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25 June 2015
Energy Q&A: Keeping the lights on

Energy Q&A: Keeping the lights on

How does Scotland satisfy its climate change commitments and keep the lights on?

Lewis Macdonald: The Economy, Energy and Tourism Committee is asking precisely that question in its inquiry into Security of Supply, and hearing from a wide range of expert witnesses. It held a very similar inquiry in the last Parliament. I was a member of the committee then too, and it is striking how some of the detail has moved on but the fundamental challenges have not really changed. We need to find ways to reduce unnecessary energy use and increase energy security, while recognising that decarbonising heat and transport are likely to result in increasing our reliance on electricity.

Planning for future needs was less difficult for government thirty years ago than it is now, as generation, transmission and distribution of gas and electricity were all in public ownership. Planning and building new infrastructure can take years, and I believe we need to find new ways for government to direct the major private power companies and the regulators to work together on those issues and plan ahead.

The creation of a single power market for Scotland, England and Wales in 2005 was critical to offsetting the impacts of privatisation, and will be essential to Scotland keeping the lights on in future. We need to strengthen the infrastructure links within Scotland, to harvest as much renewable power as possible, as well as the links with the rest of Great Britain, with Ireland and with continental Europe, in order to help meet the energy shortfall when the wind doesn’t blow.

Keeping the lights on is not just about wind, of course. Scotland needs to grow other renewable and low-energy sources of heat and power, such as biomass, solar PV and hopefully in future, wave and tidal power as well. With Scottish Power planning to close Longannet next year, we will become more reliant on the nuclear power stations at Torness and Hunterston, and the gas-fired power station at Peterhead. Carbon capture and storage is being pioneered at Peterhead; if this works at a commercial scale, it can make a significant contribution to our future energy security.

Lang Banks: Independent research for WWF shows that Scotland can effectively become 100 per cent renewable powered by 2030, keep the lights on, and remain a net exporter of power.
This can be achieved by playing to our renewable resource strengths as part of Great Britain’s grid along with major new transmission projects already under way. It should also be remembered that to meet our climate commitments, we also need to see cuts in emissions from our homes, transport, and agriculture.

Nanette Milne: Crucial to keeping the lights on in years to come is an energy mix made up of renewables, nuclear and oil and gas. If we get this balance right then we can minimise the cost for consumers and the impact on our communities up and down the country. Reducing our reliance on fossil fuels is only part of the solution in coming up with a mixed energy strategy. Consumers, the public sector and business all have to play their part in reducing our demand for energy. The public have to be given the right information on how to save energy.

Callum McCaig: Scotland’s renewable energy has the potential to make a huge contribution in achieving carbon reduction targets both here in Scotland and across the UK. We also have huge potential in terms of pumped storage, which if developed, will ensure that electricity from renewable sources can be accessed at any time. Likewise, investment in interconnection will ensure that the lights are kept on. Over and above that, where new thermal generation is required to meet Scotland’s energy demand there is ample opportunity to explore the enormous potential of carbon capture and storage ensuring carbon emissions are kept to a minimum.

Has onshore wind development gone too far, and what effect would the end of onshore wind subsidies have?

Macdonald: Energy policy is about reducing carbon emissions and increasing security of supply, but it is also about supplying affordable heat and power. Far too many people in Scotland live in fuel poverty. Onshore wind is the most affordable source of renewable energy, so we should keep supporting it until it is overtaken by something else. We need to increase the level of community ownership and community benefit in onshore wind, and operators need to drive their costs down further. Ending support for onshore wind would make it harder to achieve both lower carbon emissions and affordable prices.

Banks: No. Onshore wind has a hugely important role to play in cutting emissions and creating thousands of jobs in Scotland. We don’t yet have enough onshore wind, as the Committee on Climate Change has flagged, to hit UK-wide climate change targets. Cutting support for onshore wind, one of the lowest cost forms of renewables there is, will either mean that we fail to hit climate targets across the UK, or drive up the cost of consumer bills by replacing it with more expensive technology. It would also put huge investments at risk and threaten to undermine confidence in the entire clean energy sector. The UK has seriously slipped in the attractiveness index for clean energy investors that Ernst and Young prepares every year.

Milne: We will honour our manifesto commitment to end any new onshore wind subsidies. By doing that we’ll make sure we have the good mixture of reliable, clean energy that we need to face up to climate change and keep us energy secure, while also standing up for communities and making sure they have a say over what gets built in their area. Too often the views of local communities are ignored and the Scottish Conservatives want to afford greater respect to the views of communities, troubled by large-scale developments in their area.

McCaig: No. The Scottish Government has taken the approach of limiting onshore wind in our national parks and continues to take a pragmatic approach as applications come in. New onshore wind is the cheapest form of low carbon energy and is an important role to play in the energy mix. Ending subsidies without proper grace periods for those companies that have to date invested heavily, based on the framework set out by DECC, would significantly harm the UK and therefore Scotland’s reputation as a destination of choice for renewable energy investment. It would also make the climate change targets both more expensive and more difficult to achieve.

Would unconventional gas extraction bring bills down?

