The
democratic verdict of the independence referendum in Scotland gave the
proponents of the Union a 55% majority ahead of about 45% of independence
seekers.
Prior
to the referendum, the U.K.'s three political party leaders had promised Scots
that should they vote to remain in the U.K., "extensive new powers" over income
tax rates, spending and welfare would be transferred to Holyrood, Scotland's
parliament in Edinburgh.
However,
the vow from the three party leaders -- Tory Prime Minister David Cameron,
Labour's Ed Miliband and the Liberal Democrats' Nick Clegg -- did not refer to
energy policies and there is not the least hint that a potential transfer of
powers to Edinburgh would include energy policy.
The
case of devolving energy policy
To
date, Scotland does not hold constitutional energy policy powers. The
impressive success of the Scottish
renewable energy (RE) sector, which led
to a combination of wind and hydro energies providing Scotland's 46% of
electricity in 2013, stems mainly from its great resources, the U.K.'s RE
financing model and the Scottish government's passionate push towards RE
deployment via minor policy powers such as the devolved environment and planning
policies as well as the U.K.'s RE financing model.
Should
Scotland's energy policy become devolved to the Scottish Parliament, it is
certain the Scottish National Partly (SNP)-led Scottish government will seek to
increase the percentage of RE and achieve its goal for 100% of electricity from
RE by 2020.
The
SNP has pointed out that renewable energy generated locally in Scotland is also
exported to the rest of the U.K. Being part of the Union guarantees the U.K.
character of Scotland's energy market and has also benefited the Scotland's
renewable energy sector.
Financing
Scotland's RE sector under a devolved energy policy would be the big question.
Until now, public spending on devolved matters is calculated according to the
so-called Barnett formula, with funds allocated by the U.K. Treasury. There is
talk to change the way the Barnett formula works, but nothing is certain.
Furthermore,
various energy market analysts have spoken strongly against differentiating
financing models within the same market. A shared energy market needs common
financing rules applying to all parts of the U.K., otherwise there is risk of
market distortions, they argue.
Energy
policy being a U.K. matter
The
second case of retaining the U.K. nature of the energy policy appears rather
more likely. Given today's multifaceted nature of energy policy and its high
position in the global agenda, the U.K. will most likely seek to keep the
primary say in its energy market.
So,
is it business as usual for the Scottish RE sector? It appears it is rather
not.
Under
the recently established Contracts for Difference (CfDs) renewable energy
remuneration mechanism, subsidies are spread across different pots for renewable
technologies. However, subsidies for the RE sector are capped. Furthermore, CfDs
will be implemented via bilateral contracts between the generators and the Low
Carbon Contracts Company, a state institution.
RE
investors in Scotland applying for CfDs will need to compete with investors
deploying RE plants elsewhere in the U.K. While onshore wind energy projects in Scotland are expected to
continue strong, other renewable energy projects will face fierce competition
from similar projects south of the Scottish border.
Large-scale
solar PV plants larger than 5 MW will need to compete with onshore wind projects
and conventional-waste-to-energy technologies for the £65 million per year that the CfD mechanism will allocate to
them. Investors are expected to prefer the U.K.'s southern
parts to develop their projects, where resources are better and empty sites near
the big cities largely abandoned.
Rooftop
solar PV
Small-scale
rooftop PV installations in Scotland are eligible for the U.K.'s feed-in tariff
scheme. Precisely, Scotland's 121 MW photovoltaic installations stem from this
category. However, the Scottish government needs to promote this type of
renewable energy harder. According to Scottish Renewables, Scotland's renewable
energy industry voice, Scotland installed only 5 MW of
solar PV in the first quarter of
2014. This is a figure the Scottish government cannot take pride in. Promoting
solar rooftop installations will also benefit the local economy. Scottish
Renewable's data is astonishing: Despite a tiny 121 MW of photovoltaic installations by the end of
March 2014, the solar PV sector employs 363 people compared to the 3,397 jobs
added to the Scottish economy by onshore wind power's 4,672 MW of installed
capacity in the same time period.
A £20 million Local Energy Challenge Fund created recently by the Scottish government
to support community energy and local energy solutions is an example of a
Scottish initiative that could promote small scale installations.
Onshore
wind
Onshore
wind turbines will continue be installed in Scotland in high numbers mainly due
to Scotland's particularly high wind potential that in some areas can even reach
the offshore wind potential. Because of the way wind turbine technology works, a
slight increase in the wind's speed means a huge increase in the energy
harvested, leading to more profits. Developers investing in Scotland will
generate much higher income than at any onshore spot in England. Add to that the
facts that Scotland is less densely populated than England and the Scottish
government is very supportive of the industry and it is no wonder why the
onshore wind sector does so well in Scotland and will continue to do so.
Offshore
wind and wave
Less
established technologies, such as offshore wind and marine, will share in up to
£235 million of the U.K.'s subsidy support this autumn when the government
allocates the CfDs. Theoretically, a part of this support can end up in Scottish
projects. However, Scotland does not have the same clear advantage over England
in offshore wind potential that it does in onshore. Offshore wind speeds in
England and Scotland are similar. Wave potential off the English shores is also
equally good as Scotland's. Investors are expected to prefer siting their
projects in English waters and nearer to the high population centers.
Bloomberg
recently wrote that Scottish independence would harm the Scottish wind sector,
which would risk loosing billions of U.K. government support. Bloomberg ignored
a fundamental factor, however. Developers will have no need at all to invest in
Scotland when they can do so in the south, near to where they sell the
electricity they generate. Scotland, most possibly, will hardly benefit from
U.K. subsidies in the marine sector. It would require extremely good political
skills deployed from the Scottish government to expect the opposite.
Scotland's
large
solar PV and marine energy sectors
will struggle to secure impressive gains under the existing U.K. energy
policies. Its onshore wind sector is set to continue thriving while dependant on
the Scottish government; the residential and commercial rooftop solar could gain
too. For the last to happen, Scottish institutions need to promote
solar PV solutions more actively and engage local councils and
communities in solar projects.
Article From PV
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