[Updated below 7th July] It’s not hard to see why the No Tiree Array campaigners saw off Scottish Power Renewables [SPR] and the Scottish Government on the favoured proposal to lassoo the tiny Atlantic island with one of the most grotesque inshore ‘offshore’ wind farms imaginable.
The proposal was eventually withdrawn by SPR, with no apparent possibility of its restitution. The cost of the construction of the project – in financial and environmental terms – was, as the campaigners showed, commercially unacceptable.
Robert Trythall, one of the figures in that notably able No Tiree Array team whose forensic analyses must have been a recurring torment to the proposers and the supporting government – has just made a killer of an intervention in the economics of the independence prospectus.
Mr Trythall has delivered to the Scottish Government, through Energy Minister, Fergus Ewing, both a rock and hard place for any attempt to sustain the argument that the renewables industry in an independent Scotland would be supported by UK subsidies for the development of renewable energy exported to the continuing UK.
The rock in this endgame is a ruling made only days ago, on 1st July, by the European Court of Justice.
The court ruled that a Finnish wind producer selling power to Sweden has no right to receive subsidy support for renewables from Sweden.
As Mr Trythall succinctly noted in an email he sent that same day to Mr Ewing, ‘this ruling has implications across the EU’. Speaking plainly, he goes on to put it to Mr Ewing that: ‘This would suggest that an independent Scotland’s export of renewables to rump UK will not have the right to receive rump UK’s renewable support.’
The hard place was Mr Trythall’s reminder to the Minister that the Scottish Government has, formally, factored into its economic development planning for independence the continuing receipt of UK subsidy revenues for Scotland’s renewables sector.
So what is the impact on the indy economic development plan and on the faltering renewables industry without those confidently expected subsidies – running at £500 million a year?
In the first of his two emails to the Energy Minister, Mr Trythall asks the minister to comment on this EU ruling in terms of its impact on a possible Scottish Independence; and on an Independent Scotland’s possible intention to seek membership of the EU. He points the minister, in considering his reply to this, to two key issues:
- that the Scottish Government’s Independence White paper confirms that the development of Scotland’s renewables will be dependent on continued UK subsidy and support;
- that Mr Ewing himself has publicly stated, on BBC’s Scotland 2014 last week, that an Independent Scotland will continue to export renewables to the continuing UK because the latter will be dependent on such imports from an independent Scotland.
In respect of this last claim, a disturbing collection of facts from Mr Trythall on the true state of the Scottish renewables industry – which we will publish shortly – will severely question the validity of the Energy Minister’s position on this matter.
The specifics of the Finnish / Swedish issue
The Aland islands – all 6,700 of them, lie between Stockholm in Sweden and Turku in Finland, at the entrance to the northward-running Gulf of Bothnia.
The islands are the smallest region of Finland but are Swedish speaking – and receive their electricity supply from Sweden.
A Finnish developer proposed to build a wind farm on one of the Aland islands and, since it would output to a grid linked to Sweden, claim a Swedish subsidy for the renewables energy development.
It is this that the European Court of Justice has pronounced against, ruling that the Finnish developer has no right to receive renewables subsidy from Sweden. Both countries are member states of the EU.
The EU ruling would apply here, were Scotland and the UK to become separate countries and were both to be members of the EU.
Developers of Scottish renewables schemes, whose output would contribute to the supply south of the border, would have no right to receive subsidies for the development of their projects from the government of the continuing United Kingdom.
Germany’s Energy Minister, Sigmar Gabriel has welcomed the European Court of Justice ruling, saying that it confirms that national support schemes do not have to be opened up to electricity coming from another state.
The Herald’s analysis of the First Minister’s claim on the UK subsidies position
The impact of the European Court of Justice’s ruling was not lost on The Herald. Yesterday, on 5th July, the paper published a piece on the issue [Page 6], headed: Renewables ruling ‘deals blow to Salmond’.
