It’s Scotland’s Waves
Philip Johnston on the potentials and restrictions of the Smith Commission on unleashing our energy potential.
Friday the 21st of November was a bad day for the employees of Pelamis Wave Power and for Scotland’s renewable industry. It was announced that the company was to go into administration due to an inability to secure sufficient funding. This would seem a simple case of a company unable to meet the technological demands of its industry and paying the consequences but as is often the case the truth is more complicated than that.
That the technology developed by Pelamis works is not in doubt, not only that but it was the worlds first commercial exporter of electricity generated by offshore wave power. The system works by using the mechanical motion of waves to bend its snake like body driving hydraulic fluid which becomes pressurised and in turn generates electricity. The company achieved many firsts in the industry such as supplying and commissioning the worlds first multiple machine wave farm and gaining the UK’s first commercial orders for wave energy converters from utility customers .
Why then has Pelamis struggled to find funding ? The truth is that wave power is having a difficult birth it’s constantly seen as a technology with great potential but is missing that solid backing to allow it to develop and mature. Losses of £4.2 million were recorded in 2013 and £6.2 million in 2012 this coupled with the loss of key partner E.ON (which sought to focus on ‘more mature renewable technologies’ ) left the company in a financially perilous position.
According to a study by the Crown Estate Energy and Infrastructure Portfolio Scotland has the potential to generate 35040 GWh of power from wave power to put that into some perspective Scotland consumes 38000 GWh of electricity annually. Even taking into account the fact that studies of this nature are often overly optimistic wave energy clearly has a pivotal role to play in our future energy mix. The reluctance of companies to invest in Pelamis and other wave energy firms is due to the perceived risk and long-term nature of the investment which is often at odds with the demands of shareholders looking for more short-term profits.
To mitigate some of the effects of Pelamis going into administration Fergus Ewing announced the creation of Wave Energy Scotland a technology development centre that will utilise the expertise of the Pelamis staff. While this is well-intentioned it doesn’t go far enough, indeed bringing Pelamis into public ownership is the only realistic way that the company will be given the necessary time, support and funds to fulfill its potential.
Amid the headlong rush into developing a renewable industry that will eventually meet 100% of our energy needs (a feat to be proud of) we must step back and ask ourselves our if we are going to let private corporations define the nature of the industry . This of course would mean that 100% of our energy generation capacity would be owned by private companies putting us at the mercy of the whims of shareholders, we would be reliant on them to make the required investments in technologies and infrastructure. Whilst it would be disingenuous to claim that companies such as SSE and Scottish Power haven’t invested in renewable projects it’s also clear that they are only willing to do so when they receive significant subsidies from the Government. SSE stalled development of the Seagreen Wind farm at the planning stage due to the fact the project wasn’t offered UK Government subsidies.
Now is the time to create state-owned energy companies for wind, wave and tidal as they are relatively new industries (less so wind) . Future generations may well turn round and ask how after watching it happen with oil we then sat back and did nothing as our natural resources were again used not for the benefit of the people but to improve the share price of large corporations. Of course private companies have a part to play in the energy industry but surely they shouldn’t dominate it to the extent that they must be showered with subsidies and ministers must cosy up to them to ensure the required investment takes place ?
Scotland is a net exporter of electricity with net exports of between 14% and 24% between 2000 and 2010 reaching more that a quarter in 2012. As more renewable energy comes online from all sources more electricity will be exported, profits generated could be reinvested in the industry, used to lower bills or spent elsewhere for the common good. Although the initial expenditure of creating a publicly owned renewable energy industry would be high this would be offset by the stable and long term income from generating electricity and selling it. The Smith Commissions recommendation of ‘increased borrowing powers’ is intentionally vague so as to leave wiggle room for whoever occupies 10 Downing Street come May. It’s vital that these borrowing powers are increased so as to enable the creation of a successful state owned renewables industry that will utilise Scotland’s abundant natural resources for as long as there is wind and waves.
By recommending the transfer of powers over the Crown Estates assets (which includes seabed responsibilities) the Smith Commission although flawed has made some progress on energy. If the proposals are realised then the Scottish Government will have the ability to lease out areas for renewable energy projects offshore. Whilst this is helpful the recommendations fall a long way short of what is required as the Scottish Government will only be offered a consultative role in designing renewable incentives. Of course if electricity was generated by publicly owned companies then there would be no need to for the incentive scheme.
