Energy was political and economic dynamite, and a key battleground on which the independence debate had been fought. Following the outcome of the referendum there is now some agreement that Scotland should have a much stronger voice when it comes to energy policy. In this short article we explore the conundrum between renewables and nuclear power, and consider further what new powers for Scotland the Smith Commission might consider. Working to a tight deadline the Smith Commission intends to produce a set of proposals covering financial, welfare and taxation powers by the end of November 2014.
The renewables versus nuclear conundrum
Westminster has promised some big new powers for the Scottish Parliament, but there appears to be little agreement on how to close the policy gap between Holyrood and Westminster on renewables and nuclear power. Where are the proposals to give the Scottish Government some influence on how to spend incentives for renewable energy? At the moment, when it comes to financing, Westminster has the power to decide what it wants, regardless of what the Scottish Government thinks.
It is now clear that Westminster is planning to spend a lot of money on building nuclear power stations after 2020, and the Conservative Party has stated that it will stop incentives for onshore wind. So where does this leave a Scottish Government which opposes building new nuclear power stations and which wants some ability to make its decisions on what renewables should be supported rather than being dictated to by Westminster based Conservatives?
Many Conservative MPs are sympathetic to the aims of anti-windfarm groups like the Renewable Energy Foundation (REF). The REF say that Scottish consumers ought to pay more for renewables deployed in Scotland. Well in that case, why should Scottish consumers pay for nuclear power stations in England and Wales?
New energy powers for Scotland
There is a plausible way of solving the problem of giving more energy powers to Scotland. One way it could be done is simply to give the Scottish Government a portion of the ‘Levy Control Framework’ (a capped fund for renewables spending set up by the Treasury) to spend as they choose. Then renewables developers could choose whether to use the Westminster incentives (contracts) or the incentive schemes organised by the Scottish Government. If the Conservatives do cut off the funds for onshore wind then the Scottish Government could fund Scottish schemes instead.
Another way in which increased Scottish powers could help renewables would be to establish a Scottish Energy regulator which could have authority over rules governing investment in network distribution. Then pro-active work could be done to help community renewables and other schemes connect to a strengthened local network. This is rather than having the schemes stopped by them being given expensive demands for local grid strengthening which cannot be economic for one scheme on its own.
Then there is a wider case to give a Scottish Energy Regulator authority over incentives for energy efficiency, powers to help reduce fuel poverty and also to regulate energy prices for the domestic sector (where such competition is ineffective, opaque and self-defeating).
Scottish Renewables, representing the renewables industry in Scotland is not advocating a Scottish Energy Regulator, but it is proposing an increase in energy powers for the Scottish Government. This includes a formal role for the Scottish Government on the board of the industry regulator OFGEM, a formal role for the devolved Governments in regular strategic reviews of energy policy, and a grid connection plan to ensure renewable energy can be installed on Scottish islands.
Scottish Government should be co-driver in UK energy policy
Westminster urgently needs to do something to change a situation where policy on energy is made in Westminster for English preferences, but not so much for Scottish needs. It is now becoming clear that the Westminster parties are very likely to lose seats to the SNP at the General Election next May if they fail to have even a debate about shifting powers to the Scottish Parliament over energy (and other things). At the last election Labour won 41 Scottish seats and the Liberal Democrats 11 to 6 for the SNP. Labour and the Lib Dems are heading to lose a lot of these seats to a resurgent SNP, which is now the UK’s third largest political party.
Dr David Toke works at Aberdeen University and Professor Peter Strachan works for Robert Gordon University.
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