Macdonald: Yes is the short answer, which is why shale rock formations in Scotland were used to produce oil long before anyone explored for oil and gas below the North Sea. But we believe that the production of oil and gas from shale rocks onshore should not happen until developers have met tough tests for environmental safety and community support.

Banks: No. Even if the huge, justified opposition to fracking was overcome, UK shale gas could not be developed fast enough, cheaply enough or at a big enough volume to take over the price setting role of imported gas, according to Bloomberg New Energy Finance. There are different geological conditions, property rights in the UK compared to the US and a much denser population.I’d therefore like to see the Scottish Government turn its moratorium on unconventional gas extraction into a ban, and expand it to cover underground coal gasification too.

Milne: Unconventional gas extraction has the potential to bring down bills but also, more importantly, could help provide energy security. The Scottish Conservatives believe that unconventional gas extraction has a significant role to play in meeting the country’s energy needs and achieving a balanced energy mix. Onshore gas has the potential to stabilise our gas prices by making us less dependent on unstable markets. If we could increase domestic gas production via fracking, we would be less vulnerable to such spikes in price.

McCaig: There is no evidence that I have seen that definitively states that fracking would bring bills down in Scotland. It is also unclear whether it would be economical to do so with the current price of gas. The Scottish Government’s approach of an evidence-led policy in this area is the correct way to establish the facts around the economics of fracking combined with the legitimate concerns that have been expressed by people living in areas where extraction may take place.

Can the price of oil stay low if global reserves are limited and production is in decline?

Macdonald: Most experts predict oil prices will stay low for at least two or three years, and the risk for the Scottish oil and gas industry is that a lot of marginal fields are written off before the price goes up again. The bigger picture is that the total amount of oil must be finite, but nobody can tell how much more can be discovered and developed. Technologies developed here in Scotland have made it possible to extract oil and gas from places which would have been thought inaccessible in previous generations. The age of oil will not end because we run out of oil, but because we find renewable ways to do all the things oil does at the moment. We are not there yet.

Banks: No. Oil price has been shown time and time again to be volatile, unpredictable and subject to geopolitical forces. The current low oil price is due to a combination of strong US production, weak global demand and the strategy of the OPEC countries to maintain production. None of these factors is likely to continue unchanged and oil price will most likely rise in result.  
Current prices also hide the fact that according to the IMF, fossil fuel companies are benefitting from global subsidies of $5.3trn a year, equivalent to $10m a minute every day. Ending those subsidies as the G7 has committed to delivering will ensure fossil fuels reflect their true cost to society and open the door to massively accelerated growth in low cost renewables.

Milne: The current low oil price shows just how vulnerable the oil industry can be to price fluctuations. It’s essential both the UK and Scottish Governments work as hard as they can to provide the help this vital sector needs. Fortunately, with Scotland as part of a strong UK, these economic shocks can be endured.

McCaig: Predicting oil prices is a little above my pay grade, and judging by the success rate of those who do predict oil prices, they aren’t that easy to get right.

Is there a place for nuclear in Scotland’s energy mix?

Macdonald: Nuclear power plays a big part in Scotland’s energy mix at the moment, and that will increase after the closure of the coal-fired power station at Longannet. As a low-carbon source of electricity, it can play a big role in future too, although like other low-carbon sources it is more expensive than simply burning coal. Current Scottish Government strategies seem to rely on importing electricity from nuclear power stations in other countries, as well as continuing power production from Scottish nuclear plants as long as possible. It would be more honest to remove the presumption against new nuclear, and then support whichever low-carbon technologies succeed in driving down costs in the 2020s.

Banks: No. Nuclear power is inherently unsustainable in terms of dealing with its toxic legacy. It’s also hugely expensive, soaking up billions in government subsidy for lengthy periods for the power it produces, diverting money from renewables, and using up the vast majority of DECC’s budget in its clean-up costs. 
New nuclear build in France – the heartland of nuclear – is facing a crisis. And from a security of supply point of view, analysis for WWF shows there’s no need to maintain nuclear in Scotland by 2030. A secure, renewable powered system is perfectly achievable by that point.

Milne: Yes.

McCaig: There is a place for the current nuclear power plants as they wind down, but in terms of new nuclear, no. The proposed new plant at Hinkley is hugely expensive and will require a subsidy of around £1bn a year over 35 years. The events at Fukushima show how devastating nuclear accidents can be. There are many cheaper and safer alternatives that we should be exploring.

How do you keep the household energy bills down at your home?

Macdonald: We have insulated our home as best we can to reduce energy waste, and I run a constant campaign against electrical equipment left on stand-by. We also turn off the heating altogether when the North East weather permits, which of course is not as often as we would like!

Banks: By taking measures to save energy. My loft has more than the minimum recommended thickness of insulation, the doors have draught excluders, and almost all the lights are now highly energy efficient LEDs. Any time a room in the house has been redecorated I’ve taken the opportunity to install internal solid-wall insulation. The solar thermal panels on my roof help heat the hot water and have helped slashed my gas use by over a third.

Milne: I have upgraded the insulation and more recently installed solar panels.

McCaig: I’ve been fortunate the last year to live in a small flat with an efficient, new boiler, but over and above that, common sense. Switching lights off, ensuring TV/laptops are not left on. 

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