If recent opinion polls are to be believed there will be a strong SNP contingent at Westminster. If this is the case it’s imperative that they use any leverage to secure the powers necessary to create a renewable energy industry that will provide a clean environment, job creation and a constant source of income long after oil has run out.
I think it might be important to differentiate between ‘state-owned’ and ‘publicly-owned’.
In Norway energy companies are publicly owned – by a variety of small municipalities benefitting from the energy produced in a given locality.
We must move away from centralisation and focussing public ownership solely on the state. History has shown that state-ownership is unwieldy and inefficient but in Norway municipal ownership works well.
Centralisation is a British disease we don’t need to inherit.
Are there organisations in Scotland at the moment seeking to increase direct people’s ownership of renewables enterprises? – Things like Co-operatives, campaigning groups, green groups, community investment forums. Some could form a waypoint to municipal ownership, possibly with a significantly greater democratic component than nationalisation ever had.
Communityenergyscotland.org.uk is the best starting point for newcomers to this field
Thanks Kiwi.
Reblogged this on Schrödinger's Self Storage.
Norway has a fund supplied by its oil wealth. That kind of finance could be used in Scotland to invest in wave technology – but we dont have such a fund.
We just voted against such planning.
There wouldn’t be enough money left over for such a fund.
I know. We’re too wee, too poor, too stupid. We should be pissed on, actually. We’re an affront to humanity.
Actually, we are being pissed on…
How much public money are we willing to divert from Health and Education to this project?
How much public money are we willing to divert from Health and Education to the renewal of
trident?
Well Andrew and Shaun – you fell for the economic Tory guff hook line and sinker!
You pair are the sort who support so called ‘austerity’ and play into the hands of those who make us all pay for bankers’ fraud with political support.
BTW Andrew, ALL money is public money – produced by labour and dont you forget it. If you want to talk about ‘diverting’ money then there’s a lot of it in Trident, you poor bewildered soul you.
Stop the emotive nonsense. I work in the oil & gas industry. The idea of using an industry struggling with rising costs and reductions in output to create a sovereign wealth fund is risible, based on fantasy economics and an oil price almost double what it currently is. Thankfully people obvious saw through it. We’ve got a world class education system in Scotland, and hence people are clearly able to do the sums themselves. The idea even scared industry itself, with around 4 out of 5 bosses in industry worrying about the possibility of even more tax rises to help this fund, damaging investment and jobs. The areas that benefit most directly from oil & gas also registered some of the strongest No votes.
No doubt, though, that in Salmond’s Gordon campaign next year he’ll be all about tax breaks to help support the industry, and won’t even so much as utter a word about an oil fund (isn’t that idea mainly to appeal to the central belt?).
Stop the unfounded opinion. I worked in the oli and gas industry – which, as with you, is utterly meaningless – it gives us no special, superior insight.
You complain about the idea of a oil wealth fund and you totally, blindly, refuse to look a few hundred miles away to a sovereign country, Norway which has such a fund, now massive. They also don’t have food banks or bedroom taxes – ” fantasy economics”, eh?! Ouch! I hear you say – those facts hurt!
You use ”4 out of 5 bosses” as your guideline – do you really believe that these people’s opinions are somehow better than those of the people of Scotland? I am concerned if you feel that, as it raises worrying questions about your grasp on the nature of democracy.
You have a go at Salmond, second guessing what he’ll say, this oil analyst and outstanding politician of our century in Europe. And I’m not a member of the SNP.
What’s this ‘central belt” stuff? Are you trying to divide and rule?
Bothy Basher: “You complain about the idea of a oil wealth fund and you totally, blindly, refuse to look a few hundred miles away to a sovereign country, Norway which has such a fund, now massive.”
The difference is that Norway launched their sovereign wealth fund back in 1990 when they’d used just 15% of the total oil extracted up to 2013 (according to BP’s statistical review). If the UK had followed Norway’s lead back then the country would no doubt be sitting on a smaller (but still massive) fund as closer to 40% of UK oil to 2013 had already been extracted by 1990.
But the UK didn’t follow Norway’s lead and now UK oil extraction rates are a third of peak rates and decreasing at about 8% per year. The oil-fuelled sovereign wealth fund boat sailed a quarter of a century ago, I’m sorry to say.
Bothy Basher: “You complain about the idea of a oil wealth fund and you totally, blindly, refuse to look a few hundred miles away to a sovereign country, Norway which has such a fund, now massive.”
The difference is that Norway launched their sovereign wealth fund back in 1990 when they’d used just 15% of the total oil extracted up to 2013 (according to BP’s statistical review). If the UK had followed Norway’s lead back then the country would no doubt be sitting on a smaller (but still massive) fund as closer to 40% of UK oil to 2013 had already been extracted by 1990.
