Power to the People

scottish-marine-energyBy Philip Johnstone

Amid all the debate surrounding the Smith commission there has been surprisingly little focus on energy policy and where there has its focused almost exclusively on oil. Clearly there are issues of great importance to discuss such as tax and welfare but energy will play a vital part in Scotland’s future.  Successive Westminster governments have failed to invest adequately in the infrastructure and refuse to take heed of the unique problems (and advantages) that Scotland’s geography present.

Of course the age-old arguments about oil revenues are even more pertinent considering the discovery of more oil fields in the North Sea, but simply redirecting oil revenues from Westminster doesn’t tackle the underlying problems (although it would be a good start).  The reason I argue for Scotland to have control of energy policy is so that the people of Scotland benefit from its natural resources by having a modern grid, reasonable energy prices and a structure that gives profits back to the people instead of solely to large corporations. The UK is the only country in Europe that doesn’t own its  electricity grid,  it also has the fourth highest electricity bills and the highest customer dissatisfaction with the private companies supplying the electricity so clearly the current model is not working.

The two areas of the electricity system that matter most are transmission and generation.  Transmission of electricity through high-voltage lines is operated by the National Grid (it also owns the network in England and Wales) the network in Scotland is owned by Scottish Power and SSE.  They earn money from the grid by charging companies to use it who then sell electricity to consumers.  In 2013 the Scottish Power companies  SP Transmission Ltd made £154.3 million before tax profit and SP Distribution Ltd made £179.4 million before tax profit.  SSE made a massive £955.4 million profit in 2014 from the network side of its business of which £136.7 million came from transmission (high-voltage lines) and £507 million came from distribution (carrying power to houses and businesses).

Clearly electricity is a necessity so why is it that this vital commodity is controlled by two corporations that are beholden only to their shareholders ?  These companies are making  massive profits from what is essentially a captive market and although it would be unfair to say they aren’t making any investments in updating the grid they aren’t doing it quickly enough to take full advantage of Scotland’s renewable energy potential. An example of this reluctance to fully commit to investing in infrastructure that plagues risk averse private companies is the much delayed grid connections from the islands of Orkney, Shetland and Western Isles.  Between them they have excellent marine and wind energy resources but this bounty of clean energy remains untapped as the unique challenges provided by their location  keeps the development in limbo.

If the grid was publicly owned and maintenance work was contracted out to private companies such as SSE this would allow the expertise and experience of the current owners to be utilised whilst allowing the Government and thus the people to steer the direction of our energy policy in a way that suits our needs and aspirations.  This has all been outlined by The Common Weal in their Making Energy Work For Us proposal along with a more in-depth analysis in Repossessing the Future.

It’s probably worth mentioning at this point before I carry on that the Chairman of SSE is none other than Lord Smith of Kelvin, the very man who is in charge of the discussions over the powers that be devolved (including energy policy) is chairman of the company that dominates Scotland’s electricity market.  But of course that’s not important he couldn’t possibly have a conflict of interest.

The energy sector is undergoing transformational changes as Scotland moves towards a fully renewable supply.  This will require a mixture of wind, wave and tidal energy as well as innovative ways of storing the energy.  That Scotland has enough wind and wave resources is not in doubt nor does it require new technolgy to be created to store it, pumped hydro has been around for decades.  The main barrier for the development is that it requires the Government to persuade the companies in question that they can make enough profit out any scheme (thus profit from the consumer).  Private companies look for low risk high return ventures but in a publicly owned industry the Government could accept lower returns as the investment is for the good of society.  In March SSE reconsidered plans to create four offshore wind farms “as limited subsidies and high costs threatened the viability of the industry and returns on a series of projects were not attractive enough to invest.”
By taking energy generation into public ownership the profits could be reinvested into our society instead of simply lining the pockets of enormous corporations.

The Norwegian people reaped the benefit of oil due to the fact that its largest oil supplier StatOil is owned by the Government, of course we all know this didn’t happen in the UK.  It’s imperative that this doesn’t happen again with the renewable industry and this can only happen if Scotland is given power over energy policy and then uses those powers to create an energy industry that puts the people first and not the corporations that currently have a complete monopoly over generation, transmission and distribution of our electricity.



Categories: Environmental Justice

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13 replies

  1. There is little or no chance that the British state will devolve energy policy and practice. This is just one example of how they feel that they can simply ignore the views of Scots. We have to find ways of bringing pressure to bear. But how? It is incredible that the views of one and a half million people are apparently irrelevant.

    • We Scots have always been irrelevant to Westminster,it’s our resources they covet.
      We must have the Crown Estates Management under the control of the Scottish parliament.
      This is more important than oil revenues.

  2. I agree that Scotland would benefit from control of energy policy. Do you know if it would be possible for the SNP government to establish its own oil exploration company as Norway has done with considerable success? If it is not possible for that to be done in terms of devolved powers would it be possible for the SNP government to pump prime a “private” energy company which has the same aims as Statoil?

    As to renewables their place in the energy mix is or ought to be limited. Intermittency is a problem as you acknowledge by writing about storage. There are problems with storage – energy in vs energy out that make storage an uneconomic solution to intermittency. Also, I have read that the gearboxes of turbines use rare elements as components at present which are certainly not renewable. Costs are unlikely to come down. And see http://www.scottishenergynews.com – the difficulty of making money from wind energy

    sam

  3. I have a family cottage in Norway, and, studying our lecky bill, (pricing is very transparent in Norway) I noticed that we get charged a certain amount per kwh for the ‘strom’ (electricity) and a certain amount per kwh for the use of the ‘network’ (grid) from two different companies, Fjordkraft and BKK.

