Davey: Scotland split to hurt RE

Scotland’s bid for independence is undermining the investment case for Scottish renewables, as the country’s electricity market is not large enough to support its ambitions for wind, wave and tidal power, warns UK Energy Secretary Ed Davey.

In comments to be made today, Davey points out that at present 37% of support under the UK’s Renewables Obligation system goes to Scotland – equivalent to £530m ($803m) per year. Yet only 9% of UK electricity sales are in Scotland.

“Would an independent Scotland be able to deliver the same support to renewables on the back of a domestic electricity market that is only one-tenth the size of the UK?” Davey will ask at the All-Energy conference kicking off today in Aberdeen.

“As part of the British energy market, Scotland and its energy industry – as net exporters of energy – have access to a market of more than 23 million households and the integrated energy networks that deliver them.”

“We cannot assume that English, Welsh and Northern Irish consumers would still be willing to subsidise Scottish renewables,” he says.

“It will be much harder for a nation potentially having to spread the costs of investment across just 2.5 million households to keep prices competitive.”

Davey’s warning comes at a time of deep uncertainty about the progress of the UK's sweeping Electricity Market Reform package, growing political instability in the UK, and concerns in the power sector over increasingly vocal calls for the UK to depart the EU.

With the next national election still two years away, many Conservative backbenchers are already pressuring their leader, Prime Minister David Cameron, to distance the party from its junior coalition partner, the Liberal Democrats, of which Davey is senior figure.

Scottish First Minister Alex Salmond is a proponent of both renewables and Scottish independence. Under his leadership, Scotland has set a target of generating the equivalent of 100% of its power from renewables by 2020.

Between January 2010 and April 2013, some £13.1bn of investment into Scottish renewables was announced along with more than 9,100 jobs. That compares to £14.5bn of investment – and 18,600 jobs – in England.

“Scotland could go it alone – just as the UK could go it alone outside the EU," Davey says. “But in both cases our respective citizens would be less secure, less prosperous and less influential.”