The UK’s looming security of supply crisis will contribute to higher electricity bills, a new Scottish Government report published today warns.
The new paper – “UK energy policy and Scotland’s contribution to security of supply” – shows that uncertainty caused by the Westminster Government, coupled with a failure by successive London Governments to properly prioritise security of supply, has led to a much reduced margin between electricity supply and demand – and that this margin is getting tighter.
The paper warns that this tightening energy gap will lead to higher energy bills – and that plentiful Scottish electricity generation can both help keep the lights on and bills down across the UK.
Sufficient reserves of generating capacity are needed to cope with peaks in demand and prevent price rises and blackouts. Latest Ofgem forecasts show that the UK’s safety margin could fall to just 2% by 2015/16 – the winter after next.
In contrast, the equivalent Scottish gap between demand and available supply is 20%.
The report notes that the system operator National Grid has also warned that planned new power station connections have been cut by more than half due to lack of investment clarity from the UK – making a tight energy security situation worse.
Fergus Ewing, MSP, Scottish Energy Minister
Ramping up the rhetoric over the politics of energy following a week in which unidentified sources said to be close to Prime Minister David Cameron floated the ‘spin-sultation’ that the next Conservative manifesto would pledge to cut UK subsidies to wave and wind farm developers, Energy Minister Fergus Ewing said:
“Having only 2% reserve energy in the system is extraordinarily risky and could result in big bill price hikes.
“The laws of supply and demand and the cost of bringing more expensive power plants onto the grid to meet peak demand will drive up household energy bills the closer the UK gets to having no spare generation capacity. As the regulator Ofgem has pointed out, as installed capacity falls to near zero, prices can be expected to rise sharply.
“The more capacity you have available – especially from lower marginal cost generation such as renewables – the lower wholesale energy prices will be, again highlighting the value of Scottish generation to every household across these islands.
“Today’s substantial new paper from the Scottish Government shows that Scotland can help the UK keep the lights on and the bills down. Scotland exports electricity to England and Wales every year – in 2012, 25% of the electricity generated here helped keep lights on across the rest of the UK.
“Scotland’s huge natural resources mean that we can supply electricity – reliably and affordably. This is the case now, and will be the case in the event of independence.
“But the UK Government’s mixed messages on renewables and its delayed energy market reforms have led to confusion and uncertainty for the renewable industry, and led to a raft of investments being cancelled – as National Grid has pointed out.
“Subsidies for new nuclear generation dwarf those being offered to wind, wave and tidal generators, and risk squeezing investment in these vital technologies.
“It’s time for the UK to sort out their energy policy, stop driving away investment and instead start addressing their security of supply problems instead of making them worse.”
UK Energy Minister Ed Davey is expected to respond to the latest Scottish Government report when he speaks in Edinburgh on Wednesday this week.