Rebutting the Daily Express
On 15th July the Daily Express ran a story under the heading “Sturgeon told ‘find new customer’ for independent Scotland's energy as UK would cut ties”. This was typical Express: "Scotland’s too wee, too poor, too stupid to be independent". Nevertheless it begs the question how exactly would an Independent Scotland deal with the electricity market and what should its future relations be with England and the rUK.
Firstly it is notable that the article only deals with Electricity which accounts for 17% of energy as compared with petroleum (47%) and natural gas (29%).[1] Presumably they recognise that Scotland still produces much of the oil and gas in the UK and it is still eminently sellable.
Secondly, in 2019 Scotland produced 50 TWh of electricity, 13.6% of UK electricity generated, its highest amount, brought about more by closure of coal plants in England than expansion of Scottish generation. Scotland exported 15 TWh, about 30% of the electricity it generated to England (a similar quantity to the output from Scotland’s nuclear power stations); and also much smaller amounts to Northern Ireland. The UK imported 22 TWh of electricity overall from Continental Europe (France, Netherlands and Belgium) that year. Scotland generated 90% of its electricity needs from renewables, and accounted for a quarter of the UK’s renewable generation.
It is the case that Scotland has significant potential to expand its renewables, particularly off shore wind and it may start to export more of that to England through the recently commissioned connector.
Scotland is currently part of Great Britain’s single electricity market, overseen and regulated by Ofgem, with administration of market trades by Elexon. Technical operations are performed by National Grid Electricity System Operator (NGESO) with a supporting role from the owners of the electricity transmission system, which, in Scotland, are: Scottish and Southern Energy Networks and SP Energy Networks
After independence, unless we remained part of the GB single electricity market, we would establish a Scottish Electricity System Operator and a regulator answerable to the Scottish Government. The wires connecting Scotland to England, Wales and Northern Ireland would remain, and electricity transfers south, and occasionally north, would continue.
The next issue is whether the rUK is part of the EU electricity market. Given the amount of electricity they import they are desperate to continue to maintain that arrangement. If Scotland joins the EEA or the EU then they cannot discriminate against Scotland selling its electricity for the market rate.
More significant may be the terms on which electricity assets are disposed of. The UK Government has supported renewable (and nuclear) generators via several schemes, such as Contracts for Difference, which guarantees to buy electricity at a price determined in auctions. Many windfarms in Scotland have been successful in such auctions, i.e. offered wind generation at the most competitive prices. It may be the UK government would seek to impose a termination fee over the transfer of these contracts. This however, would be risky given the much larger costs relating to oil and gas etc.
Scotland then would be in control if not ownership of a largely renewables supplied grid. Given we could expand that grid as necessary introducing batteries and hydrogen storage to meet expanding energy needs, electricity will get cheaper. Jobs will follow cheaper electricity.
Gordon Morgan
[1]Figures from Dukes 2020.