The Energy Bogeyman
The past seven days have seen more massive price hikes for the gas and electricity customers of Scottish and Southern Energy. Add to the rises already announced by Scottish Power and it’s abundantly clear that most people in Scotland will have seen rises of around 12 per cent for electricity and 18 per cent for gas. All apparently due to increases in the ‘wholesale cost of energy’. Early estimates indicate that up to one million people in Scotland will now find themselves in fuel poverty as a result. Clearly, in an energy rich nation like Scotland, this is a scandal that politicians must tackle. With immediate effect.
The fact is, we have long since said good bye to a key element of security of energy supply. Only SSE remain a British Company, with the other ‘Big Six’ being owned mostly by other European interests. This wouldn’t be a problem in itself if major investment wasn’t required in our creaking grid infrastructure or our elderly power stations. But it becomes a problem when we are considering longer term solutions and such companies are unwilling to take risks with shareholder capital.
Given the volatility in the gas and oil markets, and the fact that fossil fuel prices are so heavily dependent on OPEC oil production and middle eastern stability , surely now is the time to be considering a complete break from Oil, Gas and Coal? Bold statements in the past from the First Minister have left many in the energy industry baffled. On the one hand, investment in more drilling in Scottish Waters is very important to Scotland (remember how that tax hike would hurt Scottish Jobs?), but on the other hand, our climate change policies demand considerable reductions in the use of fossil fuels. If the latter is the case, what’s the oil for then? What’s stopping us moving at full speed to a Denmark style energy infrastructure?
Scotland does have major opportunities when we consider renewables. During the Scottish Parliament election campaign, even Iain Gray paid tribute to the work of the First Minister in talking up Scotland’s prospects as a ‘Renewables Powerhouse.’ It is correct that we do have the greatest wind and wave potential in Europe. However, at the same time as Mr Salmond is telling everyone about this, he seems perfectly ok with the Scottish Government approving plans for new coal and gas stations, further compounding problems associated with the wholesale energy market and making the chances of Scotland meeting ‘The most ambitious CO2 reduction targets in the world,’ seem rather unlikely. In the past year, energy consumption in the UK has risen by 18%, when it should have been falling. So as energy demand rises, and prices rise year on year, the fuel poverty problem isn’t going to go away. With current policies it’s only going to get worse. A 50% cut in the fuel poverty budget sends a message that the SNP Government in Scotland doesn’t take this problem seriously. Whilst this isn’t entirely fair and there has been much to commend them on, the fact remains that we are digging an ever greater hole for ourselves through a lack of consistency in policy.
The UK Government also has to shoulder some of the blame. Interference with Feed in Tariffs and the Renewable Heat Incentive have created market instability. Suspicion is now rife that the support mechanisms for renewable investment will be altered by Ministers on a whim. As risk is the most important factor when considering putting solar panels on a house, right up to building a wind farm: anything that increases the risk factor is taking us in entirely the wrong direction.
It is this risk factor that will make the ‘Renewables Revolution’ stumble, and very possibly fail altogether. In the Renewables Industry and amongst some academics, a view is forming that eventually the risk will become so great that Government’s will have no option but to intervene and become electricity generators themselves. Of course, by any other name, this is Nationalisation. Electricity is simply too important a resource to trust to a cartel of French, German and Spanish power companies. In my opinion, these companies are failing ordinary people in Scotland and eventually politicians will have to grapple with the consequences. I know that there are many on the Left who would support at least the partial re-nationalisation of our utility companies. It would be interesting to find out if our SNP Government would be willing to be so bold, or as radical, in the interests of the Scottish People?
Jamie Glackin is a member of Labour’s Scottish Executive Committee. He drinks far too much coffee. Follow Jamie on Twitter at @Jamie4Labour.