Setting UP an Energy Company
HREC Working Group
The Need for a Publicly Owned Highland Renewable Energy Company (HREC)
Extinction Rebellion (XR) Highlands & Islands have campaigned many a time on the cost of energy in the Highlands and Scotland. As the Scottish Government is barred from being an energy generator under the 1998 Scotland Act but Local Authorities aren’t, it appeared logical for us to see if Highland Council and/or the community would be interested in forming a Highland Renewable Energy Company (HREC) to try and reduce energy prices, and lower CO2 emissions.
Over the spring of 2023 XR Highlands and Islands developed a HREC proposal which at the end of June was submitted to all Highland Council Councillors for their consideration. Also to gauge local opinions the proposal was put online as a petition.
After receiving favourable feedback from some Councillors and a very positive response to the online petition, this demonstrated a strong local support for the idea and it was therefore felt that the next valid step would be to have a Community Assembly to fully discuss the proposal with the Highland community. After a major promotional campaign for the Community Assembly, through newspapers and social media, radio, posters and street outreach, we held an Assembly on the 7th of October 2023 in Inverness to discuss the question of a publicly owned energy company in the Highlands.
The Assembly was hosted by XR Highlands and Islands, Platform and run by external facilitators from Grassroots to Global. The event included a panel of inspirational speakers who were experts in the various aspects of publicly owned energy.
Jennifer Pride, Head of Energy Delivery for the Welsh Government spoke to the Assembly on how they are setting up a Welsh Renewable Energy Company for the benefit of the Welsh people. She explained that under Welsh Devolution they were empower to do this but Scotland weren’t.
Dr Craig Dalzell from the Common Weal outlined the various frameworks for publicly owned energy companies, highlighting many examples.
Flick Monk from Platform (Injustice and Climate Breakdown Campaign group) spoke passionately, outlining some of the next steps that local authorities could take by looking at heat networks, retrofitting, ownership stakes in wind and solar.
Chris Balance, Highland Green Councillor, gave an informative account of Highland Council’s green energy plans which are currently restricted by limited financial budgets.
Ryan Morrison, Just Transition officer (STUC) highlighted the need for a Just Transition to green local jobs which would be best achieved through publicly owned energy companies.
The repeating theme mentioned by all the independent speakers highlighted the fact that energy generation in Scotland is mostly owned by foreign public and private bodies. Bizarrely, the majority stake in Scotia Gas distribution network is owned by the Ontario Teacher’s Pension Plan meaning that most of the dividends go to Canada. Other corporations and nations that capitalise from energy generation in Scotland include BP, SSE, JP Morgan, Vattenfall (Sweden), Orsted (Denmark), Equinor (Norway) and China. Subsidies given to these energy companies by the UK Government come from our taxes, with all profits going to finance public services abroad or to private shareholders.
After the panels presentations there was opportunity for groups to discuss the information and through a consensus approach the Assembly agreed strongly to endorse the idea of having a new approach to energy supply in the Highlands, based on public ownership, community benefit and a strong ecological focus. This would hopefully produce the potential benefits of generating funds to address fuel poverty and improve public services and infrastructure in the Highlands. There were some concerns that Highland Council may not be able deliver a publicly owned energy company under their current financial constraints.
It was therefore agreed by the Community Assembly to set up a HREC Working Group of local people and community groups, to collaborate with relevant organisations and look into the recommendations/suggestions made by the Community Assembly and formulate a forward strategy. The speakers at the Assembly also agreed to act as an advisory panel to give expert advice when required.
Over the next month the HREC Working Group revised the proposal and presented it to a Community Assembly Follow Up meeting held on the 11th November 2023.
While preparing the revised proposal the Working Groups found that Highland Council had a loan debt of over £1.1 billion with a shrinking asset base (£3 billion in 2019 and under £2.8 billion now). The Council’s current strategy was to reduce that debt by cutting back on vital public services, consider redundancies and reduce a number of capital projects. This was combined with their strategy to increase their income by increasing fees for public toilets, car parking and waste collections, all of which added to the cost of living crisis in the Highlands, which already has some of the highest energy prices, with ‘pay as you go’ electricity bills being the second highest in the UK.
Meanwhile privately owned or foreign state owned energy companies in the Highlands are making record profits for shareholders or for the residents of their own home countries.
The current system is whereby private energy firms make huge profits of around £60,000 - £80,000 per installed megawatt (MW) per year while local Highland communities are given a pittance in Community Benefits Payments by the private energy firms of less than £5,000 per installed megawatt per year.
Orkney Council who are vastly smaller, realised there was an enormous opportunity here and are just about to launch their own publicly owned energy company which predict average real profits of £5.5 million per year (£138 million over the estimated 25year lifespan of their onshore wind project).
Orkney Council’s venture into publicly owned energy has been vindicated by recent announcements by the Scottish Government who have committed to the delivery of 20 gigawatt (GW) (currently 9 GW) of onshore wind in Scotland by 2030 and a further commitment of 4 – 6 GW of solar energy.
The Labour Party, if elected at the next UK election have also pledged funding of up to £1 billion each year to publicly owned energy companies (£600m in funding to Councils and £400m low-interest loans to communities).
This was all presented at the Community Assembly Follow Up meeting and discussed before the majority of the revised proposal was accepted, subject to some minor amendments and some more detailed information on - what the HREC company structure would look like and what funding/finance models were available. It was also agreed once this information was collated to move the proposal on and submit it to Highland Council in January 2024 for their consideration.
In an attempt to get some expert information/advice on publicly owned company structures and funding/finance models, the HREC Working Group again contacted Craig Dalzell from the Common Weal who had previously been very helpful. Unfortunately, Craig thought these areas of knowledge were beyond his normal scope and suggested we put a call out to members of the Common Weal who may have some expertise in these areas.
If anybody wants to know more or thinks they can help, please contact the Highland Renewable Energy Company (HREC) Working Group at xrinverness@protonmail.com.