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Geoffrey Wood: The Independence Debate and Scottish Renewable Energy Policy and Practice: Is the Referendum That Important?

The 2014 referendum on Scottish independence has rightly crystallised attention on the renewable electricity sector. With the possibility of Scotland gaining complete control over energy policy and related areas, understanding the implications for renewable deployment going forward is critical. However, the debate has concentrated on alternate post-referendum visions of the future often mired down in heavily politicised claims and counter-claims. Little attention has focussed on whether or not the Scottish proposals on the table to date amount to a significant change, whether the public vote for independence or to remain in the UK. This is a critical omission in the debate and could play an important role in the post-referendum success of renewable electricity technology deployment and the continuing development of a Scottish renewable electricity and wider energy policy. 

This piece seeks to contribute to the debate by examining just how significant are the proposals set out in the Scottish Governments document Scotland’s Future: Your Guide to an Independent Scotland (hereafter referred to as the White Paper on Independence) published in November 2013. As I argue in my forthcoming paper, it is important to clarify the context in which these proposals sit in order to understand the implications for future decisions on renewable electricity technology deployment going forward. Key contextual issues include (1) consideration of the Scottish renewable electricity generating mix; (2) an examination of the divergence of powers, policy and practice in Scotland under the devolutionary settlement. 

1.       The Scottish renewable electricity generation mix 

Scotland is increasingly portrayed as one of the success stories of renewable electricity, both within the United Kingdom and abroad. In the last twelve years, renewable electricity technology (RET) deployment has more than trebled to almost 6GW of installed capacity and electricity generated from renewables (RES-E) accounts for 40 per cent of Scotland’s gross electricity consumption, second only to nuclear power in terms of output. In a country with just 8 per cent of the UK’s population and 32 per cent of its landmass, Scotland also accounts for almost half of UK capacity and 80 per cent of RET deployment in the devolved administrations. So far, all previous targets have not only been met but surpassed, including the 2011 target of 31 per cent which was exceeded by 5 per cent. In contrast, the UK was two years late in achieving the 2010 RES-E target of 10 per cent. 

RET deployment capacity has increased year-on-year for the last ten years or so. The main success story of Scottish deployment to date is onshore wind power. This one technology accounts for two-thirds of total RET capacity in Scotland and over 60 per cent of total UK onshore wind capacity. Excluding hydro power, a legacy of the nationalised construction of large-scale reservoir dams after World War Two, onshore wind accounts for 90 per cent of all RET capacity. Revealingly, almost 90 per cent of average annual new build for the period 2002-13 in Scotland was for onshore wind farms. 

In stark contrast, the other technologies have shown very limited deployment. This can be partly justified by reasons of technological maturity and resource availability. Onshore wind is one of the most mature and cheapest RETs with over two decades of deployment experience in the UK. Scotland has significant onshore wind resources, but it also has massive potential resources for other technologies: 10 per cent of the EU’s potential wave and 25 per cent of offshore wind and tidal power resource and there is potential for these technology to deploy at significant scale whilst avoiding a lot of the problems facing onshore RETs such as planning, land use and public opposition. However, these are expensive technology options requiring substantial long-term government support in order to become commercially viable as onshore wind has. 

2.       What has devolution brought to the renewables table? 

The legislative framework for Scottish devolution is set out in the Scotland Act 1998. What devolution has in effect brought about, in the last decade and a half, is political decision-making on key issues to the respective nations at a lower tier of governance. Reserved matters, remaining under the full control and jurisdiction of the UK Government, include the generation, transmission, distribution and supply of electricity, the ownership of, exploration and exploitation of oil and gas deposits, coal (including its ownership and exploitation) and nuclear energy and nuclear installations. Although the Scotland Act includes energy policy as a reserved matter, control of centralised policy making is not so clear cut. 

In practice, a division of responsibilities between reserved and devolved matters for energy is not that simple. The deployment of RETs includes many aspects of an economic, technical, social, environmental and behavioural nature that are affected by considerations that are relevant both within and outside the UK. Examples include the European Union, the global financial crisis, multinational utilities and international investment. Energy policy sits on the dividing line of powers and legally-binding and non-binding obligations and targets. It is the UK as the sovereign state that is responsible for meeting the EU 2020 and subsequent renewable energy, climate change and energy efficiency targets. Further, the UK Government controls the levers of the main policy-making tools with the Department for Energy and Climate Change (DECC) and the Treasury playing key roles in the design of the wider electricity market and the subsidy mechanisms to promote renewable energy, including the current Renewables Obligation (RO) to financially incentivise large-scale RES-E generation and the Contracts for Difference Feed-in Tariff (CfD FIT) mechanism via the on-going EMR process that will replace the RO from 2017. They also hold oversight responsibility for regulating both the energy sector and energy networks via the Office for Gas and Electricity Markets (OFGEM), a pan-UK independent energy regulatory body alongside other bodies including the Crown Estate. It is also the UK Government that participates directly in negotiations at the international level on the direction of current and future energy relevant policy.