But the UK didn’t follow Norway’s lead and now UK oil extraction rates are a third of peak rates and decreasing at about 8% per year. The oil-fuelled sovereign wealth fund boat sailed a quarter of a century ago, I’m sorry to say.
Well said Bothy Basher, swords into ploughshares. Which bothy were you bashing in? 🙂
Och mostly the west Highlands – you could hitch up on a Friday night to Glencoe to camp in the rain or doss out at Sol’s Bunkhouse. The hostel there was fine too, but one morning I stood on a dog turd somebody’s mutt had left on the kitchen floor – helluva job gettin’ it oot o’ ma woolly socks. Or Ben Alder cottage, or Gorton, or under the road bridge in Glencoe (Bendy Boys howff near McIness’s cottage), or howffs on Loch Lomondside, or the rockfall caves south of Inversnaid, or Steall in Glen Nevis , ……..and a load more whose names slip into the mist like Ben Nevis’s summit.
I spent a few months too as ponyman on the Fisherfield forest (Ach an Iasgar) when Whitbread (l’espece de connard) had it all as one forest, and we’d doss out at Carn More and over to Sheneval.
Ah’m nearly greetin’ at decades of a lost life! If I have another glass of wine I’ll be blubbin’ away….
Back on topic – let’s have a wee wind turbine for every bothy and howff…..
Sorry Bella, I’ll stop this now…
We also need to ensure that the transmission charges are equalised so that Scotland is not penalised unfairly.
Transmission charges from where to where? Equalised with what/where? Penalised by whom?
The present transmission charging regime actively works against the development of renewable resources, with a power station in central Scotland forced to pay £25m more for transmission than a similar facility in Yorkshire, and even more than in London.
The charges presently levelled range from +33.790236 (£/kW) from the North of Scotland, to -3.779931 (£/kW) in London
Thanks David – this is really helpful with facts and figures aiding everyone’s understanding.
Memories, memories BB. Have you read Alastair McIntosh’s “Soil & Soul”, incl’ his tales as a ponyman?
No I haven’t and worse, I didn’t know of it. I will seek it out. Ta.
It was funny to be a ‘Red Clydesider ‘ in that environment of sponging Dukes and toffs but I could see them at close quarters.
My ponies were Sam and Sparkle and they were great.
Anyway three months of wandering a stunning part of Scotland and then back to hammering steel, this time in Yarrow’s.
Sob!
Junius – I have looked up McIntosh.
Sometimes in one’s life a chance direction, a pointing finger appears to show a way- and this is one.
Thanks.
Cheers BB, also check-out Andy Wightman’s “The Poor Had No Lawyers”, Andy was another former ponyman.
Must be the long days lying waiting in the heather for the shot which brings to fruition thoughts of the injustice of it all, and how things should be. 🙂
Junius, another gem which I will savour. And McIntosh is a star, a polymath of the best kind. His internationalism is the icing on the cake.
Confession here, and I’ll really cut this down. I’ve been out of Scotland a long time – like many (6 of 6 children in my family) it was for work. I had endless work/dole/work/dole. My heavy industry (I was a steel fabricator/welder) took a dive in the 80s * (Thatcher helped) – I went to the ( life enhancing) Ruskin College in Oxford for study, came back to Edinburgh Uni, then to Stirling, then Thessaloniki, then Glasgow, then London – for I could not get work in Scotland. After a long, grey time and knowing I couldn’t afford to get a house anywhere in the UK, nor rent reasonably, I left for France. I have now moved further afield and find that when I read about McIntosh that Scotland has changed and hugely for the better. Edwin Muir lamented Scotland’s condition http://www.poemhunter.com/best-poems/edwin-muir/scotland-s-winter/. McIntosh is inspiring, as is the independence debate, not just for Scotland but as an exercise in democracy and community politics. And we learn of the forces ranged against this. Ah f***, how things could be.
Junius, you speak of the wait for the shot –
”And the sun sets behind Dun Cana
Love’s loaded gun will take aim.
It will bring down the lightheaded deer
As he sniffs the grass round the wallsteads
And his eye will freeze: while I live,
His blood won’t be traced in the woods.”
I am not the expat who cries in his pint about Bonnie Scotland and singing the dirge ‘Flower o’ etc ‘ but now and again i get a wee bit sentimental when I read inspiring stuff.
