One of the biggest independence battlegrounds will be over energy and the ‘divided we fall’ arguments of the Unionists will be writ large.
Labour MP and Shadow Energy Minister Tom Greatrex fired early shots in Holyrood Magazine
recently, claiming Scottish consumers alone couldn’t afford to fund the subsidies needed to hit Scottish renewables targets. A bit cheeky, especially when his own department (when he worked for the Scottish Office) locked away the £185m Scottish share of the Fossil Fuel Levy earmarked for renewables investment.
Of course the Green Investment Bank is another UK carrot currently dangling. With 32 bids now in from cities and towns across the UK to host the £3bn bank and its 100 jobs, I wouldn’t put it past Vince Cable to strike the chord of ‘independence uncertainty’ and by-pass Edinburgh’s bid. I hope I’m wrong, as whatever the shape of post-referendum UK, Scotland’s renewables will be key to everyone’s energy security.
Greatrex’s argument fundamentally ignores that there is an increasing interdependence in energy across Europe that will eventually re-draw the markets away from individual state boundaries, wherever they might lie in the future.
At the moment we have a UK electricity market and there will continue to be a strong need for cross Border trade in the future. Scotland can more than exceed our ‘equivalent of 100% of home demand’ target and if we continue to grow renewable capacity we will be strongly exporting. Conversely, to balance our intermittent renewables supply with demand at home, there will need to be imports too, but the role of Scotland as a major net renewable energy exporter is assured.
Trading electricity is not new, there has been a market across the island of Ireland for years and good evidence of wind power decreasing the price of electricity there. Across Scandanavia, Danish wind and Norwegian hydro power is traded with Sweden, while UK grid already interconnects flexibly with France, Netherlands and Ireland.
More transnational grid creates flexibility in meeting supply and demand as renewables widen their role in powering Europe’s electricity. EU states will have to become more interdependent in order to meet carbon targets and it’s likely that this cost of electricity interconnection will be shared by consumers across large regional markets. This could be beneficial to Scottish renewables investment which has for years faced the absurdity of a ‘tax’ on grid connection charges (especially on our islands) while there are subsidies for grid connections in the south.
The current UK renewables subsidies have delivered a roll out of onshore wind, while nudging other technologies into the marketplace. But now the cost of onshore wind is dropping and over time the need for subsidy will decline as the technology continues to mature. Scottish electricity consumers would no doubt have to pay their share of subsidies, especially to keep new technologies growing post-independence, but re-investing oil funds wisely could also help make us an even more competitive location for renewables investment.
The bottom line is that England desperately needs Scotland’s renewables capacity in order to cut expensive carbon out of the electricity mix. Approval rates for wind farms in England are much lower than those in less densely populated Scotland and even with recent market reforms at Westminster, new nuclear or fossil plant with carbon capture and storage face massive hurdles. Utilities staring at the need to cut carbon will have to invest in Scottish renewable generation to keep targets on track, there simply won’t be enough cost effective, politically acceptable and quickly available alternatives.
Much of the Unionist approach is to paint independence as ‘divided we fall’ isolationism, despite the fact that we live in an increasingly interdependent Europe. The shape of a post-independence energy market will have to reflect that reality of interdependence in a Europe desperate to cut carbon, but regardless of its eventual shape, Scotland’s renewables will continue to have a major profitable role to play.