is made available. Market forces cannot be relied on to deliver a secure supply of electricity.”

Michael Meacher MP makes a similar point about market failure to secure supply, “The government’s answer to these setbacks is to launch a new system of what it calls “capacity payment auctions” which are effectively bribes to get the energy companies to invest. It exposes how helpless the government is in a privatised system where the companies hold back, knowing they’re in the driving seat, till the government makes an offer they can’t refuse.”

Despite security of supply warnings, the UK is in the top 10 for its energy security, but not in the top 10 for either sustainability or affordability of supplies and it has been placed on “negative watch” by the World Energy Council along with Japan, Germany and Italy.

WET’s Joan MacNaughton, said: “One of the things that’s important is the trend. Over the last three years there has been a downward trend in the performance of the UK. In particular, its energy security is down, it’s still just in the top 10, but it’s come down quite a lot since 2012. Affordability has worsened significantly. Clearly there are issues that the UK would want to look at, but it is one of only three countries that get a AAA rating so it’s still doing very well.”

Caroline Kuzemko from LSE takes the debate in a different direction by arguing that we are over obsessing about domestic energy supply. She says, “The idea that the UK’s energy supply is at risk has once again gained currency with the ongoing conflict in Ukraine. While the narrative that energy supplies are of strategic importance is regularly trotted out by UK corporate energy interests for their own gain.”

I will leave the final word to Dieter Helm, professor of energy policy at the University of Oxford. He says that it does not make economic sense for Scotland to be reliant on renewable energy, “Salmond has talked about 100 per cent renewables for Scotland. Well, it’s nonsense. Wind is intermittent by definition. You have to ask a very simple question: even if you wanted to do this, what are you going to do when the wind doesn’t blow? The truth is Scotland relies on baseload nuclear power, coal and gas to balance its system and it will have to for a very long time to come. Full stop.”

If we can be certain of one thing, this debate isn’t going to reach a ‘full stop’ anytime soon!


Just another fracking day

Since Dave Watson's blog on fracking and the powers of the Scottish Government to stop it, there have been a few developments that I thought were worth a short update.

Starting with the Smith Commission report that includes devolving onshore gas exploration. That removes any fig leaf the Scottish Government may have been clinging to on powers to regulate the exploitation of unconventional gas or fracking. As Dave pointed out, they already have the planning powers to stop fracking, but there is little evidence that they want to. Ineos would not be be buying up licences like a Tesco Black Friday sale, if they though the Scottish Government was going to stop them drilling in the central belt.

On the safety front the Guardian covered a report produced by the government’s chief scientific adviser that fracking carries potential risks on a par with those from thalidomide, tobacco and asbestos. The flagship annual report by the UK’s chief scientist, Mark Walport, argues that history holds many examples of innovations that were adopted hastily and later had serious negative environmental and health impacts. The residents of Falkirk and the surrounding areas have probably already worked that one out!

A similar view on the health impact comes from a large amount of health impact data from the USA summarised by a Correspondent in The Lancet. Recent studies from the USA before, during, and after fracking have suggested an increased risk of adverse health events, such as congenital heart defects, and low Apgar scores – the very first test given to a new born child – in individuals living close to natural gas development (within a radius of 10 miles).

One major peer reviewed study in rural Colorado calculated natural gas well counts within a 10-mile radius of maternal residences to estimate maternal exposure to natural gas developments. The study found “an association between density and proximity of natural gas wells within a 10-mile radius of maternal residence and prevalence of congenital heart disease and possibly neural tube defects.”

Some bad news for taxpayers who are likely to have to fund hundreds of boreholes across Britain to try to persuade the public that a looming shale gas boom can be developed safely. Sensors in the boreholes would detect possible water pollution or earthquakes caused by fracking and the information would be made public. “We will be taking the pulse of the sub-surface environment and will reveal if things are going wrong, but also if they are going right,” said Professor Mike Stephenson, director of science and technology at the British Geological Survey, which would drill the boreholes. “The aim is to reassure people that we can manage the sub-surface safely.”

The plan, called the energy security and innovation observing system, will cost taxpayers £60m-£80m. It is awaiting final approval from BIS where energy minister Matthew Hancock, a fracking enthusiast, holds another ministerial post.

So, powers in place, safety fears not resolved and the taxpayer to pick up the bill. Just another day in the search for a energy source we simply don't need.



