Scotland needs a clear energy policy

Monday 11 February 2013

Energy policy, specifically in increasing the amount of electricity generated from renewable sources, is one of the areas where the SNP Government in Edinburgh has notably diverged from Westminster.

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The target of generating 100% of Scotland's electricity needs by 2020 has been markedly more ambitious than the CO2 reduction target set for the UK as a whole, which aims to provide 15% of all energy from renewable sources by 2020.

A report by five academics from each of the constituent countries of the UK has concluded the Scottish Government's renewable energy targets would be unachievable without the subsidies paid by electricity consumers in the rest of the UK. They warn that the high cost of a major expansion of offshore renewables (a necessity to increase generation, particularly as opposition to onshore windfarms gathers strength) would lead to higher energy bills in Scotland. That is not something any politician can easily contemplate, least of all at a time when fuel poverty is a growing problem.Yet green business has been one of the few bright spots in the struggling economy. In Scotland, renewable energy projects already account for 11,000 jobs and expansion of the sector promises the double benefit of immediate employment and future environmental gains.Like the prospective advantages held out for independence, this requires clear analysis and a realistic timetable before the pros and cons can be assessed. The academics led by Dr David Toke of Birmingham University have made an important contribution to this debate. It is unfortunate, however, that they have chosen to put their analysis in a political context. The economics of renewables are complex because they are subject to many variable factors from wholesale energy prices to weather patterns affecting renewable generation and demand.At the end of last year, the Economy Committee at Holyrood published an upbeat report claiming that the Scottish target remained feasible. But at the same time it warned that it could be jeopardised by lack of finance, citing the evidence from energy companies of the critical need for a reliable investment climate and subsidy regime.Energy from renewable sources is meeting a growing proportion of Scotland's electricity demand, accounting for 36.3% of gross consumption in 2011, and Scotland is a net exporter of electricity to England and Wales. That raises the important question of the future cross-border market. Scottish renewable electricity made up 39.9% of the UK's renewable energy generation in 2011 but if Westminster is deprived of that boost to its own green target, what guarantees will there be of continued sales and at what price?But it is on the question of future investment that the advantages of a UK-wide policy, especially in regard to subsidies, become critical. Security of supply is the issue that cannot be dodged but billions of pounds of investment is required in ageing infrastructure on both sides of the Border. Investors are already frustrated over uncertainty on a new "strike price" for renewables. Agreements must be reached on the UK energy market if further doubt is not to deter vital investment in Scotland.

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Scotland needs a clear energy policy

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