Monday, 7 April 2014

Are Tory plans to curb onshore wind a boost for Scottish Yes Vote?

You would almost think that the Government's, especially the Conservative's, succession of energy policy announcements over the past 10 months were almost designed to boost the 'Yes' campaign in the Scottish Referendum on independence. More support for the policy that the Scottish Government does not like (new nuclear power) and less support for the policy they want (renewables). What timing as well!

First, in the summer of 2013 came an announcement of 'strike prices' for renewables that were underpinned by a significant reduction in support because of the reduced contracts length (15 rather than 20 years) and inferior inflation proofing (CPI rather than RPI). It was bad news for offshore renewables in particular.

Then in October came the Hinkley C  announcement of what would have seemed inconceivable in previous times - guaranteeing to give the project more than twice as much incentives per unit of energy generated than is to be guaranteed to onshore wind (over 35 years) with a 65 per cent loan guarantee on top. This is directly against the non-nuclear Scottish policy. Previously people like me had been predicting that Scotland would have to pay much higher prices to reach its 100 per cent renewable energy target in an independent state compared to staying in the union. But now, the UK Government were predicting three twin reactor projects by 2030, most likely with similar incentive support as Hinkley C, and this will put up electricity prices by around 10 per cent for 35 years. On the other hand, with relatively cheap onshore wind deployment in Scotland going ahead at a rapid pace, it looked like Scotland could actually reach their 100 per cent renewable energy target more cheaply under independence if it relied on onshore wind to reach most of its target. The fact that the UK Government were now unlikely to fund much Scottish offshore renewables would not seem to make much difference to whether the Scots could reach their renewable energy target.

But things got worse. The Government has refused to come up with any ideas of how renewables will be funded beyond 2020 (certainly no renewables target for 2030). Then came the budget announcement that the carbon floor price would be 'capped'. The carbon levy itself makes little difference (it is mainly  tax revenue for the Treasury and a boost to EDF's nuclear income), but the problem for renewables is that the amount of money that will be paid to renewables is fixed by the Treasury, so the fact that the price of wholesale electricity will be less than expected (because of the cancellation of planned increases in the carbon floor price) means that there will be fewer incentives for renewables. This means less windfarms.

The final cut (to date) is of course the Tory promise that they will stop more onshore windfarms after 2020. Just in time to throw UKIP another sop before the local elections. This means that in the space of one year the renewable energy case for Scotland has gone from it looking like independent Scotland would face much higher power prices to fund their renewables targets to one where if they stay within the union they will have to pay much higher electricity prices to pay for nuclear power and will not achieve their renewable energy targets anyway!

Now don't get me wrong, I don't want Scotland to vote 'Yes'.  I would prefer a 'No' vote because of the rightward political shift that Scottish independence would mean for the rest of the country, and also because I believe there are too many nations and nationalisms in the world today as it is without adding one more. Alas, it now seems that David Cameron, a nice man really, may well go down as the man who not only 'lost' Scotland from the UK but who also paved the way for a referendum in 2017 that sees the UK exit from the EU. Cameron and the Conservatives have decided that it is much more important to listen to UKIP policies than to worry about the effect on Scotland or to risk the future of the UK in the EU. That indeed is the road to a literal little England, upon which the Conservative policy on windfarms is but a small, but very indicative, marker.

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