Wind and the Scottish devolution debate


June 9, 2014

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What will devolution mean for Scottish offshore wind?

It’s an important question – and one that’s being asked ahead of this week’s Global Offshore Wind. Keynote speeches are due from Michael Fallon and Fergus Ewing, energy ministers in the UK and Scotland respectively.

The Scottish independence vote is getting close. Scots will head to the polls on 18th September to decide whether Scotland should become an independent country.

The outcome remains difficult to predict. Nevertheless, let’s gaze into the crystal ball and pretend the Scots do un-hook from the UK.

If this happens it would raise major questions about whether Scotland can support the current level of activity in offshore wind; and would cast doubt on its investment appeal.

So far, there are only two offshore wind projects operational in Scottish waters: the 180MW Robin Rigg scheme and Beatrice, a 10MW demonstrator project. The full 664MW Beatrice scheme was selected for subsidy support in April under the UK Contracts for Difference regime. However, that UK support would surely disappear, in the case of independence.

But subsidies are not the only reason that independence could have negative ramifications for Scottish offshore wind. You see, both the UK and Scottish governments have already been talking tough over energy policy.

Scottish first minister Alex Salmond said independence would not harm renewables. He argues that the UK buys one-third of its renewable power from Scotland, and it would have to continue to do so in the case of independence.

Not so, says the UK government. Energy secretary Ed Davey has warned there will be no guarantees that the UK would buy wind energy from an independent Scotland. He argues that the UK could buy wind energy from Ireland or other energy from other sources.

The end result is unlikely to be as polarised as either politician suggests.

The UK would not completely stop buying renewable energy from Scotland. However, it is reasonable to expect that Scotland would face more competition from other nations, and that the current subsidised prices paid Scottish wind energy would weaken. There will be a deal to be done but it is likely that the Scots would be compromised.

More broadly however, the real problem for a devolved Scotland would be that all future subsidy support would need to be provided direct from its own pocket.

The UK said that an independent Scotland pursuing its current green energy goals — 100% energy from renewable sources by 2020 — would add £139 to Scottish energy bills.

Salmond has denounced this as pure scaremongering but nevertheless the question remains – given an increasing pressure on subsidy support and the bottom line, would there be an appetite to support large-scale offshore wind in an independent Scotland?

In truth, at this stage nobody knows. But whatever the case, when the industry gathers in Glasgow this week, politicians from both sides will be keen to talk up the market.

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