How to Nationalise Energy For Free

Craig Dalzell – 4th November 2021

Regular readers will know of my long-standing bugbear that Scotland has simultaneously some of the greatest potential for renewable energy assets in Europe but some of the least interest in actually owning and harnessing those assets. Almost every week, we see another story of a bright, young Scottish energy tech company being bought out by a multinational, or the Scottish Government auctioning off assets to whomever bids for them or, as is the case this week, a foreign state-owned company buying up Scottish renewables. Italian energy company Eni has just announced that it has bought £70 million worth of offshore wind from Perth-based company SSE. As the Italian state owns more than 30% of Eni, this means that a portion of your energy bills may now go towards funding Italian public services.

The Scottish National Party has been instructed by its members twice now to set up a Scottish National Energy Company but has repeatedly backed away from the idea. If we had one, it could conceivably have put in a bid for these privately owned assets to bring them into Scottish public ownership. Over the course of several such bids it could progressively build up its stock of Scottish public-owned energy and ensure that the returns on those investments are recycled into Scotland’s public services rather than shipped abroad.

This would, of course, be the expensive way to nationalise energy – something that Jeremy Corbyn found to his political cost when fumbling his way through a similar UK-wide idea a few years ago. What would you think if I told you there was a way to do it for free?

The Scottish Government recently announced a proposal to boost onshore wind in Scotland. We’ll have a more detailed analysis from an expert in the Scottish energy sector next week but the short version of this plan is that it recognises that many of the wind turbines built in Scotland in the late 90s and early 2000s are reaching the end of their lives. The need to replace them is an opportunity to exploit advances in technology since then, to “repower” the sites with larger and more efficient turbines. The aim, between this repowering strategy and the construction of new wind sites, is to double Scotland’s onshore wind capacity.

However, almost all of these wind turbine sites operate on a time-limited licence (usually 25 years) granted by their planning permission (something ultimately controlled by the Scottish Government). As these licences hit their end it would be perfectly possible for the Scottish Government to not simply renew the licence but to take it over and hand it to a community energy company or (especially in the case of the larger sites) to a National Energy Company. There is another trick here though – acknowledged implicitly in the re-powering proposal. The planning permissions for these sites were granted on the basis of the turbines having a certain maximum output. If the new repowered site exceeds that capacity (which in most cases it will) then new planning permission must be issued. This again creates a break-point in the licence during which the National Energy Company could take over the running of the site. For only the capital cost of building the new turbines (which we, as energy users, will be paying for through our energy bills regardless), Scotland could nationalise its entire onshore wind portfolio over the course of the next 20 years or so.

But should we be going so deeply into wind power? I’d argue that we shouldn’t. The limits of devolution mean that while Scotland has substantial indirect power over these assets it has much less control over the National Grid itself. Most of us will be aware of the lopsided pricing system that significantly limits the ability to connect renewables to the Grid in Scotland but fewer will be aware of the severe challenges facing the stability of the Grid as we move towards a decarbonised future. In short, Scotland currently produces nearly 100% of our electricity via renewables but this only makes up about 25% of our total energy budget. If we want to electrify all of our cars and home heating and don’t significantly reduce demand (e.g. we push for Net Zero instead of a Green New Deal) then we’ll need to quadruple our electricity generation. Frankly, the Grid can’t cope with that.

As Scotland has little to no control over the National Grid then – at least before we become independent – we have two choices. Either A) work within the constraints of the UK’s Net Zero plan and expand our renewables only as fast as they will let us or B) we work around them.

By far the largest challenge to a renewable future is the demand for heating. If we continue to push for the “Net Zero” future of electric heat pumps then we’ll be working to plan A. I’ve spoken before about district heat networks as a solution to heating from a resilience and an effectiveness point of view but they also have the advantage of fitting nicely into strategy B. Because heat networks transport heat directly to customers rather than transporting electricity to be turned into heat, and because the ability to construct these heat networks is firmly a devolved issue, we don’t need to wait for the UK Government and National Grid to catch up to or throttle our ambitions. The more effort we put into building these alternative networks, the faster we can decarbonise our energy demands.

We can also tie this strategy into the wind energy nationalisation plans I mentioned above. One of the ways that Scotland could charge its heat networks is via solar power. Solar thermal panels are more efficient than solar PV electricity generators (thermal panels capture more solar heat energy per square metre than a PV panel can capture and convert into electricity – never mind the losses involved when turning that electricity back into heat in your home) and are well suited to being placed in large arrays (you use so much more heat in your house than you do electricity that they are less effective as rooftop panels than PV is, though many places do use such systems too). Additionally solar “co-locates” well with wind as they can sit around the base of the wind turbines, take advantage of the clear space that many turbines require around them and work at their best during those still, sunny days where the wind isn’t blowing. A combined solar and wind and thermal storage site could be the ideal core for a heat network. The solar panels heat the system when it’s sunny, the wind turbines connect to industrial-scale heat pumps to provide heat when its windy and the thermal store allows heat from our long summer days to be used in the winter when we need it. Denmark is leading the way with this kind of forward planning. Why isn’t Scotland?

Scotland has a wealth of potential energy and potential benefit from the renewables revolution but so far we have not done well to capture it, retain it or to develop that potential as well as we could and should. If we continue with the current trends, then we’ll very likely become one of Europe’s premier renewable powerhouses but it’ll be countries like Italy and Norway who benefit from it rather than us here. Let’s not make the same mistakes we did with previous energy revolutions. With proper planning, strategy and sufficient political will, we could create a Green New Scotland that takes advantage of public and community ownership to recycle investment and build an energy sector fit for the 21^st century. Or we can continue to sell off every last asset in Scotland and let folk in cold houses who are already in fuel poverty fund the Green New Deals of every other country we invite to “inwardly invest” here.

Craig Dalzell is Common Weal’s Head of Policy and Research