Coalition against Ineos fracking plans

Fracking is back in the news with the announcement that Ineos, the owners of the Grangemouth plant, has £640 million plans for shale gas exploration and appraisal. It already has two licences for extracting from under the ground near its Grangemouth refinery, but is applying for more in Scotland and the north of England.

Ineos is facing strong community protests on the grounds that the techniques are unproven and risky. Others argue that Scotland should be focusing on clean energy rather than fossil fuels.

A coalition led by Concerned Communities of Falkirk (CCoF) and Friends Of The Earth Scotland, including the trade union UNISON, are demanding a moratorium on unconventional gas development in Scotland, saying risks to public health, staff and the environment are “impossible to regulate away.”

Labour's shadow energy minister Tom Greatrex, said: “Shale gas extraction cannot go ahead unless we have a system of robust environmental regulation and comprehensive inspection.” He also accused the Coalition Government of sidelining legitimate environmental concerns.

Top scientists have also warned that fracking will not stop ­climate change and could lead to 11% higher greenhouse gas emissions by 2050. They identify a possible scenario that the boom in shale gas may have no effect on carbon dioxide pouring into the atmosphere over the long term. Five computer models assessing the impact on global warming projected that, despite natural gas consumption increasing by up to 170 per cent by 2050, changes in CO2 emissions would range from a 2 per cent reduction to an 11 per cent increase.

Ineos is offering the prospect of cash for land owners and communities. In addition they are banking on the Scottish Government not opposing the exploitation of unconventional gas. It looks as if they might get their way because the Scottish Government has avoided opposing this extraction in principle. They have sought to distract attention from this position by campaigning for devolution of the reserved powers over exploration. Ineos might attract more support if they had better industrial relations and paid their taxes in the UK rather than dodging them by registering in Switzerland

A Survation poll commissioned by the Scottish Greens, found 66.1 per cent said controls on shale oil and gas exploration should come to Scotland, with 18.2 per cent believing they should stay with the UK Government. Many submissions to the Smith Commission have also argued for this

So while there is a consensus on devolution, the Scottish Government already has planning powers that could end the prospect of fracking in Scotland now. They have used these powers to stop new nuclear power stations, but not fracking. Simply put, Ineos are making this level of investment because they are confident that the Scottish Government is not going to stand in their way.



Diversifying energy ownership needs a more radical approach

Community energy provides an opportunity to diversify Scotland’s energy ownership from the dominance of big energy companies. The Scottish Government has published a Community Energy Statement that sets out the measures they are taking to encourage the development of community energy.

The Scottish Government’s ambition for community energy is that it provides an opportunity to spread the benefits of the rich energy resource with which Scotland is blessed. Support for community projects reflects their importance in empowering communities to take control of their own destiny and make the most of their own local resources.

Community energy covers a spectrum of activity – from direct ownership of energy assets, through joint ventures to community benefits payments. These enable communities to take a stake in the full range of heat and electricity generating technologies, from onshore wind, to solar PV and solar thermal, hydro, biomass and heat pumps.

community energy

The ambition is to see a fairly modest 500 MW of renewables in community and local ownership by 2020. This has been independently estimated to create some £2.2 billion over the operational lifetime of those projects. There is already 285 MW operating in 2013, including 43 MW of community energy. Most benefit comes from community benefit payments made by commercial developers. In the past 12 months this amounts to about £6 million from over 3 GW of (mainly) onshore wind schemes. While the cash is no doubt welcome to the communities concerned, this is not community ownership.

Support for community energy is currently delivered through the Community and Renewable Energy Scheme (CARES) delivered by Local Energy Scotland, and the Renewable Energy Investment Fund (REIF) delivered by Scottish Investment Bank. These schemes provide funding and technical support. While these initiatives are welcome, fully functioning direct ownership is limited to small scale, mostly rural hydro and wind farms.

Continuing down this path is unlikely to deliver a radical change in energy ownership in Scotland. There are substantial barriers to this form of community ownership as the Statement recognises. Not the least of which is the UK government’s volatile energy policy. Long term investment in energy needs a stable pricing regime. Another is the speed of connection to the grid, something that other European countries accelerate through public ownership of the grid.

Experience from Europe indicates that to make serious steps in diversifying ownership requires new public sector entrants to the market, primarily local authorities, although Scottish Water could also be a bigger player. The Statement recognises that the formation of Local Authority Energy Supply Companies (ESCOs) may be an opportunity to improve competition and offer a wider range of tariffs. CARES support has recently been awarded to Comhairle nan Eilean Siar to explore the potential to establish an Outer Hebrides Energy Supply Company (ESCO), which could enter the UK electricity market in 2016-2017 retailing green Hebridean electricity to local and export markets.

