As September 18th – the day Scottish nationals vote whether to stay in or leave the UK – draws closer, Peter Rolton, ceo of the Rolton Group and former government advisor on the UK’s Renewables Advisory Board, considers what the clean energy landscape may look like in a post-referendum, independent Scotland.
In 2012, 25% of the renewable energy generated in Scotland made its way south into the UK. As a sizeable chunk of the total, it will have made a substantial contribution to the sector’s annual success. This friendly give and take, however, depends on the maintenance of an amicable relationship between the two countries, and make no mistake, the energy market will not be exempt from the bitter divorce proceedings that will undoubtedly ensue if the two nations unwed.
Scotland: bountiful resource of green energy
One thing there can be no debate about is that Scotland is a particularly bountiful resource of natural and sustainable energy, with wind and tidal potential that is among the best in Europe. It is this abundant supply that Alex Salmond MP hopes to use as a springboard to a successful economy, announcing that an independent Scotland could source 100 per cent of its electricity from renewable supplies by 2020.
The problem is that sustainability isn’t cheap. Wind and tidal energy are both heavily subsidized to make them commercially appealing to investors, and they are also subject to very low levels of tax. This means that rather than sitting back and waiting for the big bucks to roll in should Scotland vote ‘yes’, the Government will find itself having to pay out subsidies that annually run into the hundreds of millions of pounds.
European energy powerhouse or economic minefield?
While we wait for the technology to reach parity with traditional fuel, predicted by many as a distant dream until the mid-2020s, it won’t be possible to remove the financial incentives that currently support the industry, not least because there are already many deals in place that investors will expect to be honored regardless of September’s vote. If an independent Scotland is serious about kick-starting its green economy, it will need to have enough in the coffers to support an industry hoped to be so large that it can, in Salmond’s words, ‘power much of Europe’.