There are concerns that reforms to the UK electricity market could subsidise new nuclear power stations at the expense of renewable energy development schemes in Scotland, the energy minister says.
The electricity market reforms (EMR) proposed by the UK Government as part of the UK Energy Bill are aimed at incentivising investment in low-carbon energy while also ensuring the security of electricity supplies.
They will bring forward a new support mechanism – a Contract for Difference – to provide long-term price certainty for low-carbon electricity generation.
Mr Ewing, speaking during a Holyrood debate in which he updated MSPs on the progress of the reforms, said concerns had been raised by the electricity industry over their complexity.
He added: “The Scottish Government also has concerns that the EMR – if implemented badly – could deliver subsidy support for new nuclear at the expense of renewables development in Scotland.
“The Scottish Government position on new-build nuclear power is clear – Scotland neither needs nor wants new nuclear power stations. We know nuclear build programmes are expensive, uncertain and historically have significant cost over-runs and programme delays.
“Major questions exist about the levels of EMR support which may be given to new nuclear build and there is a lack of transparency in these support negotiations.”
Labour’s Rhoda Grant agreed the reforms were key to moving towards low-carbon generation but said her party wanted to see issues over grid access charges for energy producers in the isles addressed.
She proposed an amendment to the Scottish Government’s motion acknowledging this point.
She said: “There are still huge problems with the proposed grid access charges to our islands.
“Our islands have the potential to become the renewable energy generators for our whole country. Islands really stand to generate more and we need Westminster to address the charges.
“Not only are projects stalling because they can’t get connection, but it will mean higher costs in the future.
“I very much applaud the aims behind the energy market reform ensuring we have secure low carbon affordable electricity, and I believe that is something that we can unite behind.”
Conservative energy spokeswoman Mary Scanlon pledged her party’s support for the Bill.
She said: “The domination of the UK electricity market by the big six, with only two companies based here, does give rise to concern, particularly given the vertical integration of generation through to supply.
“One MP described this process as allowing a utility company to generate the electricity under one arm of the company, sell it through an intermediary, often offshore, which the company also owns, and then on-sell it to another arm of the corporation which supplies it to us as the consumer.
“The end result is a total lack of transparency in the true cost of electricity, and prevents real competition and is a barrier to new entrants. This Bill has an opportunity to address these issues.”
SNP MSP John Wilson said he would support the Government’s motion and Ms Grant’s amendment.
“I think it is very important that we look at the connection costs for the grid, particularly in Highland and islands communities, and in particular the fuel poverty issue,” he said.
“We cannot have a continued policy that sees electricity prices rise at a time when household budgets are decreasing.”
“Therefore, fuel poverty should be at the heart of any energy strategy that is taken forward, either by the Scottish Government or the UK Government.”
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