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Energy Costs Higher for an Independent Scotland, Warns Davey

Linda Hardesty

DECC Energy ManageOn September 18, 2014, Scottish citizens will vote on whether they want to remain part of the United Kingdom or become their own independent, sovereign state. Edward Davey, the UK’s secretary of state for the Department of Energy and Climate Change, says independence would increase energy bills for Scottish citizens.

The UK government’s analysis shows that energy bills in an independent Scotland would be higher by at least £38 ($64) a year and perhaps by up to £189 ($316) per year, once the full cost of supporting renewables was included.

The government says energy costs for a medium-sized manufacturer could increase by as much as £110,000 ($184,000) per year by 2020 and £608,000 ($1.09 million) if renewables were included.

Davey said that because the single UK energy market is ten times the size of Scotland’s energy market, Scottish energy bills are lower. He listed a range of reasons affecting costs, including the way investment in transmission and distribution networks are currently shared across the whole of the UK, to the way the subsidies for energy distribution in remote rural areas like the Scottish Highlands and Islands are currently paid for by all British consumers not just Scottish bill payers.



One comment on “Energy Costs Higher for an Independent Scotland, Warns Davey

  1. Scottish Independence and Electricity Prices: Why England Needs Scotland to Keep the Lights On

    The goal of UK energy policy should be to ensure security of supply for households as well as businesses and to ensure the affordability of the electricity we use. Unfortunately, the current UK Coalition Government has taken its eye off the ball and is scoring an own goal by failing on both fronts.

    In particular their flagship initiative – Electricity Market Reform – has led to a hiatus in energy investment. This failing is very bad news for England. In effect we are now seeing a critical reduction in our energy capacity reserves, which will eventually see electricity costs spiral out of control. For London this might well mean the lights going out post 2015.

    As Scotland exports approximately 25% of the electricity it generates, this is not such a problem for Edinburgh. In Scotland, we produce much more than we use. In recent years this has been bolstered by a truly world class renewables industry. Scotland now produces nearly the equivalent of 50% of its electricity from renewable energy sources such as onshore wind and hydro. This will increase to around 70% by 2017.

    I strongly reject Ed Davey’s announcements last week that if Scotland votes ‘Yes’ then Scottish electricity bills would increase. This claim is evidenced by a comprehensive report that I published with colleagues from a number of Universities from across the United Kingdom in December.

    To summarise some very complex arguments, as a result of the Coalition Government’s decision to fund new nuclear build, what we found in this report was that a Scottish Government committed to no nuclear build would actually see reductions in consumer electricity bills compared to the rest of the United Kingdom. Scottish consumers would not be subsidising the hundreds of billions of pounds of investment that new English nuclear power stations require.

    Already the Department of Energy and Climate Change (DECC) spends £2.5 billion or 42% of its annual budget on existing nuclear legacy. Of that £1.6 billion is spent on managing the waste at Sellafield alone. In their misguided aspirations for new nuclear build the Coalition Government is now writing a ‘blank’ cheque. At a time of unprecedented financial austerity this is somewhat astonishing.

    Under no scenario can I see in an independent Scotland electricity bills increasing along the lines outlined by Ed Davey. In an independent Scotland, even with an integrated electricity market, Scotland would be able to sell its electricity to England at commercial rates. England currently has to resource its electricity requirements from Scotland; there is no alternative source. It is pure fantasy on the part of Ed Davey to suggest otherwise.

    Scotland offers an excellent model of how to deliver a world-class energy policy. The Coalition Government could learn much from us.

    Professor Peter Strachan
    Group Lead Strategy and Policy
    Robert Gordon University, Aberdeen
    Email address: p.a.strachan@rgu.ac.uk

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