The next big step requires new municipal entrants to the energy market in urban areas. Cities should be engaging in the energy supply market where this can support efforts to tackle energy affordability and promote local generation. The Institute for Public Policy Research paper ‘City Energy, A new Powerhouse for Britain’, July 2014 showed one way forward.

This Scottish Government Statement is a reasonable description of the relatively small scale efforts made to date to encourage community energy ownership. However, the ambition is modest, lacking proposals to seriously diversify ownership in Scotland. The next big step requires support for local authorities to return to their 19th century role as an energy provider. They can do this on their own or in partnership with cooperatives. This model brings significant benefits to communities across Europe with lower energy prices and income generation for public services. I set out this approach in more detail in the energy chapter of the Red Paper on Scotland.

For all the words in this latest publication, the reader is left with the overwhelming impression that the Scottish Government is not in the business of taking on the big energy companies. As they have not been over energy retail prices. A few rural wind farms in community ownership is not going to make the radical diversification we really need.

Renewables round up

Our latest renewables round shows plenty of new potential, but still some concerns that the overall strategy may not be deliverable.

The case for renewables is set out, with much enthusiasm, in this FoE blog post at Left Foot Forward, “Energy security, jobs and carbon reduction. All in one. And since the sun and the wind will remain free as the technology to harness them improves, the potential for cost reduction is almost limitless. The countries which grasp this the quickest will be the winners in the 21st century, just as those who first piled into coal and steam were in the past.”

If you are sceptical about decentralised power, what about the Saharan sun? Up to 2.5 million British homes could be powered by Tunisian sunshine by 2018 under an £8bn plan to build a giant solar farm in the Sahara desert and ship the electricity to Europe through a 450km (280 miles) submarine cable. Solar power could outstrip fossil fuels, other renewables and nuclear to be the biggest source of electricity by mid-century, according to the International Energy Agency.

Germany is the new model for the renewables industry. They are well on the way towards having a predominantly green electricity supply. The transition from nuclear and fossil fuel electricity to using renewables is happening faster than anyone had anticipated. However, it is hugely expensive largely because the weather is notoriously unreliable and variable. So a secure system needs more renewable capacity and also more reserve capacity from conventional power plants (mainly fuelled by natural gas) to make sure it can always meet demand. As the chart below indicates, installed renewable capacity in 2050 is expected to be 180GW, which is roughly twice maximum demand.

german power

One indicator is that electricity tariffs have almost doubled since 2000. Meanwhile CO2 emissions have not decreased, but actually increased over the last few years because coal-fired power has been on the rise while nuclear wanes. German technology might not hack it this time.

Can renewables really provide all of Scotland’s needs?

scot energy sources

Scottish ministers have approved four major offshore wind farms that it is claimed could generate enough electricity for more than half of the homes in Scotland. On windy days of course. This seems fine on a day like today, but its not always like that. The Longannet announcement and problems at Hunterston, highlight some security of supply challenges. Others argue that the UK government is strangling offshore wind through the Electricity Market Reform plans. UK government estimates of expected offshore wind generation by 2020 have gone from 18 GW in 2012 down to just 10 GW.

Marine renewables have had something of a boost with the announcement that the developers of a planned tidal energy scheme in the Pentland Firth have signed a 10-year Power Purchase Agreement (PPA) with energy firm SmartestEnergy. Under the first phase of the project, four 1.5MW turbines will be installed on the seabed. MeyGen said eventually the scheme could have up to 269 turbines and it plans to start installing devices over the next two years.

Lets also not forget demand reduction. The Energy Saving Trust reminds us that households could save £356 million by making simple changes to their energy use. Around 594,000 tonnes of carbon emissions could be cut by minor improvements such as installing solar panels, switching to LED bulbs and switching appliances off rather than on standby.

So, plenty of potential projects, but questions of actual delivery and cost remain. We will also still need conventional power sources to balance the system. The phrase, all our eggs in one basket, still springs to mind.


The case for devolving energy policy to Scotland

Devolving energy policy would tidy up the often conflicting mix of devolved and reserved powers and enable Scotland to develop new approaches to energy policy.

