Scottish independence: UK warning on energy cost

ENGLAND, Wales and Northern Ireland could buy power from abroad if an independent Scotland cannot sell its energy at a competitive price, Westminster’s Energy Secretary has warned.

By The Newsroom Tuesday, 18th March 2014, 5:18 pm

The UK's Energy Secretary has warned that Scotland's position as an energy seller may be weakened by independence. Picture: TSPL

Ed Davey rejected the SNP’s claim that Westminster would continue to pay for Scotland’s energy if it leaves the UK.

Scotland would become just one of many countries the UK could turn to for the cheapest and most reliable deal, he told a renewable energy industry gathering in Edinburgh.

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The UK could buy wind from Ireland, geothermal from Iceland, hydro from Norway and develop the untapped potential in England and Wales, he said.

Scotland provides “a very small proportion” of the rest of the UK’s energy demand at around 4.5 per cent, he added.

And “there are no guarantees” Scotland could maintain this level once it has paid to upgrade its grid, subsidised its remote areas and powered its own homes, he said.

‘Strike a new deal’

Westminster’s “positive case” for keeping the UK together “leads to the negative”, he said.

“I have no doubt that we would continue to trade energy with an independent Scotland but net electricity imports from Scotland make up only about one-twentieth of demand in England and Wales,” he said.

“With a border in place the integrated market will not be sustained in the same form.

“We would have to strike a new deal. I have experience in negotiating cross-border energy deals and it is incredibly complex and difficult.

“Negotiating post-independence energy contracts would be no different. I would put the interests of the UK first - a UK then without Scotland.

“The Scottish Government asserted that ‘England and Wales will continue to need and pay’ for Scottish renewables regardless of the cost and there would be no taxation issues at all.

“There can be no guarantees about how much or at what price the UK will trade energy with an independent Scotland.

“Because there are no guarantees about how much electricity from an independent Scotland will actually cost.

“Scotland alone would need to find the £6 billion required to upgrade Scotland’s transmission grid, subsidise its remoter parts and pay for the Scottish Government’s ambition to meet 100% of Scotland’s domestic electricity consumption from renewable sources by 2020.”

He added: “Scotland will go on to a list of all the places in the open market the UK can buy power from - wind from Ireland, geothermal from Iceland, hydro from Norway.

“And don’t underestimate the renewable potential yet to be tapped in England, Wales and Northern Ireland, including offshore wind and tidal.

“The Scottish Government can assert that UK consumers would continue to subsidise the costs of Scottish renewables and buy Scottish electricity to meet renewables targets no matter what the cost, but this goes against all commercial logic.”

‘Bills will go down’

A Scottish Government spokeswoman said: “The whole of the UK needs to produce and supply greater amounts of renewable energy to meet legally binding targets and help keep the lights on, and the costs of paying for this energy are spread across all electricity consumers - there are no taxation issues involved whatsoever.

“Furthermore, Scottish energy bills will go down in an independent Scotland because of the removal of the Energy Companies Obligation and the Warm Home Discount from bills.

“The current breakdown of payments from suppliers to generators is related to the huge amount of renewable power which Scotland produces, not to our population size.

“Suppliers in England and Wales will continue to need and to pay for that power for their customers regardless of the outcome of the independence referendum, and that is why the current single market arrangement remains in our shared interest.”

SNP MSP Rob Gibson attacked Mr Davey’s support for nuclear power since the Liberal Democrats “jumped into power with the Tories”.

“Westminster’s misguided support for new nuclear comes at a time when countries across Europe are waking up to the need to move away from it,” he said.

“In contrast, the Scottish Government aims to generate the equivalent of 100% of electricity from renewable sources by 2020.”