….What if…
* I was a wee bit shocked on a visit to the Kelvingrove Art Galleries years ago to see my trade – in a museum! With the display they had some great Stanley Spencer paintings from WWII but it was a disconcerting experience.
Junius, another gem which I will savour. And McIntosh is a star, a polymath of the best kind. His internationalism is the icing on the cake.
http://www.poemhunter.com/best-poems/edwin-muir/scotland-s-winter/
Confession here, and I’ll really cut this down. I’ve been out of Scotland a long time – like many (6 of 6 children in my family) it was for work. I had endless work/dole/work/dole. My heavy industry (I was a steel fabricator/welder) took a dive in the 80s * (Thatcher helped) – I went to the ( life enhancing) Ruskin College in Oxford for study, came back to Edinburgh Uni, then to Stirling, then Thessaloniki, then Glasgow, then London – for I could not get work in Scotland. After a long, grey time and knowing I couldn’t afford to get a house anywhere in the UK, nor rent reasonably, I left for France. I have now moved further afield and find that when I read about McIntosh that Scotland has changed and hugely for the better. Edwin Muir lamented Scotland’s condition http://www.poemhunter.com/best-poems/edwin-muir/scotland-s-winter/. McIntosh is inspiring, as is the independence debate, not just for Scotland but as an exercise in democracy and community politics. And we learn of the forces ranged against this. Ah f***, how things could be.
Junius, you speak of the wait for the shot –
”And the sun sets behind Dun Cana
Love’s loaded gun will take aim.
It will bring down the lightheaded deer
As he sniffs the grass round the wallsteads
And his eye will freeze: while I live,
His blood won’t be traced in the woods.”
I am not the expat who cries in his pint about Bonnie Scotland and singing the dirge ‘Flower o’ etc ‘ but now and again i get a wee bit sentimental when I read inspiring stuff.
….What if…
* I was a wee bit shocked on a visit to the Kelvingrove Art Galleries years ago to see my trade – in a museum! With the display they had some great Stanley Spencer paintings from WWII but it was a disconcerting experience.
Bothy Basher,
Experience in the oil industry certainly is far from meaningless when it comes to discussions of the realities of an oil fund. I find it somewhat incredulous that you have even said such a thing. In reality, it gives you the kind of insight and knowledge of the sector that people out with it typically do not have. And this is key when it comes to the often made comparison between between us and what the Norwegians have achieved with their fund.
The main difference is that the Norwegian fund began in 1990, when Norwegian production was high and rising to its peak. In 2014 now, UK production is a fraction of what it was at its peak, with production costs having risen rapidly and margins heavily squeezed. A large amount of UKCS assets are currently up for sale, as their current owners see little future in them. It’s natural for major operators to shed their more mature assets, but what’s worrying me is that some of these assets for sale are also currently some of the most productive assets we have! There simply isn’t the money for an oil fund; oil revenues would have to be directed to fund our vital public services such as the NHS and schools.
Nowhere did I suggest that the view of bosses was “better” than those of the people of Scotland (although I’m sure that bosses are also people of Scotland). That’s you putting words in my mouth again, something you’re very adroit at in the absence of proper debating skills. The people of Scotland as a whole voted against independence, especially in areas where there are large amounts of people employed in the oil industry. That’s democracy.
Reblogged this on The Orkney Vole and commented:
I had a wee scurry out from the burrow today thinking there would be no cats about at all in this ghastly weather – looking out at sea I thought that thing we would own, if anyone did, it would be the waves – but no they the property of the Crown Estate and those who run it are as democratically elected as Genghis Kat (rules the main street past the Library) – this thought provoking article that should have all inhabitants of Orkney in arms.
Lovely point Vole. I am reminded though of the Danish/Anglo king Knut who commanded the waves to get back. No result.
Take heart.
(Fond memories of Stromness and Brown’s hostel there, and Hoy and a man – was it Isaac someone who ran the hostel – and Rackwick!!)
AH Rackwick indeed, I am glad I am not there today – my whiskers would shiver – could it be Isaac More – I am not sure … must have been some time ago.
Thanks Shaun
I can’t agree with your first paragraph, but no matter. Yet your ‘incredulity’ does you little credit. I also worked in shipbuilding but I knew about construction, not the global politics and economics of shipping. I hope you’re not saying that technical ability equates to political wisdom.
Your second paragraph is a view and I’m fine with that; it’s considered, informative and reasonable. It adds to the debate.
