By Sean Martin
The SNP has voiced concerns over the Westminster Government’s energy policy in the wake of a survey conducted by one of the world’s largest banks which ranked the UK the riskiest for investors in the sector.
The European Utilities 2014 Investor Survey, conducted by the French banking partnership of Exane and BNP Paribas, found that the political risk associated with UK energy policy has increased markedly in the past year.
It highlighted that this is the first time ever investors have considered the UK more risky than Spain. The survey also concluded that over two-thirds of respondents thought a Labour Party government would also deter investment in the energy sector.
Additionally, the report posed the question: ‘if elected, would a Labour Government’s energy policies result in a permanent reduction of supply margin for the big six utilities?’ to which just under 70% of respondents answered said that it would.
Mike Mackenzie MSP, a member of the Economy, Energy and Tourism Committee, said the report demonstrated a lack of confidence inspired by the main Westminster parties when it comes to attracting investors in the energy market.
He said: “With the [Exane and BNP Paribas] report saying more than two-thirds of respondents believe that Labour’s energy plans would deter investment even further, it’s clear that whoever is in charge in London, investors have concerns.”
Mackenzie’s comments follow findings by the Scottish Government that the potential for energy blackouts will increase if their UK counterparts fail to provide security of energy supply. The report concluded that the principal priority in the sector should be to guarantee supply for domestic consumers and businesses by ensuring a sufficient reserve capacity. It added that the country is facing its highest blackout risk in a generation.
An Ofgem report from last year had already highlighted thatprobability, saying that the risks to electricity security of supply over the next six winters had increased. The regulator attributed the findings to ‘deterioration in the supply-side outlook’ and added that there was ‘uncertainty over projected reductions in demand’. Ofgem added that, although blackout instances were almost non-existent, the chances of them would increase.
“We continue to expect that margins will decrease to potentially historically low levels in the middle of the decade and that the risk of electricity customer disconnections will appreciably increase, albeit from near-zero levels,” the report stated.
Mackenzie, who represents the Highlands and Islands, condemned the Westminster Government for what he said amounts to ‘mismanagement’ of energy policy. He added that its handling of the sector was driving away investment at a time of need.
“Under the current government the UK is perceived as the most risk place in Europe to invest in energy,” he said. “Given the mismanagement of the Electricity Market Reform process, the infighting between the coalition parties on renewables and nuclear, and the Tories wanting to abolish onshore wind, this is perhaps no huge surprise,” Mr Mackenzie said.
MEANWHILE, according to the Herald, the UK Government has moved to block Scottish ministers from taking part in a European Commission investigation into its plans to subsidise a new nuclear plant in England.
The newspaper is today reporting that a UK Government minister Michael Fallon has told his Holyrood counterpart Fergus Ewing that any evidence provided by the Scottish Government would be considered a “hostile act”.
The Scottish Government has already raised its own concerns that the deal with French firm EDF will lead to a rise in household bills and will hit the renewables industry in Scotland.
In a letter seen by the Herald, First Minister Alex Salmond has written to Prime Minister David Cameron, complaining about the attempt to silence Mr Ewing and asking for an explanation.
Mr Salmond writes: “I am deeply concerned to learn that Mr Fallon made clear the purpose of his call was to discourage any direct representation from the Scottish Government to the EC concerning these issues.
“Mr Fallon stated such direct representation would be interpreted by the UK Government as a ‘hostile act’.
“I would invite you to explain exactly what the UK Government would do if we choose to express our views to the Commission. At best, this could be interpreted as an inept attempt to stifle legitimate views from the Scottish Government. At worst, it is a direct threat with implied retribution.”