Independence is likely to push power bills up, because the rest of the UK won’t be subsidising Scotland, writes Peter Jones
WIND power, because it is unpredictable, needs a lot of subsidy, and covers the landscape with highly visible (some say unsightly) turbines, remains controversial.
Being able to store the power produced when it is not needed deals with the unpredictability problem which is why Alex Salmond was keen to be in Spain yesterday to hail ScottishPower’s announcement it is looking at a big increase in the capacity of its Cruachan pumped storage hydro plant. But whether it does anything to fix the problem of much higher electricity prices that his independence plans look likely to cause is dubious.
Pumped storage is a wonderful way of making renewable energy even more renewable. If it is blowing a gale in the middle of the night, a wind farm can produce lots of electricity, but hardly anyone wants it. But you can use it at night (when electricity is cheap) to pump water uphill to a reservoir and then in the morning, let it all slosh downhill and the pumps become turbines, producing electricity again (when it fetches a high price).
The Cruachan 440 megawatt (MW) pumped storage scheme was opened in 1965, making use of off-peak electricity. SSE has two similar plants with a combined capacity of 400MW and may decide in 2015 to build another 600MW scheme at Coire Glas in Lochaber.
If this and the Cruachan extension go ahead, it will take Scotland’s pumped storage capacity up to 2,040MW. It would go some way to making wind power a more reliable source of electricity, but is by no means a complete solution, if only because Scotland gets days, and nights, when there is little wind, which means empty reservoirs in the morning just when you need them to be full.
So even if Scotland reaches Mr Salmond’s target of being able to produce 100 per cent of its electricity needs from wind, there will still need to be close to the equivalent thermal generating capacity from conventional coal, gas, and nuclear sources.
Close, because some solar and biomass power can be developed, but the big hopes for more reliable renewable energy from waves and tides still look to be at least ten years away from being realised, and even then these sources may turn out to be more expensive than is hoped.
The cost of electricity is now a pressing concern. Consumers have shown their resistance to rising bills and it is also a big worry for industry. The UK government and the Labour opposition, concerned not just about voter agitation but also about high energy prices damping down economic growth, are competing to find ways of offering cheaper bills.
Would independence make that easier or more difficult in Scotland? The big issue is whether English and Welsh consumers would be happy to continue paying the subsidies that renewables get. This, and other green levies, is paid through electricity bills, adding about 11 per cent, or about £57 to the average Scottish household bill of £520 in 2013.
This, plus all the green levies paid by all UK consumers, gets paid to the generators. Gordon Hughes, professor of economics at Edinburgh University and an expert in energy economics, reckons Scottish generators received a total of £779 million this way in 2012-13.
And of that, Scottish consumers paid only £246 million, leaving £533m to be paid by English and Welsh electricity users. In a debate on BBC TV Newsnight last week, Caroline Flint, the shadow energy secretary, pointedly said that she might not be able to justify continuing to pay these subsidies to what would be a foreign country to voters south of the Border.
Fergus Ewing, the SNP energy minister, insouciantly batted away this as a bit of a scare. He argued that England and Wales would need this Scottish electricity as Ofgem, the regulator, has been warning that generating capacity is falling and in a few years closure of coal and nuclear stations will reduce the generating spare capacity margin to 2 per cent, well below the 6 per cent that is generally reckoned to be the minimum prudent margin, arguments which Mr Salmond repeated yesterday.
Moreover, he says, in order to reach carbon emission targets, England and Wales will need to import Scottish renewable electricity. Ms Flint, however, argued that England already has the capacity to import carbon-free nuclear energy from France and discussions are well under way about building a sub-sea line to buy wind energy from Ireland.
And then looming in the background is the prospect of fracking, which the UK government seems determined to push ahead with south of the Border and which could yield vast quantities of gas using technologies which are commercially proven to work and to have slashed the price of gas by 75 per cent in the US.
Gas is not carbon free, but it could replace a lot of coal-fired generation, cutting emissions. Even if fracking does not work out, there is still the possibility of importing gas from elsewhere, not cheaply admittedly, but at least as cheap as renewables.
Some academics have argued that the price subsidy that the UK government has agreed to pay new nuclear plants in England will levy so much on bills that electricity in Scotland would be cheaper if an independent Scotland disengaged from the UK market and relied on renewables. Well, that won’t matter until 2023, the earliest that the first of the new nukes could come on line.
Between that and the mooted independence year of 2016, there will be at least seven years in which Scots have to hope that either force of circumstance or English generosity will permit the sending north of the Border of a subsidy which will, given current renewable investment plans, ramp up rapidly from the present £533m a year into the billions.
I just find this wholly improbable. When austerity will still be biting hard, when the recovery will still be a little bit fragile, when Scotland will have stunned England if it votes Yes, why would English politicians authorise, and English voters tolerate, giving a foreign country hundreds of millions of pounds?
Why wouldn’t they want to keep that money and invest it in their own renewables and get the jobs benefit? Would they not be more inclined to say: you want to be independent, so go and be independent?
And if they did, it would just send Scottish electricity bills rocketing.