Scotland Independence Vote: A Cloudy Future for Scottish Wind Power

Within the next 24 hours we will learn whether Scotland has declared independence from the U.K. There have been loads of forecasts and projections about what a split would mean, and the biggest questions are the economic ones: from figuring out a currency to EU memberships and concerns that financial companies would move to London.

Then there is the energy question. Scotland sits closest to the North Sea’s oil reserves, leading some in the pro-independence camp to dream of Scotland, in the words of the New York Times, as a “socialist paradise of enhanced benefits fueled by endless amounts of North Sea oil and gas.” But North Sea production is dwindling. It’s only about half what it was in 2006, falling from more than 5 million barrels a day to an expected 2.6 million by the end of 2015.

North Sea oil & gas productionBloombergNorth Sea oil & gas production

Scottish wind power, on the other hand, is rising. Scotland accounts for about 43 percent of U.K. wind power capacity. This has some renewable energy executives warning about the consequences of a “yes” vote on the question of independence. “Projects in the pipeline that are planned in Scotland could get canceled,” Doug Stewart, chief executive of Green Energy, told Bloomberg News earlier this month.

In a report this week, Bloomberg New Energy Finance analyst Kieron Stopforth lays out the likely negative impact a “yes’ vote would have on Scotland’s wind industry, mostly as a result of the big subsidies Scotland receives from the British government. Of the 34 billion pounds the U.K. has invested in large-scale renewable power projects over the past two years, about 14 billion pounds were directed toward Scotland. Without that support, Scotland would have to replace those subsidies with private financing.

“With oil, power, and renewables support under discussion as well as the currency, defence and national debt, clean energy investors would feel less than confident about future prospects,” says Stopforth. ”Decisions will inevitably be delayed.”

Scotland currently has 4.7 gigawatts (GW) of commissioned wind farms, with another 900 megawatts (MW) financed or under construction, according to BNEF. Another 5.7GW have permits, and 11.3GW are at the announced or planning stage. The permitted category alone could be equivalent to more than $12 billion of investment.

Scotland produces enough renewable power—mostly from wind and hydroelectric sources—to cover about 47 percent of its domestic electricity demand. The Scottish government wants that to reach 100 percent by 2020. The mere prospect of Scottish independence has stalled that progress. “It has since become clear that this target is unlikely now to be met,” says Stopforth.

Losing Scotland would also deal a blow to Britain’s renewable energy goals, since about a third of the U.K.’s renewable power capacity is in Scotland. But it appears that the U.K., as a consumer of Scottish wind power, could get by better than Scotland could as a producer. According to BNEF, England and Wales in 2012 imported less than 4 percent of their net electricity consumption from Scotland, compared with 4.7 percent from Europe. Says Stopforth: “Scotland may be more reliant on England and Wales as a customer than they are on Scotland as a generator.”

If the article suppose to have a video or a photo gallery and it does not appear on your screen, please Click Here

18 September 2014 | 4:11 pm – Source: businessweek.com

[ad_2]

Leave a Reply

Your email address will not be published.