At present energy is a largely reserved matter to Westminster. Specific reservations in Schedule 5 of the Scotland Act 1998 include the generation, transmission, distribution and supply of electricity; the ownership of, exploration for and exploitation of deposits of oil and natural gas; Coal, including its ownership and exploitation; Nuclear energy and nuclear installations. However, secondary legislation has devolved aspects of these powers including the Renewables Obligation in Scotland and consent for power stations greater than 50MW onshore and 1MW offshore.

Perhaps even more importantly, environmental legislation and planning are fully devolved matters. The Scottish Government has used these powers to set more ambitious targets for reducing greenhouse gas emissions by 42% by 2020 (UK target 34%); 50% of all electricity demand from renewables by 2020; and finally aims to decarbonise electricity demand by 2020. Most notably, the Scottish Government has used its planning powers to rule out new nuclear power stations, although supporting life extensions to existing capacity.

These conflicts have resulted in well publicised disagreements over issues like transmission charges that discriminate against Scottish generators; Electricity Market Reform (EMR), support for renewables and subsidies for nuclear power.

The Scottish Government believes that the Scottish Parliament should have greater responsibility for all energy policy and regulation, including all oil and gas. They argue this would deliver a streamlined approach and allow Scotland to design a regulatory and fiscal landscape which maximises the return from the energy sector, encouraging a sustainable industry for the benefit of the people of Scotland. This would include joint oversight of UK-wide bodies such as OFGEM, and an arrangement of shared competence in relation to the new Oil and Gas Authority proposed for Aberdeen.

With these additional responsibilities, it is argued that Scotland could also capitalise more fully on its comparative advantages in the energy field. The Scottish Government could advance community and local ownership of energy; and better address societal inequalities through tackling fuel poverty. The connection of the islands to the national grid could also be prioritised.

There is of course a certain irony in the Scottish Government’s position. In the referendum they claimed Scotland would remain part of the UK energy market, despite the obvious consequences for renewables. Scotland gets a third of the UK’s renewable support with less than a tenth of the population. The Scottish Government’s claim that the lights would go out in England without Scottish renewables, was simply not credible. The rest of the UK has a wide range of options, including new interconnectors to Europe and their capacity margins will be tightest when the wind isn’t blowing. So, intermittent Scottish renewables would be the wrong energy at the wrong time.

The UK Government position in the referendum was equally weak. They failed to properly address their management of capacity margins, the mess they have made of EMR, energy prices and the consequences for fuel poverty. Their green credentials are in tatters due to the malign interference of the Treasury in energy policy.

Devolution could well deliver the best of both worlds. Security of supply and support for renewables, as well the opportunity for Scotland to develop a distinct energy strategy. Instead of being a minor player pleading from the outside, Scotland could have a constitutional role in the UK energy market. There is also a potential gain at UK level, with Scotland able to play a positive role in developing a coherent energy policy, rather than just blaming Westminster. The recent problems at Hunterston and ScottishPower’s announcement on Longannet could mean the loss of 40% of Scotland’s generating capacity. A prospect that should shake the Scottish Government out of its own naive approach to energy generation.

Having powers is all very well, but the acid test is how you use them.

A Scottish energy policy should use our abundant renewable energy resources, within a balanced UK and Scottish energy system. A planned energy policy than relies less on the vagaries of the ‘kid on’ energy market and makes a real contribution to reducing greenhouse gas emissions. A formal role in regulation will support the necessary reform of the regulatory system, including transmission charges and retail prices. That links energy efficiency, price and welfare – the three elements that are needed to tackle fuel poverty. It can also link already devolved matters such as training and education to address the workforce skills gap. We set out these approaches in more detail in our policy paper Scotland’s Energy-Scotland’s Future’.

There are international precedents for devolving energy powers. For example, Greenland and the Faroe Islands have devolved energy powers within Denmark. In recent years there has been renewed interest in local generation with local government leading the way in countries like Germany. We need to break away from the big business model of energy that is concentrating wealth in the hands of foreign corporations. One of the strengths of devolution is the ability of smaller parts of the UK to try different approaches. Scotland could be radical and innovative, with the devolved powers and the political will to use them.

UNISON has long argued that energy policy should be devolved to Scotland. It would tidy up the current mismatch of powers that allows governments to stop developments rather than encouraging new approaches. The UK would benefit from the innovation and Scotland would take responsibility rather than looking to others. That looks like a win-win for everyone within these isles.



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