SNP leader Alex Salmond is in enough trouble over what he may or may not have offered to do for his new best friend Rupert Murdoch over the BSkyB bid, but Scotland’s first minister faces certain embarrassment over his ludicrously ambitious green energy plan.
Salmond, who wants all Scotland’s energy to come from renewable sources by 2020 (which simply isn’t feasible), has made much noise about his “world-leading climate change legislation”. As Scots opposition parties have noted, he was quick to talk up a planned £170m investment by Korean firm Doosan in an offshore wind research centre in Glasgow and even more in a new wind-turbine factory. But he went very quiet when told by Doosan in December the plan had been scrapped, not acknowledging this publicly until last month.
There is, however, a more tangible problem for Scottish “green energy” than evaporating investments: the remoteness of its growing highland wind-farm sector. The difficulty of transmitting power hundreds of miles south (to where it is actually needed in central and southern England) is such that it is sometimes uneconomic to do so, at which point wind-farms are “constrained off'”. This means they are paid not to generate, to the tune of tens of millions of pounds a year from consumers’ pockets – more even than the already generous subsidies they enjoy.
These “windfall” payments are made under market rules introduced when the Scottish power grid was integrated with the England & Wales grid in 2005, a merger which undoubtedly resulted in a favourable deal for Scottish electricity generators. Many analysts assert that constraint payments to wind-farms are not the cheapest way to balance the grid and that Scottish wind-farms benefit disproportionately.
This nice little earner might come to an end sooner than the Union itself. This is because, under the EU drive for a single electricity market across Europe by 2014, there is talk of replacing the UK rules with a larger system embracing both the UK and Ireland.
In designing rules for a new market it is unlikely that known distortions will be allowed to survive. Who in cash-strapped Ireland, for example, would want to contribute to windfalls for Scottish windfarms? They have their own to pay for.
Thus Salmond’s pet projects may lose out on the constraint payments if a more logical regime is devised – and Rupert’s chum will be left whistling in the wind.
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