By Steven Vass
Friday, November 29 2013
The Electricity Market Reform (EMR) negotiations do not appear to be going well from the Scottish point of view. London is said to be offering little in the way of compromise to those in the renewables industry. Strike prices seem to have advanced little from the draft figures, while degression curves are only modestly improved.
The Scottish authorities seem to be preparing to cross their fingers that the final offer will be just enough to make offshore wind happen up here.
Now obviously this is exactly what you would expect them to say to anyone asking them for an update a couple of weeks before the horse trading ends. The optimism of such people has brightened and dimmed like weather over the past few months, and could of course get sunnier if there is a fat lady warming up her vocal chords in the vicinity.
This seems unlikely, however. Aside from the UK Prime Minister’s supposed ‘green crap’ mutterings and the Treasury’s even more unhelpful agenda, one omen that looked especially ill was the spat over the Scottish renewables obligation.
Those who have been paying attention will know that the Scottish Government, like the Northern Ireland Executive, has had the power to set its own ROC levels for more than a decade.
It has used this to make the country more attractive to segments like wave, tidal and offshore wind over the years; and is currently seeking to woo Statoil with a ROC-shaped floating turbines carrot.
Under EMR of course, the RO is disappearing and National Grid will administer the contracts for difference for the whole of the UK.
Whenever Alex Salmond has been asked about this ceding of Scottish sovereignty his response has been that a unified energy market is in Scotland’s best interests and that he wouldn’t allow the RO to go until he was fully satisfied that the new regime was sufficiently appealing.
Salmond’s RO sword has undoubtedly been a nuisance to the rest of the UK over the years.
He drew envy from English regions with his superior wave and tidal ROCs (since rectified) and some say he made it difficult for the Treasury to cut UK onshore wind subsidies more aggressively this year by threatening to trump the offering if it fell below 0.9 ROCs.
It’s not clear whether there was a straw that broke the camel’s back over the autumn, but Scotland has certainly had plenty of wishes on its list.
The higher cost of offshore wind up here will have made for a particularly aggressive Edinburgh lobby, especially given Scotland’s negative nuclear stance, while other hobby horses like the islands and transmission charges will have been leaping over the negotiating fences too.
Clearly the UK Government got tired of talking – or felt more negotiation would threaten the timetable. The Energy Bill amendment that repatriates to London the power to scrap the Scottish RO will no doubt be the shape of things to come if the Yes movement gathers strength in the coming months. And there was plenty in the White Paper to indicate that this will cut both ways.
The paper says Scotland will insist on a “far greater degree of oversight” of the market arrangements for energy, presumably meaning it will not tolerate the consultative role that is in the offing.
It also talks about setting up an Energy Partnership with the UK to jointly steer energy policy to better serve Scotland’s interests.
The Scots would be hoping for leverage from having the green energy that the English needed to meet their carbon reduction targets. The English would be countering that they had all the consumers and money.
Would Scottish independence really put the Scots in a stronger negotiating position, given that there would still be a unified energy market? You certainly wouldn’t bet the farm on it, let alone the wind farm.
Steven Vass is deputy business editor at the Sunday Herald and a regular contributor to New Era magazine
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