By Alasdair Galloway
John’s recent publication of an SNP Media piece (https://talkingupscotlandtwo.com/2022/01/11/electricity-transmission-charges-england-subsidised-scotland-to-pay-465m/) focuses rightly on the charging regime imposed by National Grid on generating plants to carry their electricity. The SNP claim that Scotland is paying £465 million a year to put electricity on the grid, but England and Wales get a £30 million subsidy. The reason for this is that a plant in the North of Scotland (Peterhead for instance) would pay £7.36 MWh while one in the south (Torness) would pay £4.70. In England and Wales the (average?) charge is but £0.49p and certainly there are some areas where the National Grid pay generating companies per MWh (Somerset is I think one). This could in fact be easily resolved. National Grid’s rationale is the Economics one that if you impose a cost you pay for it. Leaving to one side whether these costs are exaggerated (probably are), the fact is that to get to what the National Grid call “market”, Scottish generators have to make use of a considerable amount of National Grid infrastructure – it’s a long way from Peterhead to somewhere in Somerset, for “the market” is in the most heavily populated part of the UK in the south. But why does there have to be a single reference point? Why not regionalise? Its not like there are no centres of population in Scotland – the whole central belt and much of the east coast is a “centre of population”? Why not accept that power generated AND used in Scotland is charged at a lower rate (or even subsidised as some providers are in England). This isn’t rocket science – power generated in Scotland less power used in Scotland. Any surplus might still be charged at the higher rate as it will be getting used in England. Why not? Well see below.
However, this is not the only important point. I cited two plants, one in Peterhead and one in Torness. The latter will be closing before the end of the present decade, while with global warming it is likely that the former’s days are numbered. You might have noticed the recent closure of Hunterston B, so when these two go … there will be none. All power production in Scotland will be by renewables. Now this might all be very ecological, trendy and cuddly, but to date no one has found a way of storing the energy generated on a windy day for use when the wind is still. A system like this is just not sustainable – the lights will start going out. Then the only alternative will be to import power from England. That is not a terrible situation to be in, but you can bet your life that come the next referendum that it will be used to batter us over the head with claims basically saying, “what you going to do when the lights go out?”.
Of course, responsibility for this is not with the Scottish Government – Energy is reserved to Westminster. So, what’s going on? What’s to do?
To answer those questions I am grateful to my old friend Iain Lawson who just before Christmas published this https://yoursforscotlandcom.wordpress.com/2021/12/15/whysome-questions-to-ponder/ and I recommend it. The main questions posed by Iain are
- Why did the UK GOVERNMENT sell off the state owned BNOC unlike Norway who created Statoil? Well, the obvious answer we have all become accustomed to is that London preferred to blow the revenue on current expenditure and tax cuts, leaving Scotland’s financial position quite unlike that of Norway.
- How will we sell our renewables which are already at a level beyond what Scotland needs? Recently an interconnector was completed with Norway, but it hit UK landfall at Blyth (in Northumberland). Why might you ask? Is Aberdeen not closer? But, this isn’t the first time something like this has happened. As Iain points out oil was piped from the North Sea to Teesside and points south. The same thing is true of interconnectors – there are 10 of them between the UK and western Europe – all to England and with the exception of Blyth, south of the Wash. As Iain points out “Blyth is the most suitable point in North East England to transfer Scotland’s surplus power to the continent but keep Scotland out the equation. Blyth to energy is what Teesside was for oil.” While Scotland may be in surplus – albeit with sustainable generation that is not always going to keep the lights on by itself – England are not self-sufficient – they are massive importers (one of the reasons for all those interconnectors). Thus, if they need Scotland’s surplus, it is there for them to use. It is their decision. “The effect of all this. Scotland, the top exporter in the UK is forced to trade with the World via ENGLAND”
Now it is important to be careful with this argument. No one is arguing that the power is not generated in Scotland, and if (BIG IF) the generating company is Scottish then the proceeds go to them. In the same way, Heathrow exports Scottish whisky and the value of this is attributed to Scotland – BUT, it’s Heathrow that gets the business. Suppose it went through Prestwick! Suppose the Norwegian interconnector went through Aberdeen? Suppose our seafood exports didn’t go through Dover? Get the idea?
Therefore, we are put in a situation where our products are world leading – power, whisky and many many others – but we trade with the world through England, who get the benefit of doing so on our behalf. For instance, consider the idiocy (and I don’t use that word lightly) of sending Scottish produce south to be exported via Dover which must be nearing capacity. Why has there been no determined effort to develop our own direct trading links with western Europe? This could be done from, for instance, Rosyth (for France, Netherlands, Germany etc) or Aberdeen for the Nordic countries?
In the late 1960s a project called Eurobridge was mooted. The idea was to make use of the deep water at Hunterston – some of the deepest offshore water in western Europe. The notion was for container ships from places like the US/ Canada (or indeed anywhere who wanted to avoid the maritime traffic jam known as the English Channel) to offload, with their containers loaded on to flatbed railway trucks to be moved across to the east coast where they would be loaded on to smaller ships which might even bypass such as Europort or Bremen and proceed upriver on the Rhine, Meuse or the Weser, possibly to central Europe. On their way back containers would be collected and taken to Scotland for the reverse journey. If nothing else, even an arrangement such as this was used mainly or only by Scottish companies, it would end the folly of sending Scottish products to Europe via Dover. In passing, since Brexit, Ireland has started its own project to export to Europe direct from Dublin, obviating the need to send via England.
Probably important to note here the similarity with Scottish generated electricity which can be exported only via England. Likewise, oil produced from the Scottish sector of the North Sea sent straight to England. In the same way our capacity to export has been biased in favour of using facilities in England by a large number of decisions over the years.
Nor does it end there, because ports in Scotland are mainly under the control of Peel Ports which owns the following UK ports – Clydeport, Dublin ; Great Yarmouth ; Heysham; Liverpool ; London Medway ; Manchester Ship Canal. As Alf Baird pointed out nearly 10 years ago, “The motivation behind Private Equity ownership of ports in the UK includes gaining control of an asset class which returns consistently high profits, offers barriers to entry, and hence involves low risk.” Is this who we really want running the entry and exit points to our economy?