But what does this mean for Scotland? Devolution has resulted in the Scottish Government gaining a number of levers of control over the evolution of the future electricity generation mix and in addressing barriers to deployment. Devolution has devolved control over the onshore and offshore planning system to the Scottish Government, for power stations with an installed capacity >50MW and 1MW, respectively. Onshore power stations below these thresholds fall under the jurisdiction of the relevant local planning authority although changes to planning law since devolution have blurred this division of responsibility. The executive devolution of planning also permits the Scottish Government to ultimately decide which types of power generation can take place within Scotland’s territorial jurisdiction: coal plant (yes with caveats); gas, oil and other thermal generation including biomass (yes with caveats); non-thermal renewables such as wind, wave and tidal power (an unqualified yes) and nuclear power (a definite no). 

The Scottish Government has also acquired a degree of operational control over the RO subsidy mechanism in Scotland (the Renewables Obligation Scotland, ROS). However, this only really extends as far as the ability to set subsidy levels for the various RETs at a different level from the rest of the UK, in addition to changes to the subsidy eligibility criteria for RETs. This is important as there are a number of fundamental concerns with the RO, specifically due to the type, design and operation of the mechanism that supersede the limits of Scottish Government power. That is the prerogative of the UK Government. Critically, the most recent UK Energy Act erodes the Scottish Government’s devolved powers and therefore discretion over the operation of the ROS. Furthermore, the new CfD FIT mechanism that will replace the RO/ROS in 2017, removes this control from the Scottish Government anyway.  

With significant numbers of onshore and offshore wind, wave and tidal power projects planned, an unprecedented amount of grid capacity required to connect new renewables. Although OFGEM and DECC have been proactive in increasing network capacity, particularly in Scotland which is currently heavily congested, with the exception of planning the Scottish Government has very little power over either the transmission or distribution networks. It has no regulatory powers to allocate new upgrades, extend the network or change access rules to the grid or the charging regime. As the pan-UK energy regulator of the single Great Britain (GB) electricity system, this is the remit of OFGEM with an important role for National Grid as the system operator. Further, on the policy and legislative side, it is DECC as part of the UK Government that introduces grid reforms and not the Scottish Government. 

In practical terms, then, despite overall energy policy being reserved to Westminster, substantial areas of energy policy have been devolved. Devolution has therefore not led to a black-and-white repertoire of powers. This shows that the Scottish Government has the potential to exert influence over energy and renewable deployment at the Scottish-specific level. The crucial question is how much influence does the Scottish Government possess in the sphere of renewable technology deployment? Just as important, how is that power used? In a very real sense, devolution has both provided and legitimised the ‘space’ whereby Scotland and the other devolved nations now at least have the potential to create their own energy policy, albeit constrained by the boundaries of devolution. Importantly, as these boundaries are not set in stone, the devolved administrations have the opportunity to engage with policy implementation and processes in Westminster through intergovernmental bargaining and negotiation at the formal (consultations, setting targets and producing policy documents) and informal (dialogue, behind the scenes agreements) level. Devolution has also allowed the devolved administrations to set out their own distinctive policy strategies and priorities on the issue of renewable energy. 

3.       Policy in practice 

The above highlights the importance of formal and devolved powers. However, political support is arguably a critical pre-requisite for the promotion of renewable energy. A stable and coherent political strategic vision is required to overcome a number of challenges given the current need for financial, policy, legislative and regulatory support for the majority of these technologies. 

A strategic vision for renewables 

Since winning the 2007 election, the Scottish National Party (SNP) led Scottish Government has focused heavily on renewable energy as an integral part of its sustainable economic strategy and as a key argument in the nationalist SNP’s move towards independence from the UK. Scotland, the First Minister Alex Salmond proclaimed, would become the ‘Saudi Arabia’ of renewable energy with the potential to deploy up to 60GW of renewable electricity capacity, more than ten times current peak demand. The 2007 and 2011 Government Economic Strategies have reinforced the distinctive Scottish emphasis on renewable energy, including it as a new strategic priority. This vision has been backed-up and developed by various policy documents including the Electricity Generation Policy Statements and the 2020 Routemap for Renewable Energy in Scotland alongside additional Scottish-specific initiatives to promote renewable deployment. In contrast to the consistent high-level political support for renewable electricity emanating from the Scottish Parliament in Holyrood, the political situation in the UK has become characterised by a lack of coordination, political infighting, delays in the implementation of key initiatives and legislation and opposing ideologies and aims with respect to energy and environmental objectives.

