The success of Alex Salmond’s energy ‘revolution’ will depend on decisions made in England, writes Dominic Jeff in Valencia
IN A VAST turbine hall 2,000 feet under a man-made lake on a Spanish mountain, Alex Salmond showed no ill effects from his helicopter ride as he announced a “revolution” in Scotland’s energy policy.
Joking that the gale raging outside was “nothing like the real wind we get in Scotland”, he said it had been choppy, but he looked forward to flying over the similar scheme on Ben Cruachan near Oban once work was under way to expand it.
He had been eager to visit the state-of-the art pump storage station owned by ScottishPower parent Iberdrola after persuading the firm to consider upgrading Cruachan in a move he says heralds the renaissance of hydro-electric energy in Scotland.
But, ironically, the First Minister’s plans to produce “clean, green and competitive” energy face a challenge from his own top political objective – independence.
Work to more than double the capacity at Cruachan could create over 1,000 jobs. However it would not be cheap, and pump storage facilities do not actually generate any electricity – they are net users. They work by reversing their turbines and pumping water to a higher reservoir at times when there is surplus electricity in the grid, acting as giant batteries until it is time to reverse the process and provide a surge when energy is most in demand.
The system was pioneered at Cruachan in the 1960s and originally served to store energy produced by nuclear plants during the night. Now the technology is enjoying a new lease of life as a means of capturing the erratic output of wind turbines and other renewable methods of generation.
The Scottish Government has also given the go-ahead to 20 smaller conventional hydro projects, meaning that water could account for a third of Scotland’s generating capacity within a decade. Salmond said the creation of a new generation of hydro power could rival the “revolution in the glens”, which saw electricity brought to the Highlands in the 1950s. But this time the Highlands already has electricity, and the ultimate consumers of the new hydro power are likely to be in England.
Salmond acknowledged as much when in Spain, as he pointed out that England’s shrinking margin between generation capacity and demand is expected to reach critical levels as soon as next year.
“The power is going to be needed – nobody is going to risk blackouts – and we are happy to supply it,” he said. He even had the chance to play the good neighbour, adding: “I want to see the lights kept on in England.”
However, the electricity may be a harder sell if Scotland were to become independent. Peter Atherton, head of utilities at Liberum Capital, points out that UK renewables firms currently enjoy hefty subsidies from consumers. The system is due to change in 2017 to one where different forms of electricity will be guaranteed a “strike price” – a form of subsidy – and he expects most hydro schemes to be viable under this new arrangement.
If Scotland votes to become independent, it is unlikely that the rest of the UK will want to keep subsidising Scottish renewables, he says. Instead, the system would probably be similar to Denmark which already has this sort of agreement. Excess capacity is sold to Germany at a price far lower than that guaranteed by the Danes from domestic customers.
“England might still buy the power [from Scotland], but it would be at the UK wholesale price, not the subsidy price,” Atherton said.
He says that renewables development in Scotland has already slowed to a trickle in the face of uncertainty surrounding the upcoming referendum.
He added: “There’s been a huge slowdown in terms of renewables in Scotland – in particular, nothing is getting finance. SSE is still adding some onshore wind, but by and large there’s nothing new.”
That may explain some of the reticence shown by Iberdrola chief Ignacio Galan, who at the press conference with Salmond was noticeably more cautious about the chances of Cruachan eventually being expanded.
When questioned on independence, he said it was a matter for the people and pointed out that his company continued to supply electricity in Spain throughout the civil war.
But ScottishPower has hedged its bets well in terms of the independence issue, as the feasibility study into the project will last two years, by which time the Scottish people will have spoken.
It also remains to be seen whether pump storage will be included in the same strike price category as conventional hydro power.
Alan Mortimer, director of innovation at Glasgow-based energy consultancy SgurrEnergy, said that would be key to making the Cruachan expansion viable. But he said governments are likely to want to encourage more pump storage.
“We know there’s more potential for pump storage, which is extremely healthy for the system because it helps maintain balance and can be used to allow more renewables,” he said.