In your third, by implication, you previously suggested that the view of bosses was ‘better’ than most. Sorry, these people are expert in their particular field and not necessarily of political issues. Their view on Norway’s oil fund is no better informed than most. I certainly dont want to depend on bosses’ views on politics and social policy or wealth. They are no more qualified than you or I. The ‘bosses’ are certainly not the ‘people of Scotland’. They form one part of the people. That’s democracy. Authority is not democracy.
You question my debating skills (I do too) yet suggesting that I put words in your mouth which of course I reject. But when you say you value bosses for a political opinion, I part company with you. Immediately.
You speak of the Norwegian fund having begun long ago – but avoid the fact that it exists, and bulging with national wealth. I’m sorry that you imply that Scotland was wise not to have such a fund. It could though have helped ameliorate the bedroom tax, council cuts, and a host of other vicious social policies that Scotland did not vote for. The fund could also have started up wave power – you know that industry is in trouble through poor funding. I wonder if your bosses commented on that?
I certainly never avoided the fact that the Norwegians have an oil fund. It clearly does exist, but we can’t go back in time and create one for Scotland. Unfortunately, the North Sea’s best days are past now, and continued investment in future production, which will bring new projects and employment, is only going to continue as long as taxes on the sector are continually reduced in order to help marginal or uneconomic projects become worthwhile. Look at the damage Osborne’s tax grab did in 2011; such a similar attempt in order to create a sovereign oil fund would only have a similar effect now. I want what’s best for the future of Scotland, and although a massive oil fund like Norway is no longer possible, it can still be a large employer of high skilled workers decades from now if we nurture it correctly.
You reject that I said you are putting words in my mouth? Well, you just did when you said that I implied Scotland was “wise not have such a fund”. Although given that we’re part of Britain, I don’t think that, if such a fund was created it should have only applied to Scots, but rather everyone on Britain. Just like I don’t think that banking profits should be solely distributed amongst Londoners. Although if Scotland was independent in the 80s or 90s, the decision to set up a wealth fund would have been a no brainer.
I’m not sure if I’m convinced of the merits of wave power just yet. If there was a solid case for it, then I don’t think E.ON would have dropped it. I can certainly understand why they’d want to focus on more “mature” renewables, by which they almost certainly mean wind. Of course, something new could happen in the wave power industry and in 20 years we might all be cursing ourselves for letting Pelamis go under, but hindsight is a wonderful thing, and in truth it seems that solar energy has the brightest future amongst the renewables field.
As I think Alex Salmond said, Scotland is the only country in the world to be told (and Shaun is convinced) that to have major oil resources is a bad thing.
You couldn’t make it up!
Shaun
All Norwegians become millionaires as oil fund balloons
http://www.cnbc.com/id/101321953#.
This discussion is missing the point that tidal energy flows, rather than the waves, are likely to be the form of ocean energy that will win in the end – and that the experimental tidal flow generators being dropped in the sea off Orkney would be the technology that should be backed by the public funding.
Shaun said, ”You reject that I said you are putting words in my mouth? Well, you just did when you said that I implied Scotland was “wise not have such a fund”. ………..Although if Scotland was independent in the 80s or 90s, the decision to set up a wealth fund would have been a no brainer.”
Shaun – you’ve just made my point. And you’re trying to have it both ways – you say we should have a fund, and you say we shouldn’t.
Shaun, it’s troubling to discuss issues with you after this.
In the 90s, production volumes were larger and margins were higher. Money could have been put aside for later. Now, it’s the opposite. The time has passed. It’s too late.
This isn’t a difficult concept to understand.
Shaun said ” not sure if I’m convinced of the merits of wave power just yet. If there was a solid case for it, then I don’t think E.ON would have dropped it.”
Again Shaun, you depend on authority rather than give us YOUR views.
I’m sure E.ON has a team of relevant engineers who are much more familiar with renewables technology than myself. Although in my opinion the wave energy devices do seem a lot more complicated than other technologies such as wind turbines (and tidal turbines too).
I think the pigs at the trough are waiting on the fracking starting. Oli exploration has barely started on the west coast & the Clyde awaits. A low oil price now means nothing. Some folks gless is aye hauf empty!
BB, enjoyed your wee biog’ my own cv reads like the death roll of Scottish industry. I think Edwin Muir was too much of a gentleman for life in the tenements. My own grannie was an Orkney wummin who took to Glesga nae bother. Her gf was evicted from North Ronaldsay by the Traill laird. Muir’s father fell foul of another Traill, the Little General of Rousay.
