Last month brought a major announcement from regulator Ofgem that carried the glad tidings of the “green light” for a new £1.2billion link between Caithness and Moray.
At least that is what it said in most of the headlines. Remarkably little attention was paid to the small print which told a significantly more qualified story. And for the renewables industry, the real story surely lies in these caveats.
What Ofgem actually approved was the “need” for a new link to carry the power generated by renewables in Caithness and points north towards markets further south. This was based on the case put forward by SSE’s transmission wing, SHETL.
The stated purpose of the proposed subsea link is “to help meet Britain’s renewable target at a lower cost to consumers”. That makes good sense. The “need” is indisputable. The only remaining question is whether we will be part of “Britain”.
So the stage we are actually at is that SHETL has “submitted more details on the project and Ofgem is currently analysing them to check that the spending, technical and delivery plans for the upgrade are appropriate and offer value for money for consumers”.
Then comes the Ofgem punch-line: “We will consult on the detail of the funding proposals this autumn”. And by this autumn, of course, the world – or at least our little corner of it – could be a very different place.
Loosely translated, the limits of what Ofgem has announced is that under current assumptions about a single electricity market within “Britain”, there is a need for this link.
The decision on whether anything happens thereafter on the basis of “value for money for consumers” has been delayed until the autumn and beyond. Just as with the Western Isles sub-sea cable.
Misunderstanding of what Ofgem has actually said was certainly abetted by the press release from the Scottish Government which made absolutely no reference to the crucial hurdles still to be cleared.
It was presented as a done deal which, in the quote attributed to Alex Salmond, “will ensure continued progress towards our renewable energy ambitions”.
The quote went on to assert: “It also underlines once again the essential role that renewable energy in Scotland has to play in meeting the UK’s long-term energy requirements”.
But only, he might have added, for as long as we are part of the UK.
If independence prevails, subsidy for Scottish renewables will be a decision for what’s left of the UK to take – and in which Scotland would play absolutely no part.
The multi-billion pound question of whether English consumers would fund expensive renewable-related projects in Scotland if we were separate states remains unanswered. Though we can guess.
The organisation that one might reasonably expect to point this out is the trade body Scottish Renewables.
There is no industrial sector in Scotland that is more dependent on the continuation of the United Kingdom than renewables. Without a subsidised English market to sell into, their prospects would be devastated.
That is why so many investment decisions are on hold.
But Scottish Renewables remains totally silent on the issue. The organisation is caught between the rock of current subsidy-dependence upon the Scottish Government and the hard place of reality if the same Scottish Government succeeds in its over-riding objective of independence.
Sadly, Scottish Renewables decided a long time ago that discretion is the better part of valour and to keep its collective mouth firmly shut.
This is a dangerous game for the trade body to play. For a great many reasons, I hope that SR gets away with the tactic of leaving other people to point out the realities – but it is scarcely an honourable one.
Lest there was any doubt about the dependence of Scottish renewables on political decisions in England, in the event of independence, it was resolved recently by a European Court of Justice ruling in a case involving the Swedish government and a Finnish wind energy company which wants subsidy for supplying into Sweden.
The Court found that there is no obligation for Sweden to make these payments and that EU member states can continue to limit renewable support schemes to within their national borders.
Whatever one thinks of it, this is a ruling of first order importance to the Scottish renewables industry in the context of our own constitutional debate.
It confirms that the decision on whether consumers in the rest of the UK would continue to subsidise Scottish renewables in the event of independence would be 100% political, to be taken in London.
Once again, Scottish Renewables expressed no view on a ruling which its collective membership’s whole industry could soon depend upon.
Does SR have one? Can it explain why anyone should invest in Scottish renewables if they are soon to be dependent on political decisions which would, in the event of independence, be taken by a foreign state?
Of course, anything is possible. Norway and Sweden share a common electricity market, for example. But Sweden and Finland obviously don’t!
It is possible that English consumers would happily fund subsea cables around the Scottish coast so that they could pay more for their electricity, but it does seem unlikely if they can get power more cheaply from elsewhere.
Is it too much to hope that Scottish Renewables will come out of hiding in the next few weeks and start addressing the questions on which the future of the industry it is supposed to represent depends?
On past form, the answer to that question is almost certainly “no”.
But let there be no mistake. If Scotland votes for independence, the brave talk of becoming the “Saudi Arabia of renewables” will be no more than an historic joke and the much-vaunted job creation potential of the Scottish renewables industry will disappear with it.
Remember, without a market, there is no point in having a product.
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