Scottish Energy Minister sits on political fence on ECJ court ruling on UK cross-border renewables subsidies


by Scottish Energy News Political Correspondent

The Scottish Conservatives recently put down a parliamentary question in Holyrood for the Scottish Government to answer on what impact the recent European Court of Justice ruling on cross-border state subsidies for renewable energy developments will have in Scotland/ UK.

In the ECJ case, the court rule in the case of Alands Vindkraft AB v Energimyndigheten [the Swedish Energy Agency] it was decided that such cross-border subsidies are not legal.

While Scottish Energy Minister Fergus Ewing is yet to formally reply in parliament to the PQ from his Tory Shadow Murdo Fraser, MSP, a recently reply from the Scottish Government’s Energy Department on this very question appears to indicate that that Scottish Government is sitting very firmly on the renewable energy fence.

Fergus Ewing, MSP, Scottish Energy Minister
Fergus Ewing, MSP, Scottish Energy Minister

See the Scottish Energy News – exclusive – report  for full details:

In a reply to a virtually similar question from the No To Tiree Array anti wind farm campaign group, Ewing replied:

 “The ECJ ruling confirms that countries are not obliged to pay subsidies for renewables generated in other member states.

 “It also confirms that EU member states are not prohibited from doing so if they choose.

 “The UK Government has already indicated that it is considering subsidising lower cost renewables generation outside their borders in order to achieve its legally-binding EU renewable energy targets. DECC have set up Electricity Market Reform to enable renewables subsidies (via Contracts for Difference) to be open to projects from outside the UK.

 “There is no reason why this should exclude projects situated in Scotland.

 “The Scottish and UK Governments would need to agree on eligibility rules for support for renwables capacity built after independence.

“Future support contracts for renewables will be allocated increasingly under a competitive process to the cheapest supplier, and so subsidies will go to Scottish generators if they are the most competitive option.

“Scottish renewable generation now accounts for 32% of total UK renewable generation, and 26% of the total electricity generated in Scotland is exported to the rest of the UK.

“Scottish islands have massive potential to deliver clean and cost-effective energy – Orkney, Shetland and the Western Isles could supply up to 5% of GB electricity demand by 2030.

Unless the UK Government chooses to unpick existing Renewables Obligation legislation, and the significant investment which has taken place in response to it, then rUK suppliers will still need to buy Scottish power after independence.

 This viewpoint has been endorsed by the Independent Expert Commission on Energy Regulation whose report, published on the 10 July 2014, states that:

 “Generation operating, or projects committed at the point of independence, and supported by existing market mechanisms should be grandfathered i.e. current commercial arrangements should be honoured, with the historic costs spread across all GB consumers as at present”.

“Grandfathering existing investment is a fundamental principle of good governance; this applies not only to renewables, but across the energy sector and beyond.

“Failure to grandfather, and generally to legislate in a way that demonstrates that the state will retroactively undermine investment affects sovereign credit ratings.”

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