Why has the Scottish Government given devolved powers back to Westminster?
The long running campaign to return Scottish energy resources to public ownership took another turn last week. It feels like every time we’ve started to make progress, the Scottish Government has thrown up an objection and every time we’ve overcome that objection, they’ve fallen back on another one instead. You can read the timeline of the saga in an article Keith Baker and I wrote in The National last year.
Most recently, the Government’s excuse has been that they can’t launch a National Energy Company because energy is reserved. Our counter to that has been on several fronts – chiefly that that reservation only applies to the Scottish Government running that energy as an internal government department. It may not apply to an arms length company owned by the Scottish Government (like CalMac or Crown Estate Scotland) and almost certainly would not apply to other forms of public ownership like joint ownership between a coalition of Local Authorities or a “National Mutual” company that would be technically private but the shareholders would be the Scottish public – every adult resident of Scotland would own one share in the company.
But another angle to our workaround is to recognise that the reservation in the Scotland Act only applies to electricity. It doesn’t apply to the generation, transmission, storage or delivery of heat. It would be perfectly possible for Scotland to launch a National Energy Company that generated and transmitted heat via local and regional heat networks. Doing so would enable Scotland to access different forms of heat energy such as solar thermal energy or, as in our latest policy paper, geothermal energy and would enable the heating of homes far more efficiently and more cheaply than the current strategy of air source heat pumps and could do so without having to wait on Westminster to upgrade the National Grid to cope with the extra electricity demand the heat pumps will create (especially as doing so would run contrary to their electricity strategy of maximising exports of electricity from Scotland to England).
However, to properly run a system of national scale heat networks, we need a regulator to oversee it. Again, as this is an entirely devolved area, it is perfectly possible for the Scottish Government to set up and run said regulator. At the time we were lobbying for our public energy company plans we warned the government that such a regulator didn’t yet exist because the UK was so backwards looking on its view of heat networks that it didn’t really consider them to be a thing at all (which is also probably why the reservation in the Scotland Act is so specific to electricity and not energy in general). Additionally, unlike gas and electricity, heat networks are relatively short range technologies. Heat networks across Europe have demonstrated that it is more efficient to transmit heat a short to medium distance than it is to transmit gas or electricity then convert it to heat in a home boiler or even an air source heat pump but that the maximum range for this is around 40 to 80km. Beyond that, the transmission losses of heat in the pipes is greater than the transmission losses of electricity plus the conversion losses in the heat pump. Now, 40km is plenty of range to move heat from somewhere equivalent to Kype Muir or Whitelee wind farm (imagine a field of solar thermal panels at the base of the wind turbines feeding into a heat pipe) to the centre of Glasgow but it’s not so good for moving that same heat energy to, say, London. So heat networks are always going to be a much more local or regional affair than a pan-UK electricity or gas grid. It therefore make sense that the regulations are themselves more local than that.
We warned the Scottish Government that if they didn’t accept this argument and didn’t set up their own heat regulatory body then someone like Ofgem would come along and start regulating on a national scale. Given that Ofgem is such a weak regulator and given that they are ultimately overseen by the UK, not the Scottish, Government, this would effectively mean handing the devolved powers to regulate heat networks to Westminster.
This is precisely what has happened and last week, the UK Government announced their public consultation into the regulation of heat networks across the whole of the UK. The Heat Networks Regulation: Consumer Protection consultation is part of the process of appointing Ofgem as the official regulator and will result in setting standards for various aspects of heat networks such pricing and quality of service. I worry about what this will mean in practice. It’s perfectly conceivable that the UK Government is being lobbied hard right now by the fossil fuel sector to ensure that these heat networks don’t bite into their profits too much. Will we, for example, see a “continuity of service” clause that mandates that every heat network has a gas or oil backup generator attached to it? That’d be a good way of guaranteeing oil profits in the face of the climate emergency under the guise of “protecting customers from intermittent renewables”.
There’s little excuse for Scotland to be handing back devolved powers like this. I worry that the current push for air source heat pumps will start actively competing against heat networks (what is the economy and political case for a heat network in your street right now compared to in five years time when you have to tell 20% of your neighbours to tear out that new heat pump they just spend seven grand installing despite the government grant?) and that our “Net Zero” ambitions will be bottlenecked and curtailed by a UK Government that is still in active climate denial. I worry more that by handing that same government powers over the rest of our energy supply, we end up completing that job with no way out – possibly not even by independence if we then decide to stick to the Sustainable Growth Commission model of buying in “shared services” from the UK Government in that area too.
I do note that the deadline for party conference motions will be shortly after this article is published (precise dates will depend on the parties in question) so if you are a member of a political party in Scotland please put a motion into your conference calling for the Scottish Government to take back these powers and set up a bespoke regulator of heat networks that can design those regulations to meet Scottish needs and standards. Consider putting in a complimentary motion calling for a comprehensive mapping and zoning of Scotland (something also mentioned in the consultation) to determine where various heat networks would be best placed, where the best sources of thermal energy and storage are for them and to start building a plan to roll them out at pace.