The current UK Coalition Government (the Conservatives and Liberal-Democrats) has vacillated between support for nuclear power, shale gas, CCS and renewables. Nuclear power and shale gas benefit the most from political support, as evidenced by the tortuous electricity market reform process over the last four years which seems to be an attempt to underpin new nuclear build whilst avoiding the appearance of subsidising it and the almost gung-ho push for a rapid expansion of shale gas extraction based on US success in exploiting its domestic resources. It is clear that political motivation to support renewables falls far short of that on offer for other ‘chosen’ technologies. The growing rift between the two Coalition parties over the future of onshore wind, with the Conservative Party’s proposal to cap the future capacity of the technology is one such example. From the laudable but utterly vague slogan of becoming the ‘Greenest Government Ever’, in the space of just four years the Coalition has increasingly moved towards supporting nuclear power and fossil fuels through strong policy commitments, financial incentives and addressing regulatory barriers to their deployment. 

The implications for renewable deployment in Scotland

Scottish RET deployment is dominated and arguably dependent on onshore wind. This technology is also arguably the most contentious one primarily due to landscape and land use concerns. In Scotland as with other parts of the UK, there is growing opposition to the technology. This is not surprising. By 2012, there were already 160 operational wind farms in Scotland with another 152 under or awaiting construction and a further 235 pending a planning decision. A further aggravating factor is that developers are driven by the design of the ROS to locate onshore wind farms in sites with the best wind resource to maximise electricity generation (and thus sales) and subsidies. Typically, such locations are in those areas people appreciate for being non-industrialised but increasingly they are located close to urban areas where people live and work. With the bulk of deployment required to meet the 100 per cent of gross electricity consumption from renewable electricity sources (the 2020 RES-E target) anticipated to come from onshore wind this technology has become a very emotive and politicised issue. 

To combat this, the Scottish Government has increasingly centralised control over the onshore wind farm planning consent process via The Planning Etc. (Scotland) Act 2006, resulting in higher approval rates in comparison to the rest of the UK alongside support measures including community benefit provisions. At the same time, the Scottish Government has acknowledged the problems facing the technology through initiatives such as the core wild lands which will prohibit deployment in specified areas of natural value. However, opposition in addition to the reduction in suitable sites which can only concentrate deployment in increasingly contentious areas makes it difficult to see how this technology alone can continue to deploy at the scale required to meet the 2020 RES-E target, which equates to the need for a further 10GW of capacity over the next six years. 

This is particularly relevant given the barriers facing alternative RET deployment, especially the offshore options. Despite playing an active role in promoting the offshore wind and marine renewables (wave and tidal power) sectors, and additional devolved powers resulting in the Marine (Scotland) Act 2010, these are expensive technology options requiring long-term financial and policy support in conjunction with concerted and sustained effort by all stakeholders involved in the sector: the UK Government, the devolved administrations and other countries within the EU and beyond, regulatory and other statutory bodies, developers (typically multi-national and often state-owned to some extent) and supply chain companies, non-statutory organisations and the public who ultimately pay for sector development through their energy bills. In other words, these issues sit out-with any single countries competence to address in isolation. This is especially so for the immature marine RETs. Further, not all of the barriers or challenges facing these technologies lie within the Scottish Government’s jurisdictional control. These include transmission and distribution, the setting (and paying) of appropriate subsidy levels and policy or political risk (lack of a legally-binding 2030 target, control of the CfD FIT by Westminster). It is the latter point, in particular that can affect investor confidence that a viable market will exist for renewable energy post-2020. Looking at the other options, biomass for power generation has effectively been ruled out by the Scottish Government due to sustainability and public opposition concerns and the need for biomass to help meet non-electricity sectoral targets (e.g. heat). Hydro power and solar, due to the scale most likely to be deployed, will fall under the small-scale FIT that is driven and controlled by the UK Government. 

These are very real concerns. The implications for the Scottish sector are significant, with the recent loss of 480MW of new biomass plant and potentially up to 5GW of offshore wind. The developers behind these projects, including SSE, Forth Ports, SeaGreen and Scottish power, have publicly blamed UK policy risk, escalating costs and unavoidable technical and environmental problems. Currently, only the Beatrice offshore wind project has been awarded a CfD FIT (decided by DECC), representing only around 600MW. This is significant. Only by increasing experience learned from actual deployment in the marine environment via reducing technology risk and developing supply chain capabilities will the sector be able to achieve real cost reductions. 

