More power: Scotland needs control of electricity policy

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Commentary by Fraser Wallace

Scotland has made significant progress with regard to the development of renewable energy systems. However, it is clear that to maximise the benefits of this opportunity it may need to take a radically differing approach from the rest of the UK.

Fraser Wallace
Fraser Wallace

Scotland is famous for its energy. The oil and gas industry has developed cutting edge technologies of worldwide significance and raised billions of pounds of revenue. More recently, alternative technologies have emerged as a principal font of excitement. Scotland’s wind turbines recently delivered more electricity than was needed in a day, grabbing the focus of the international media.

The rapid expansion of the United Kingdom’s renewable fleet saw renewables grow to the extent they generated 24.6 percent in 2015. In Scotland, the proportion of electricity consumption met by renewables is even greater- 57.4 percent in the same year. Scotland has shown global leadership in developing low-carbon electricity generating capacity. Costs associated with the wind industry have fallen significantly as the scale and number of projects has increased.

Essential priorities

A range of policies have been put in in order to reduce emissions of greenhouse gases, which are responsible for climate change. This priority formed part of the ‘energy trilemma’ for policy makers- the idea that Government has to ensure society is able to access clean energy, affordably and reliably. Currently, responsibility over energy policy is reserved to Westminster, although the Scottish Government does have some useful influence over policy implementation in Scotland.

Scotland has been fortunate to benefit from a plentiful renewable resource- anyone walking along the coast on a windy day will attest to that. Maximising the economic opportunity inherent from the Scottish climate will require more technology and more sophisticated electricity management systems. The Scottish Government needs the powers to accelerate this process.

Increasingly, combustion technologies such as coal and gas turbines are becoming white elephants. New, alternative (and green) energies are fully capable of being designed, built and operated in a manner that removes the economic or operational justification for construction of outdated fossil fuel generation plants. The future of power generation is already moving toward a diverse portfolio of renewables, albeit with a strong emphasis on wind and solar globally.

There are problems with the other ‘low-carbon’ power source, nuclear energy too. New plants are expensive, as exemplified by the back-door subsidy that was offered to the operators of Hinkley Point C, the UK Government’s proposed new generating station in the south of England. Other nuclear power plants under construction are already experiencing prohibitive cost increases. Proposals for new nuclear power plants highlight the UK Government’s priorities remain with centralised, large generating plant, seeking a perceived ‘security’ of supply’ even in the face of painfully high costs associated with the technology.

Scotland needs more modern thinking.

Falling costs

Initially supported by subsidy, the renewables industry is now operating at a scale that is delivering rapid cost reductions. In 2013, the (now disbanded) UK Government Department of Energy and Climate Change reported that the levelised cost of onshore wind could be favourable compared to nuclear and some gas turbine plants.

Since then, reputable economic platforms such as Bloomberg Finance have reported that costs for renewables have fallen further, with onshore wind energy emerging as the cheapest source of power. The Economist has warned of the risks of investing in an energy system which does not account for potential future commercial imperatives. It has also emphasised the cost-effectiveness of onshore wind.

Reliable renewables

Despite this, critics of non-traditional, ‘alternative’ energies remain. Some claim that wind energy cannot supply the ‘base-load’ of industry and domestic daily energy requirements. This is not true; traditional power technologies will find it increasingly difficult to compete in today’s market for two reasons.

Firstly, renewable technologies smother the market for fossil fuels by ensuring that only when demand is very high (above the level produced by wind energy) traditional technologies can sell their power. Fossil fuel technologies have to continue paying for inputs. For every unit of energy they produce, they have to burn a unit of coal or gas. That costs money. Their wind generating competitors do not face similar costs- the wind is free.

This means that when bidding into a national grid system, wind can consistently under-price its fossil fuel competitors. It has no ongoing input cost to pay for. Wind is the first energy onto the system.

Secondly, demand varies rapidly. Kettles boiling across the nation following the end of a popular TV show can cause massive spikes in demand. For this reason, ‘fast response’ is the essential quality of technologies operating in a wind-dominated system. That rapid-response is provided by fast-ramp gas fired generators currently. However, such gas technologies will struggle to compete with batteries, pumped storage or other demand and supply side responses in future.

Storing up potential

In Scotland, the country is not only leading in the generation of power, it is also leading in the development of technologies to manage renewables’ flexibility too. The Cruachan Pumped Hydro storage scheme has long been associated with grid management and it is heartening to see that a number of elected representatives have recognised the potential that further storage schemes offer. The Orkney Islands have been experimenting with using wind energy to create combustible hydrogen- which can be used to heat homes, fuel transport or generate power at a later point.

The Scottish Government has also made improving the efficiencies of buildings a National Infrastructure Priority too. There are significant issues with policies aimed at reducing demand across the UK, but it is commonly accepted that many of the UK Government previous policies – for example the Green Deal – have been a complete failure. Rates of installation of insulation measures remain far too low.

It is not just hardware and tangible materials that can push forward this improved management of energy. Software too, has the potential to permit use of energy when required, and shift demand loads away from peak times, reducing the strain on the grid and requirement for generation capacity. This is a key challenge which technology suppliers and software developers can hopefully address. The Scottish Government previously offered ‘the Saltire Prize’ as an incentive to develop new maritime energy schemes. A new competition should encourage development of new energy management software programmes. This would certainly create a stir in the already extant and vibrant software development community in Scotland.

Access to a greater resource has seen the wind industry commit significant effort to developing projects in Scotland. It is clear that the sooner innovation and supportive Government policy permit suitable deployment of energy storage and management systems augmenting the wind farm fleet, the greater the economic rewards for Scotland.

Opportunity is the mother of innovation, not necessity. It might be necessary for Governments all over the world to seek to combat climate change, but it is Scotland that is fortunate enough to have renewable opportunity in abundance. The Scottish Government can and should lead the way.

Note: All opinions in this article are personal