The text of the article declared that the ruling undermines the First Minister’s claim that Scotland’s renewables industry would continue to be subsidised from south of the border.
Expert’ opinion is that, in removing any right to UK subsidy for renewables by foreign counties selling surplus energy into the UK, the government of a continuing UK would have no obligation to pay such subsidies to such companies while paying the going rate for importing any potential surplus. One such expert, Peter Atherton of Liberium is quoted by the Herald as saying: ‘This judgment opens the way for the UK Government to cease to support renewables in the event of a Yes vote’.
While Scotland would be free to sell its surplus renewable energy into whatever feasible market it liked, all EU member state markets would be equally free from any obligation to provide subsidies to developers of Scottish renewables projects, just because they were buying surplus power from the grid, generated from renewable sources in Scotland.
However, in response to this ruling, the Scottish Government has kept its head in the paper bag that has allowed it to continue to insist, against logic and evidence, that following a ‘Yes’ vote it would be in a currency union using the GBP [Great British Pound].
In the same blind insistence, a spokesperson for the Scottish Government simply declared to The Herald that a deal on cross border subsidies ‘would be negotiated’ if Scotland were to vote for independence.
The reason for such a declaration? The spokesperson is quoted as having told the paper that: ‘Experts have made it clear that in an independent Scotland there will be security of supply of very affordable energy and that the rest of the UK will need the Scottish electricity for the foreseeable future.’
Where it may be the case that the UK will need to import surplus renewable energy from Scotland, that does not now mean that it will have any obligation also to pay supporting subsidies to developers in Scotland. Moreover, imported energy needs would be relatively short term – for as long as it takes China to build the new nuclear plants now commissioned from it by the UK Government.
The Scottish Government spokesperson said: ‘The continuation of a system of shared support for renewables and capital costs among consumers in Scotland and the rest of the UK is a reasonable consideration for meeting the UK’s green commitments.’
This fails to recognise that in the aftermath of a fractured United Kingdom, that continuing state would be left with its own financial revisions to be made. In that sort of situation, ‘green commitments’ would take a sharp second place to saving the cost of continuing to subsidise Scottish renewables – and £500 million a year is another annual City Deal, like Glasgow’s, for another city south of the border.
The break up of the union would mean both of the new states having to retrench on their spending. The continuing UK would be no milch cow for a thirsty new state of Scotland.
Following the Scottish Government’s blindfold response to the EU ruling, Robert Trythall wrote again to Fergus Ewing, pointing out: ‘This response [Ed: to The Herald] does not address this EU ruling and its application to a cross border issue between EU member states.
‘One of the policy decisions of the SNP in the event of a Yes vote is for an Independent Scotland to seek full membership of the EU as an independent member state.
…’Your spokesperson’s response was risible. It shows Scottish Government’s [SG] total lack of understanding the specific issues of this EU ruling, ie that cross border renewables subsidy between EU member states is not permitted.
‘This EU ruling is linked to EU policy to harmonise renewables subsidy among EU member states – ergo, until harmony is created no cross border subsidy export may be permitted between EU member states.
‘I look forward to SG’s reasoned response to my original email of the 1st July, particularly as your recent reply to NTA’s letter [Ed: NTA is No Tiree Array] of the 11th Dec 2013 confirmed that Scottish Government would be seeking rump UK’s continued subsidy of an Independent Scotland’s renewables ambitions.’
There is more to come
This is the first in a series of three articles focusing on issues of genuine difficulty Mr Trythall is raising for the Scottish Government’s vision of a sustainable renewable energy industry in Scotland.
Update 7th July: Quoted expert’s note to The Herald
Robert Trythall has sent us the text he has acquired of Peter Atherton of Liberum’s assessent of this situation. Atherton is the expert quoted by The Herald, mentioned above. This presents a detailed insight into the European Court of Justice finding: Simon Atherton of Liberum on Scottish Independence – Stranded Asset Risk Increased.