There is practically no interest whatsoever in fracking in the UK by the oil industry. Most of the talk appears to come from UKIPers, who seem intent to believe that it’s just around the corner, being blocked by the environmental lobby. Such stories likely get a lot of hits on the Telegraph’s website, but are far from reality.
Oh Shaun,you are indeed a babe in the woods. Fracking, when the price is right ,will be the flavour of the decade. And look at what Mojo says below.
You don’t seem to understand the nature of the rampant uncontrolled capitalism you seem to favour. It is amoral, and It will eat you alive, as it will do all of us.
If
we
let
it.
Ineos have invested in it. Set up a research department a year ago to look into UK onshore and bought extensive licences around their plant in Grangemouth. Why?
I’d like to hear your account of the death of Scots industry. It’s part of our living history.
Muir was indeed a true gentle man (I think of his recoil from the horrors of the Greenock/Port Glasgow life which shocked him to the core) . Me too, many decades later in Clydebank, though I was hardened to it as he was not. But I find it difficult to step away from that directness, to life. It’s often misunderstood especially by middle class folk. But they have no idea of the road I’ve travelled.
I think of Muir’s most elegant poetry (on which I modestly published some appraisal in the English Review, before digitalisation, on ‘Scotland’s Winter.’ )
I loved my two visits to Orkney and to Hoy over to Rackwick and have a nostalgic wish that I’d stayed there, not least for the trout fishing at Stenness! I didnt meet Mackay Brown, though I’d like to have. Our paths on the shining wet flagstones of Stromness did not cross.
So many evictions – so little retribution, and even less redress!
The real issue here is institutional. Energy policy and regulation is a reserved matter to Westminster. So currently the Scottish Government cannot intervene in the market. The UK energy ‘market’ is organised to ensure the producers earn high profits; this is obviously at the expense of the consumer. By voting No, Scotland is forced to continue with this arrangement.
Given this environment, asking Scottish civil servants to run a bust wave energy company is going to achieve what exactly?
‘the North Sea’s best days are past now’- only for oil and gas Shaun perhaps – but not for renewables – that’s the point of the article above…..we have potential to be more than self sufficient in wind and wave energy and new models of public ownership are needed to ensure that the industry serves the public interest this time round instead of allowing the energy companies to hold everyone to ransom, with fuel poverty currently rampant in the UK and the worst public housing in Europe
To Bothy Basher
There are many pros and cons to every issue. Lies on both sides.
There are facts:
1) Norway has an Oil fund worth Billions
2) Norway has Food Banks for the poor
https://anewlifeinnorway.wordpress.com/2011/09/02/the-poverty-house-in-oslo-fattighuset/
Yes Inter, we know about the lies. I didnt know about the Norwegian food banks.
But the national oil fund is a good start.
The oil price is highly volatile and the main factors conditioning volatility are political. The price is low at present because both the US and Saudis are dumping cheap oil on the markets to hurt Russia. My reading of this situation is that it is likely to continue for some time. But at some point oil prices will recover and reach a level at which it is economic to invest in the North Sea. We know the oil is there, it’s just the price of getting it out. New technologies will aid this. Meanwhile the UK government’s high taxation of the industry and in particular its varying that taxation frequently so that investors don’t know what lies ahead from year to year, is not helping the industry.
Public ownership is not ownership by cantonisation i.e. by small communities. Public ownership is where the assets are held by the state on behalf of all of the people of state. Only large scale public ownership produces the economies of scale and strategic planning that allow for proper investment and offset of cheaper energy in the future against today’s soaring bills.
Pelamis should be taken into public ownership as a first stage of developing a state owned national renewable energy company, the grid, National energy supply company and and a stae oil and gas exploration, extraction and refining company.
These are the basic levers a modern progressive state will require to a ensure a coherent long term energy policy that moves towards wholly renewable generation, reduced energy costs and a fiscal surplus to create social justice and invest in technological progress as well as high skill, high wage jobs.
There are many aspects to Steve’s proposal that need closer consideration. IF (the big if) SSE decided to become an English registered company (before or after the next vote – do they have more shareholders south of the border?) then the pressure to set up such a Scottish “public owned” entity would increase. However the existing infrastructure – networks and grid – will still need a huge input of new capital.
But it is not just the renewable energy generation opportunities that are being squeezed out by the current regulatory and ownership arrangements – SSE have no ‘commercial’ incentive to institute projects that could significantly reduce energy poverty (mainly oil-induced) in the Highlands and (especially) Islands where renewable resources are massive, but networks are constrained and the ‘returns on assets’ for improvements are not great.
