Sept. 8 (Bloomberg) — A vote for independence in Scotland
may halt work on renewable power projects that support 14
billion pounds ($23 billion) of investment and 12,000 jobs by
raising questions about how developers would get subsidies, an
energy supplier said.
Green Energy Plc, which sells electricity to almost 20,000
customers in the U.K., said breaking up the union between
England and Scotland in a referendum on Sept. 18 would force the
two countries to negotiate how to divide payment for
electricity.
Currently, Scottish projects get support though a
nationwide program known as the renewables obligation, which may
have no mandate north of the border if the two countries were
split. Scotland exports as much as a quarter of its electricity
and has about 43 percent of the U.K.’s wind power capacity.
About 13 gigawatts of power projects are on the drawing board
currently in Scotland, about 15 percent of total U.K. capacity.
“Projects in the pipeline that are planned in Scotland
could get canceled because who is going to pay?” Doug Stewart,
chief executive officer of Green Energy, said in an interview in
London. “At the moment, we have the Department of Energy and
Climate Change and Ofgem who rule over subsidies, and they are
U.K. bodies. If they didn’t have any jurisdiction in Scotland,
how do those subsidies get paid for?”
Concerns Unspoken
The comments mark a rare intervention by renewable energy
executives in the debate over Scottish independence, which most
companies have avoided. Bigger utilities such as SSE Plc and
Scottish Renewables declined to comment. EON SE and Scottish
Power Ltd. said they await a decision from Scottish voters.
“A vote for independence would introduce regulatory
uncertainty in Scotland,” said Kieron Stopforth, a London-based
analyst at Bloomberg New Energy Finance. It would likely halt
project developers from making final investment decisions until
incentives were clarified, he said, and that would only happen
after negotiations between Westminster and the Scottish
government conclude. That will take “at least” several months.
Scottish Renewables, an industry group that represents the
biggest utilities developers and banks working in the industry,
also declined to comment.
Wind Resources
With expanses of windy highlands distant from population
centers, Scotland has become a center of the U.K.’s wind energy
industry. The government both north of the border and in London
is encouraging turbine developments there both onshore and
offshore.
Of the 34 billion pounds of investment planned in large-scale renewable power projects from January 2012 to February
2014, about 14 billion of that was to be sited in Scotland,
according to data from the U.K. Department of Energy and Climate
Change. It estimates the industry supports about 12,000 jobs.
Those projects get funded through subsidies run by the
government in London. Of the 2 billion pounds of support paid
through the Renewables Obligation in the fiscal year ended in
2013, Scotland received 560 million pounds. That represents as
much as 28 percent of the total U.K. funding. Scotland itself
accounts for about 10 percent of electricity sales in the U.K.,
according to government estimates.
Renewable energy supplies almost half of Scotland’s
electricity, and the government is targeting for that level to
reach 100 percent by 2020. About 34 percent of the U.K.’s
renewable electricity capacity was located in Scotland at the
end of 2013.
Stewart said Scottish First Minister Alex Salmond has yet
to answer how the power market would be split up in the event
voters back the referendum to break away from the rest of the
U.K.
“Are we going to be buying on- and offshore-wind through
Scotland with a pipeline straight through to the U.K.? Is Alex
Salmond going to tax it?” said Stewart. “The whole thing is a
risk.”
To contact the reporter on this story:
Louise Downing in London at
ldowning4@bloomberg.net
To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Alex Devine