How Scotland’s green energy revolution is about to create thousands of good jobs

I have long been a big fan of hydro power, the earliest and most consistent source of renewable energy. The post-war revolution that brought electricity to the remotest islands and glens remains one of Scotland’s greatest industrial, social and political achievements.

Equally, it was Scotland’s loss that all this ground to a halt in the early 1960s, mainly because of landowner opposition. The only major scheme to be developed thereafter was the Foyers pump storage project on Loch Ness which was inaugurated by Willie Ross, as Secretary of State for Scotland, in 1975. Then it all went quiet.

In its heyday, hydro power was promoted for economic and social reasons. Nobody spoke then about “renewables” or consciously pursued net zero. Decades later, when I was energy minister, we brought hydro within the Renewables Obligation in return for investment to secure the future of existing stations for another generation. But that should only have been a holding operation.

Billions of pounds of investment

The potential contribution of new hydro schemes – and particularly pumped storage – to net-zero targets continued to be neglected by government. This was careless since it was becoming increasingly obvious that reliance on intermittent renewable generation needs to be accompanied by storage. Worldwide, more than 90 per cent of storage comes from hydro. So why not here?

On Thursday, all this changed via a press release from the Department of Energy Security and Net Zero which announced a “new scheme to attract investment in renewable energy storage”. It sounds pretty dry and went correspondingly unheralded but in fact it is the key to unlocking not only billions of pounds of investment, mainly in Scotland, but also to creating thousands of jobs over the next decade. It’s a big story!

A “cap and floor” mechanism will guarantee a minimum price for power and also limit revenues, with consumers sharing in any surplus, which is the same underpinning that has been provided to new nuclear. As energy minister, Michael Shanks, said, “we’re reversing a legacy that has seen no new long-duration storage built for 40 years and are taking steps to unleash private investment in both established and new technologies”.

Hydro renaissance

For more than a decade, we have heard a great deal of hype about “the Saudi Arabia of renewables” and the jobs it would create, without much evidence to support it. This has created scepticism about the prospects for a “just transition”. Those whose jobs depend on it are still looking for something tangible to match the rhetoric. Now we are starting to see things happening.

Within three months of an incoming Labour government, years of prevarication have been cut through to deliver a guarantee which will enable a hydro renaissance. I find it satisfying that it is Scotland’s old faithful friend, hydro power, which will make this happen. With hydro, the vast majority of the work will be rooted in Scotland. Unfortunately, the same cannot be said for other technologies.

There are currently at least half a dozen pumped storage hydro schemes at various stages of development in Scotland, which have been awaiting this trigger. The most advanced of these is the fully consented 450MW Loch na Cathrach project on Loch Ness which is now owned by the Norwegian renewables giant, Statkraft. In Norway, 90 per cent of electricity is generated from hydro, so they know their business.

Statkraft acquired the project last year from a remarkable Scottish company, Intelligent Land Investments based in Hamilton, which recognised the potential of pumped storage hydro a decade ago when nobody else was talking about it. They survived two knock-backs from Highland Council’s planning committee before gaining approval in 2021. Since then, the project has remained in limbo awaiting the form of support which has now been confirmed.

£24bn vote of confidence in UK

There was also positive news yesterday on investment by Iberdrola, the Spanish owner of Scottish Power, with commitments to two wind farms off the East Anglia coast and also to strengthening the transmission capacity which carries power between Scotland and markets in the south. The chairman of Iberdrola, Ignacio Galán, described a £24 billion investment programme as a “vote of confidence” in Britain, encouraged by a “clear policy direction”

It is exactly the kind of mood music that the Labour government wants to hear in advance of an investment summit in London next week when it is expected more big players will pitch in with billions of pounds of investment in energy and other sectors. The hard truth is that with the UK’s public finances in dire straits, the Labour government’s road to economic growth depends on private investment on a scale which does not currently exist.

A boon and a blessing

Energy has a huge part to play in this strategy and the challenge is not only to attract global investment but also ensure that it creates a manufacturing supply chain in Scotland and the rest of the UK. Let’s hope Senor Galán is equally committed to that objective since the record until now has not been great. Investing in highly profitable windfarms is one thing. Committing to the UK supply chain is another.

There are also consumer issues on the horizon. Not unreasonably, there is an expectation in Scotland that proximity to renewables generation will bring bills down, for both business and households, through a system of “zonal pricing”. Scotland’s big energy companies and the trade body, Scottish Renewables, are strongly opposed because they say it will deter investment if Scottish-based generators receive a lower price for their power. The Scottish Government seems to be firmly on the fence.

Like everything else in the energy world, the issue is more complex than it might first appear. Thank goodness for some old-fashioned certainties – like the fact that building a new generation of hydro schemes will be a boon and a blessing for the Scottish economy.