Is it time for more locally “owned” networks to provide community-benefit energy services – e.g. to allow local wheeling of electricity on an island (at a very cost effective rate for consumers) when SSE network cables can not carry the amount available. See http://anm.ssepd.co.uk/ANMGen.aspx for a picture of the problem.
The cost of nationalising SSE or the Scottish operations of Iberdrola would be very large (possibly about £15 billion for SSE?). For comparison, North Sea tax income is currently around £4 billion a year.
Municipal ownership works perfectly well in Norway.
See: http://en.m.wikipedia.org/wiki/Bergenshalvøens_Kommunale_Kraftselskap
Public ownership does not mean public control…..unless we have real democracy then we get state capitalism and control by a state elite/bureaucracy…..this is only nominal public ownership. Scotland is probably the most centralised “democracy” in Europe and if we really want to create genuine public ownership and control then we must address the democratic deficit in Scotland as a priority.
Agree. Municipal ownership works well in Norway. See for instance BKK.
http://en.m.wikipedia.org/wiki/Bergenshalvøens_Kommunale_Kraftselskap
Hold up, didn’t Westminster just take take back Holyrood’s power to subsidise renewable projects ?
I noticed the SNP taking a big hit on the BBC news the other day, being accused of all sorts but no ire directed to Westminster from various pissed off mechanical bods.
Why doesn’t this article refer to the carbon tax levy that Scotland has paid to Westminster over the years but still hold on to ? I think they still have £ 50m-100m locked up in the treasury. That could have saved Pelamis or taken it into public ownership.
Lastly the strangest omission must be the mention of a failing renewable company and the Smith commission and not bringing into the story the Green Investment Bank. Set up by Westminster, situated in Edinburgh, why doesn’t it offer some financing for the company ?
After all, the chairman of the bank is one….Lord Smith of Kelvin.
I am deeply involved in the entire marine planning regime so have read scoping documents and design plans for marine devices in the kind of depth that no sane person would want to. There is engineering skill in spades in Scotland and in Orkney which knows the challenges of working in the volatile and corrosive environment of the sea very well.
From day one the problem with the wet renewables has been laudable but naive optimism in what was possible in and on the sea, a lack of willingness to embrace the knowledge of those who knew the environment from a practical point of view be they from oil and gas, or fishing. Those from those industries looked on in disbelief to witness the colossal waste of public money that was carried out in the name of development but whose voices went unheard and largely ignored.(That was a class issue in my mind, an educated and arrogant university class disdaining those who got their hands dirty but had superior practical knowledge) The reason was that because private companies as the developers needed to keep private capital flowing in to their developments and public money to further bolster their design realisation and testing, there could be no hint of any negative publicity that might scare the investing horses. The result was overhype of the devices – pelamis and aquamarine power in particular, constant marketing spin and effusive press releases which masked the numerous failures of the devices. There were gagging orders on any subcontractors working on the devices (fairly normal) but in a small community when you know the tradesmen and the divers contracted to do the repairs you inevitably learn the truth about what is happening on the ground or on the sea bed in this case.Much of the secrecy was indeed reminiscent of the develpoment of nuclear power…such is energy pursuit an area where normal transaprancies can be ditched.
What is most sad is that so many people have been duped through all this – they need to examine carefully and dispassionately what really went on within it. Much effort went into the designs of the devices, very little into how they would actually be securely fixed to the seabed and how they would be maintained at sea. Given last weeks weather – this is exactly the type to environment that they would have to endure in if they were to be sited in the strongest wave climates. In addition there is the vast loss of fishing grounds that would be incurred not just from the spatial area required by the massive amount of subsea cabling that would be required. Inshore fishermen (our forgotten working class) stood to be cleared from their grounds and still could be.Is any one shouting about this? And before you say well they could just fish elsewhere, no they cant, they are restricted in where they can fish by where the stocks are and how safe it is for them to take their boat to that area.
This is not luddite talk – its time for truth. Vole needs to take note!
Interesting. I’ve seen it more from the public investment end where the promise of a manufacturing and exporting industry to rival what Denmark has achieved with wind turbines has drawn all eyes.
Scottish Enterprise and HIE – the job creating agencies in Scotland – have already put millions into marine renewables in the hope, not that we become an electricity exporter, but that we make and export the technology for others to use. The game is still to be won – who will create the system (device, anchors, cabling, installation, controls) that will become the world standard. If it can be done.
