By LESLEY RIDDOCH
The Scottish Government’s Growth Commission Report will be published today with facts, figures and scenarios about the economics of an independent Scotland.
Doubtless, there will be arguments aplenty about the type of currency chosen and Scotland’s general ability to survive on its own. Which is fine. There are strong, convincing answers.
But Andrew Wilson’s report may not have time to examine the other side of the balance sheet – the danger and economic cost of continuing stagnation in Scotland as a result of under-investment, over-interest in shareholder profit, surcharging “remote” populations and the sheer inadequacy of structures in policy areas still controlled by Westminster.
Areas like trade, communications, broadband … and energy. Sitting here on Orkney, the case for change could hardly be clearer.
Put in a nutshell, these windy and wave-swept Northern Isles have an incredible, valuable and mixed energy resource.
But because of the UK’s crazy, complex, privatised and therefore inevitably short-sighted energy regime, islanders have only realised a tiny fraction of their true wind, tidal and solar potential and – as a direct result – experience Britain’s highest rate of fuel poverty.
When Margaret Thatcher privatised electricity in the 1980s, making millions for her pals, she ended the century-long practice of carefully planning infrastructure investments to benefit the country and instead brought in a complex energy “system”, where everything is about short-term financial gain and no-one is really responsible for financing the cable and grid improvements needed to reap the green energy harvest budding all over Scotland.
The National Grid is a centralised system, designed a century back to shift energy out from centrally located fossil-fuel powered plants, to folk at the margins. The energy pricing structure is the same. It penalises energy producers (even green ones) who are distant from markets, so it costs 20 times more to join the grid on Orkney than in urban areas further south.
Of course, Orcadians don’t really have to worry about that, because for a decade, their grid connection has been absolutely full. And since you don’t generally get cash for renewables unless you can feed into the grid, Orkney’s efforts to develop as a world-leading, green energy hub have been stymied.
But the UK Government controls energy policy – so why has it not coughed up the money to build a new subsea cable connecting Orkney to the mainland grid? Ah, if only life was that simple.
Thanks to Maggie’s great carve-up of the energy industry, transmission, production and distribution are all handled by different private companies watched over by a regulator, OFGEM that’s bound to reject any investment propositions that don’t have a cast-iron guarantee of making a mint. No point in spending millions to lay cables connecting islands that don’t have energy projects and developers ready.
But here’s the rub. Developers can hardly be ready, committing the time and money to get past planning and design constraints, when there is absolutely no guarantee of a grid connection from the industry or regulator. It’s a ludicrous catch-22 situation and it’s hindered the development of wind, tidal and other marine renewables for between 10 and 20 years.
Chuck in the other wee snags – sky-high grid connection rates only facing remote suppliers and the collapse in Westminster subsidies for renewable energy – and it’s a miracle any projects have managed to forge ahead at all on Orkney, Shetland or the Western Isles.
The fact some have is testimony to the extraordinary potential for wind power prompting developers to commit resources to a currently impossible transmission situation – and the wiliness of islanders, who’ve shown they can make the very best of a profoundly bad job.
Take Orkney again.These islands have produced more than 100% of their electricity needs since 2013 – all from renewable energy. In 2016, they actually produced 120% of their own fairly modest needs.
So what did they do with the extra, since they couldn’t feed it into our so-called “National” grid? Well for a time, the surplus was “flared off” using heaters running in empty barns — a terrible waste since the average Orcadian was stuck in fuel poverty.
There was talk about using heat during calving to save animals lives, creating insect farms and building a hot tub complex.
But none of these could really mop up the amount of spare energy circulating round Orkney because of the massive growth in micro-renewables. Anyone with the cash – especially farmers using a lot of electricity – had taken up grants for individual wind turbines and PV solar panels to heat water and power electric cars.
By 2016 there were more than 1,000 individual generators in a community of just 10,000 properties, causing instability in the local energy network.
But instead of investing in that much-needed subsea cable to solve the problem, the energy authorities introduced “curtailment” instead. Basically, since 2012, the most recent energy installations on Orkney has been ordered to shut down when too much energy is being produced – it’s called the “last-in, first-off” rule.
Some renewables producers have been switched off 40-50% of the time, without compensation. You couldn’t make this situation up.
Swedish Gotland, the largest island in the Baltic Sea has three 60-mile subsea energy cables to the Swedish mainland allowing it to transmit a total of 320 MW.
Yet Gotland has only a fraction of Orkney’s wind and marine energy assets and is six times further from Sweden than Orkney is from Scotland.
It’s been a shameful situation that even local MP Alistair Carmichael was unable to change when he was Secretary of State for Scotland in the ConDem coalition and while fellow LibDem Ed Davey was British Energy Secretary.
This is where the wiliness of islanders comes in. The Orkney Renewable Energy Forum was set up to lobby for change and find better outlets for surplus energy and they’ve done rather well.
Orkney now has the highest percentage of electric vehicles in any Scottish local authority and extracts energy from the North Sea, to heat public buildings.
But far more ambitious, the Orcadians are now using spare wind and tidal energy on Eday to create hydrogen and use it to fuel ferries docked in Kirkwall.
Hydrogen has so far lagged behind battery technology in the race to become the dominant form of energy storage. Battery power has high profile advocates like Elon Musk, founder of Tesla and is far more energy efficient.
But hydrogen is the lightest and most abundant element in the universe, it creates nothing but water and heat as by-products in electricity production and advocates say hydrogen fuel cells are a better power solution for trucks, ships and trains.
In short, many countries have tried to make a commercial breakthrough with hydrogen – but thanks to the ridiculous constraints on exporting energy to the grid like islands in any normal country, Orkney might be closest to cracking it.
And now, in a fabulous irony, a subsea cable may suddenly be on the horizon.
Who knows why, but after more than a decade saying the economics didn’t stack up, Scottish and Southern Energy Networks (SSEN) have said they finally do and have put a business case to regulator OFGEM for a 220 MW cable. SSEN said an “innovative” change to queue management has made the cable economical.
Islanders suggest it’s far simpler – there’s a problem with the existing connection and if SSE repair it it’ll have to use its own money, whereas the costs of a new cable can be “socialised.” Whatever the truth, if Ofgem approves the bid, there should be a new cable by 2022.
But do the islanders actually need it anymore?
At a recent conference in Orkney it was revealed that when hydrogen propels cars, it’s worth 20 times more than turning hydrogen back into electricity.
That’s game-changing. So Orcadians might prefer to have a hydrogen pipeline to the mainland instead of a subsea cable. They could start making synthetic fuels at Flotta and create the first effective green substitute for heavy-duty diesel.
Talk of making a virtue of necessity. But imagine what could happen if Britain’s unfit-for-purpose, archaic, privatised energy system was redesigned to meet the needs of the renewable era (not a fossil-fuel yesteryear) and run by a democratically elected Scottish Government – not a set of profit-making companies – to serve the needs of renewable-rich Scotland, not a nuclear-obsessed neighbour?
There may be no room in the Growth Commission report for this Northern story of creativity and inspiration borne out of frustration and despair – but this is what constitutional change could mean for Scotland. Fulfilling our destiny as the energy hub of the North Atlantic, because of the system, not despite it.
This article was first published in The National – the newspaper that supports an Independent Scotland
25 May 2018