SCDI: More questions on energy and independence

Today’s Scottish Council Development and Industry (SCDI) survey is worth a read and the energy section in particular. 

While, SCDI takes no political view on independence, the organisation’s role has always been to examine and consider impartially the industrial, commercial and economic challenges and opportunities facing Scotland. Today’s paper, ‘Future Scotland: Future Growth’ is based on extensive interviews with members and a number of larger gatherings. 

The section of energy finds that in terms of security and affordability of supply, a balanced energy policy was considered by many respondents to be necessary. Key issues and questions which emerged from the power generation and transmission sectors were: 

  • The need for a clear and competitive policy framework
  • Would systems that are currently working remain intact or would they be split?
  • Scotland’s potential in the generation of renewable energy is a key objective for Scotland. The development of renewable energy has been based on the renewable obligation and the system of Renewables Obligation Certificates (ROCs), now being phased out and replaced by Contracts for Difference.
  • The critical question is how such systems would be funded in an independent Scotland. Investors and developers would require a clear vision of how development can be supported with the necessary funding prior to proceeding with investment projects
  • An independent Scotland could export surplus generation to rUK, but would consumers there be willing to continue paying the same proportion of costs for this, or will rUK begin to look at alternative markets for its electricity needs?
  • Would consumers in an independent Scotland pay for renewable targets?
  • Would an independent Scottish Government prioritise local content in supply chain for renewables development?
  • The cost of doing business is key in electricity and natural gas supply
  • Recognition that conventional gas remains important to domestic and business users
  • Would energy providers need to set up separate Scottish entities to serve Scottish customer requirements?
  • Would they need to work with two separate regulators in Scotland and rUK, and what would this mean in terms of additional costs, as well as potential divergence of policy priorities?
  • The need to build bootstrap connections around Scotland to England
  • How would different independent Scottish and rUK licensing and planning impact on the relative advantages and disadvantages for development in Scotland and in the North Seas as a whole e.g. for offshore generation?
  • How would access to the National Grid be impacted? What would this mean for transmission charges? What would be the economics of harnessing Scotland’s natural resource when distant from the ultimate consumer?
  • The need to continue to support innovation, particularly in technologies for sectors in which Scotland has competitive advantages
  • Would Scotland continue to be able to access funding from what are currently UK sources and, if not, how would this funding be replaced?
  • Scotland must continue to pursue leadership potential in Carbon Capture and Storage opportunities
  • Concern that any gap in Scotland’s EU membership could disrupt Scottish industry’s involvement in the carbon trading market and investment in reducing emissions

 The survey recognised the advantages of a GB market. However, respondents expressed a desire for clarity beyond assertions that this would remain, and more detail about how an independent Scotland and rUK would interact in the operation of an EU single market. The critical question to be resolved is the funding of renewables development in an independent Scotland and the willingness of rUK customers to fund that cost. 

Overall, a helpful list of business concerns over energy and independence and questions for both sides of the debate to answer.

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