On that basis, having the government step in to favour one particular developer, with one particular approach, could lead to public money being coralled for it – when the successful device is actually invented elsewhere.
On the basis that the government is best placed to see into the future and decide what the winning model is, we should have bought Salter’s Duck in 1974.
Fiona has it right I fear. Better to drop the marine renewable dead donkey now, as Fergus is doing. HIE need to ask a few questions of themselves. As do the ‘world leading’ academics and PR R&D types who got the public cash from ScotGov but failed to deliver anything. This is no recent thing either but goes back 10 years or more.
What Scotland really needs is control of energy regulation through which the pricing mechanism and capacity regulation and producer monopoly power can be better controlled than at present. Westminster’s only energy policy is to ensure the big producers earn excessive profits with no risk, giving high returns for shareholders. The consumer pays for this. Well done all you No voters who preferred the status quo!
Fiona may be right – that implementation of the trial wave energy technologies has been disappointing and failures may be linked to a devaluing of existing marine engineering experience available – but I would rather see this research continue so that we can capture the immense power available in tidal flows and the waves. The unacceptable alternative is to have the Govt investing hugely in disastrously expensive nuclear power stations (and CCS). Grants and subsidies offered to ocean energy are highly likely to be a better option for the people of Scotland than the costs for nuclear options.
But that is not to say that the whole situation, including impacts on fishing communities, does not need to be given a strongly coordinated knocking of heads etc.
“The unacceptable alternative is to have the Govt investing hugely in disastrously expensive nuclear power stations”
That is another very good reason for independence – an indy Scottish Gov is non-nuclear.
Stay with UK = stay nuclear.
Indy Scotland = no nuclear.
Clear!
no new nuclear also equals run away climate change.
says its all http://www.withouthotair.com/c12/page_73.shtml put the money into cycle and sustainable transport infrastructure.
I agree with StrandedKiwi. Fiona may well be right about the viability of the existing technology (although I understood real progress is being made with tidal turbine technology as distinct from wave based tech). The urgency of tackling climate change does not give us an option of “dropping dead donkeys”….we have to persevere and that calls for more persistent commitment to financing the development of new technologies. of all kinds, whether in renewables or other industries.
Here is a piece that I wrote to The National last week and which was published on the letters page of the 11/12/14 issue:
“The news that two pioneering wave energy companies have run into difficulty and run out of financing is disturbing. This emerging technology and these sort of companies, which support highly skilled and well paid employment, are exactly what a vibrant new Scottish economy will need. A high wage economy is key to tackling inequality.
The Scottish Government has been providing financial support for the development of the new wave energy technologies but this has been insufficient to support the process through to fruition. This calls for an evaluation of and some new thinking about how this finance can be provided. Bringing cutting edge technology to the stage of commercial viability is a long term process and requires long term thinking and patient capital. Clearly the financial infrastructure which currently exists is not up to the job.
Some new ideas are emerging ; of particular interest are the proposals from the Green New Deal Group for “Green Quantitative Easing” and from Birmingham Labour councillor John Clancy, who has proposed in his book “The Secret Wealth Garden” that Local Government Pension Schemes (LGPS) should be enabled to allocate a substantial part of their assets to investment in the regions whose taxpayers fund the LGPS schemes by paying the employers’ pension contributions.
Investment by Scottish LGPS funds in Scotland’s infrastructure and social housing will in itself create employment but will also release government spending to focus elsewhere where it is needed – such as supporting emerging new technologies and industries.
Green QE can play a role as it would give the Bank of England an option of creating new money to buy Scottish LGPS pension fund assets (instead of buying up banks’ assets as happens with standard QE), thereby providing the cash for the funds to invest in the Scottish economy. If LGPS funds had to generate cash by selling assets on the open market it might trigger a fall in the value of those assets which they retain…..selling to the BoE in a Green QE initiative would prevent that.
How this sort of financial architecture would work in detail will require better minds than mine, but it is clear that we urgently need financing models which can deliver the committed, long term patient capital necessary to create the new technologies and industries our country needs to build and sustain a high wage economy.”
[END}
On a related issue…..Scotland is not now in a position to create an “oil fund” – even if we do have the reserves left we will have to leave most of them where they are unless we are happy to fry the planet. We do have a form of quasi sovereign wealth fund though – the Scottish Local Government Pension Schemes (current assets worth £28bn). If we took up John Clancy’s proposals (set out in his book “The Secret Wealth Garden”) we could put these funds to productive use investing in the Scottish economy whilst also sustaining the investment income to maintain pension benefits for the members of the schemes.