Scotland's Economy

Energy and consumers: Scottish independence offers a renewable and sustainable future

Written by Michael Gray

renewablesThe development of renewable energy technology presents major opportunities for the Scottish economy. Over the past decade the sector has grown dramatically and it now accounts for 40.3% of Scotland’s electricity consumption. This forms part of Scotland’s many strengths in the sector which allows for 26% of energy generated here to be exported.

Unfortunately, recent decisions by the UK Government have signalled a lack of support for the renewables sector, especially when it comes to Small and Medium Enterprises.

Scotland’s energy industry faces a choice of two futures. The Westminster Government is prioritising expensive nuclear power plants and this puts a squeeze on support for renewables. It has also conducted a tax grab on North Sea companies undermining investment and jobs.

Renewables business people backing independence

As Gordon Archer, partner and commercial director in Renewables Unlimited LLP, said: “To end the uncertainty and get control we need decisions about our energy mix and the subsidies we choose to decarbonise that energy mix to be made in Scotland. And the only way to do that is a yes vote next September.”

Dr Gen Cannibal, Director for Environment with Progenus Environmental Ltd, recently supported independence due to the renewables debate: “The Yes campaign arguments were more factually accurate and convincing by a long way. This was especially the case in regards to the renewable energy sector which has the potential to be a major economic earner for the Scottish economy but only if it is supported.”

Already over 11,000 people are employed in renewable energy in Scotland as of March 2012. The sector has the potential to provide many more skilled jobs in manufacturing and engineering. To an extent it also has a symbiotic relationship with oil and gas because our expertise and infrastructure in the North Sea can be applied to renewable energy perhaps most notably with Global Energy Group at Nigg. We need to promote a diverse energy sector which builds on the connections and multiple strengths.

Local renewables projects have the capacity to produce significant social outcomes which empower local economies. A recent profile of the Isle of Eigg off Scotland’s West coast demonstrates the benefits of renewables investment. The energy project cut costs and improved local infrastructure.

The Islay Energy project, which was launched recently, is an example of a cooperative investment scheme which seeks to return the long term profits of a renewable scheme to local projects. Other larger projects on the Pentland Firth and Moray Firth demonstrate the scale of future projects.

UK minister’s fears dismissed

Recently UK energy Shadow Energy Minister Caroline Flint tried to dampen these opportunities by claiming that Scottish independence would threaten Scotland’s energy potential.

These claims were dismissed by Euan Phimister, Professor of Economics at Aberdeen University, “[The Scottish Government point] about OFGEM predictions about the low margins of capacity over demand over the next few years are correct and it likely that rUK electricity demand for Scottish electricity overall would remain significant.”

This follows experts at Birmingham University – who previously claimed that Scotland benefited from UK economies of scale – changing their mind to say that renewables in Scotland would benefit from the economic powers and the support stability of Scottish independence.

Martin McAdam, Chief Executive of Aquamarine Power dismissed Caroline Flint’s claims and supported the Scottish Government’s White Paper provision for a common energy market after a Yes vote, which he expects to be implemented by all parties in their mutual interests:

“The comments today from Shadow Energy Secretary Caroline Flint that consumers would face higher energy bills post-independence is not proven.

“The UK relies on low carbon electricity from Scotland to meet binding EU 2020 climate change targets and to stop the risk of blackouts later this decade as old coal fired plants are switched off. The proposed Hinkley Point power station will be hugely expensive, will saddle British consumers with a 35 year subsidy and will not be complete until 2023 at the earliest. The annual direct subsidy from Hinkley Point C is over £1b per year.  The indirect subsidy in terms of UK government guarantee, political risk guarantee, insurance, security and long term waste disposal makes the true subsidy for Hinkley Point C a lot higher. Compared with nuclear, wind energy is now the lowest cost low carbon source of electricity.

“As UK and Europe moves towards closer energy integration, it would seem contrary that Britain would unpick what is a well-functioning existing single GB electricity market. Indeed, the UK is already exploring the potential to import renewable energy from the Republic of Ireland, which already operates in a single market with Northern Ireland. Increasing interconnection to the rest of Europe will provide a path for greater competition and lower electricity prices for customers.

“The most sensible option for all parties – both in terms of energy security and consumer bills ­ – will be to retain a single electricity market across the whole of the British Isles.”

Conclusion

Scotland’s energy market remains strong across a number of sectors. Renewables presents a significant opportunity for expansion both at a local and larger scale level. The way in which Scotland can utilise this strength is through the economic powers of independence to place investment into and support the renewables sector.

Westminster is travelling in a different direction on energy policy. Oil and gas and renewables are of much more importance to Scotland. It is therefore independence which provides the greatest opportunities for the areas of energy in which we already have globally competitive advantage.

About the author

Michael Gray

Michael is Head of Research with Business for Scotland.

A graduate from the University of Glasgow, he has carried out a series of interviews with academics, politicians and the public in Denmark, Iceland and Ireland. Michael's on twitter @GrayInGlasgow.

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