    BKK is publically owned, but that doesn’t mean that it is state owned or nationalised. The state owns 49.9% of it, (Statkraft) but the rest of it is owned by a number of municipalities in western Norway, the area it serves, the largest of them being Bergen council.

    http://en.m.wikipedia.org/wiki/Bergenshalvøens_Kommunale_Kraftselskap

    BKK as a company has also diversified into a number of other service areas, like broadband, and has a number of subsidiaries.

    There is quite a bit of hydro power in western Norway, an area of high rainfall. One municipality, Modal, earns quite a bit of money from exporting its lecky to the grid. It is a wealthy municipality which has built some of the best schools, but it is otherwise a poor rural area with a small population and few jobs.

  4. I wasn’t really clear from your article who owns the National Grid. You say the National Grid owns the network in England and Wales, but that SSE and Scottish Power owns the network in Scotland…. I always thought the ‘National Grid’ was just the name for the network…. Is it a company then, like SSE and Scottish Power? Who owns SSE and Scottish Power? In Norway, as I’ve explained, the network is variously owned, but by various municipalities in combination with the state, and they operate very much like businesses in an entrepreneurial way.

  5. What’s the difference between transmission and distribution?

  6. Coal and Fife (extract from a longer piece Bella?)

    From The Herald letters

    IN 1875 the then Glasgow Herald commissioned a series of surveys on the atrocious conditions of coal miners’ housing across west and central Scotland as well as the in the Fife coalfields.

    These reports (authors not attributed) were published in the paper in a remarkable series of strongly-worded, frank and detailed pieces of powerful social investigative journalism. Today they read like Pulitzer Prize winners for the power and quality of the graphic writing as well as the editorial commitment in revealing the hideous conditions that so many coal-mining families were forced to endure.

    As a Fifer I was made intensely aware, from early, that “coal is Fife”. There was always the implicit threat that failure at (in my case) Kirkcaldy High School, the only option open was “doon the pit”.

    I had friends whose fathers were very sick in their forties and dead in their fifties through working in coal. Then there was the social dislocation when thousands (including families) were boarded on to trains and shipped south to England to work when the old Dysart/Methil area pits closed.

    Economic blight continued when a Labour Government opened a brand-new high-tech pit in Glenrothes (with a new town) only to discover that building a pit in a “glen” wasn’t geologically smart and it quickly closed due to flooding. (They then built another on a cliff at Seafield, Kirkcaldy, only to find more water than coal under the Forth. It, too, closed within a very short time.)

    From the late 18th century Fife folk have been blighted by coal. Conditions across Scotland (not just Fife) were similar to plantation slavery with miners and their families consigned to pit owners for life.

    Today now we see the pathology of coal and Fife continuing. You are critical of the new gas (from burning the coal) to be found under the Forth (“Fears over plans to tap gas from undersea coal seams”, The Herald, November 11). This long sad, bitter saga of dirty coal sits like some Greek tragic nemesis over Fife. Coal offers hope through jobs with one-hand while creating long-term tragic consequences with the other.

    Out grandchildren will live in a challenging degraded world; in a toxic environment and over-heated climate that our generations have left them: a damnable inheritance . In our part of the globe we have added to this tragic cycle through our long exploitation of coal. Yet we continue to dig.

  7. I’ve done a couple of papers on this, one showing where the profit was made

    and one showing a switch to coal, yes, that’s right, to coal in recent years.

    The transmission network in the UK is needed to take power from where it is produced to where it is consumed. As a very high and growing proportion of the population lives in and around London the cost should be borne by those living there. It isn’t. Producers in Scotland pay a disproportionate share of the cost while producers in France pay only charges for using the cross-channel Inter-connector. Generators in the South of England are paid a subsidy.
    The flip side of this is that consumers living near to where the power is produced don’t require to use the transmission lines much at all. They use the distribution network taking power from sub-stations to homes and businesses. Our power should consequently be cheaper. It isn’t, its the most expensive in the UK.
    OFGEM the regulator has produced a plethora of papers which justify their position. They are nonsense.
    OFGEM tried to hoodwink the Westminster Energy & Climate Change Committee to refer the Supply side of the business to the Competition Authority. Public pressure eventually got Ed Davey to refer the Generation side to the Competition Authority as well – where it sits in the “long grass”. When wholesale prices went up our bills went up. Now wholesale prices have fallen and bills have not – Asynchronous Price Elasticity of Demand in the technical lingo. This shouldn’t happen.
    Until communities generate and use their own power locally they’ll continue to be ripped off.

  8. A publicly owned grid could only be welcomed by those of us living in areas where the potential for renewable electricity generation is huge but where interruptions to supply are regular occurrences! Clearly, this is a systematic market failure that can only be rectified by public ownership/intervention.

  9. Agreed – Scotland should be in charge of our own energy.
    I do think you have over simplified the challenges to storage. New technolgy most definately needs to be created to store energy produced from renewables. It is a challenge being worked on through out Europe with lots of ideas being refined, but as yet no silver bullet found.
    Yeah, pumped hydro has been around for decades, but that wont solve Scotland’s storage needs. Too few sites available compared to the amount of storage required for the nation.

  10. Hello Rob
    Yes, there’s a number of storage technologies of which pump storage hydro is one. There is also compressed air storage and electrolysis from wind to produce hydrogen. Glasgow University announced a breakthrough there recently. It is possible to double the size of Cruachan to serve Glasgow but we also have Glen Doe on line in the Highlands to add to Foyers. A further scheme is in development in the Great Glen. I accept we’re not Norway with a huge number of deep Fjords but we’ll do fine if we invest in the renewables mentioned.

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