4.       Scotland’s future: A post-referendum vision of the renewable electricity sector 

In the event of a yes vote, the White Paper on Scottish Independence sets out the current Scottish Government’s post-referendum vision for the shape of the energy sector. This proposes that Scotland will continue to participate in the existing GB-wide market for electricity and gas under the existing single Transmission Operator (National Grid). In return for Scotland’s significant renewable energy resources, existing generation capacity and the transfer of electricity to the rest of the UK (rUK), the Scottish Government would seek “… a far greater degree of oversight of the market arrangements for energy and firmer safeguards over Scottish energy security”. The overall approach to energy would be directed by the establishment of a jointly controlled Energy Partnership with Westminster, with a new independent national regulatory body taking over the relevant functions for Scotland but working closely with the pan-rUK regulator OFGEM (or any replacement body). Importantly, in return for Scottish renewable energy and security of supply benefits, the UK Government would continue the system of shared financial support for renewables and capital costs for grid infrastructure across the approximately 30 million households in comparison to less than 3 million in Scotland.  

Leaving aside the counter claims, as exemplified by the UK Government’s document Scotland Analysis: Energy (although this is not to question the validity of these counter-claims), how would these proposals impact on Scottish renewable electricity policy and RET deployment? Primarily, this is an issue of influence with regard to the Scottish Government being able to meet their policy objectives. The following points highlight this: 

The existing GB-wide energy market will remain essentially the same:

Will an independent Scottish Government be able to change issues that it believes are disproportionately impacting on RET and associated infrastructure deployment such as locational charging, grid access issues or the setting of price controls for network companies? 

Retaining the EMR CfD FIT mechanism:

As mentioned previously, the CfD FIT is a highly centralised subsidy mechanism (more so than the RO/ROS) that by design has already stripped existing devolved powers from the Scottish Government (setting of bands, differentiation of subsidy levels and the setting of eligibility criteria). In addition, the problems of the new mechanism are well documented. As recently as 2012, the House of Commons Select Committee on Energy and Climate Change recently announced in an investigation into the EMR proposals that “… arrangements have become so complex that the proposal has now arguably become unworkable”. How much influence would the Scottish Government be able to exert over the mechanism, and would this result in a redesign or reorientation of the mechanism to favour Scottish aims? Further, the CfD FIT introduces problems of market participation, route to market and liquidity. This benefits the ‘Big Six’ vertically integrated energy companies that dominate the UK energy sector, or ‘Big Three’ in Scotland, but will particularly impact on small and independent generators. It is doubtful whether any increased powers of oversight for an independent Scotland will enable it to change the way the CfD FIT and the EMR process fundamentally operates. Of importance, however, the initial report of the Delivering Renewable Energy Under Devolution project suggests that there is no fundamental disagreement about energy in general and renewable energy in particular between Westminster and the devolved administrations with regard to the prevailing pathway: “The evidence of our research suggests that… both Scottish and Welsh Governments are broadly comfortable with an energy development pathway that consists of large developments, international investment and conventional generation technologies”. 

Policy risk

Retaining essentially the same arrangements opens up Scottish renewable electricity policy objectives to continued policy risk from the UK Government. In other words, risk out-with its control or influence that can and does affect investor/developer confidence, increasing the costs and/or reducing the optimal deployment of RETs. Examples include the favouring of nuclear power and gas, particularly shale gas. Of course, governments change but all three main political parties in what would be the rUK, Labour, Liberal-Democrats and Conservatives have signed up to an expansion of nuclear power and/or a drive for shale gas extraction. Arguably this is already a very real risk, with exposure to EU policy risk, for example the difficulties encountered in setting a meaningful 2030 renewables target. What influence could one (small) country have on the overall EU policy direction, for example, in setting more meaningful post-2020 targets? 

RET deployment issues

Related to the above, how would retaining the status quo help address the problems already facing RET deployment discussed in section 3? With onshore renewables (onshore wind and biomass) facing technology-specific limitations to deployment, this is particularly relevant for the more expensive and technologically immature options including offshore wind, wave and tidal power. Again, retaining the EMR means that these technologies would face subsidy reductions in the near-term, and as with the RO, the CfD FIT mechanism fails to comprehensively address all the barriers to deployment including policy risk, planning, grid and public opposition. 


In discussions of influence, the critical issue then is how the proposed Energy Partnership will work, alongside the interaction (and different roles) of the proposed independent Scottish and pan-rUK regulators. Talk of ‘oversight’, realistically means some form of negotiation and cooperation over the separate countries objectives, inevitably leading to compromise with interesting implications for the UK Government’s desire for nuclear power and shale gas on the one hand and the Scottish government’s renewable energy goals and opposition to nuclear and (apparently) shale gas on the other. 

5.       Conclusions 

In summary, the proposals set out in the Scottish Government’s vision for post-referendum renewable electricity policy do not constitute a significant difference from the status quo. 

(a)      There is little appetite for change in this area, whether or not independence is achieved.


(b)      It is difficult to see what beneficial changes will occur in the event of independence for key RET deployment, particularly those technology options that require long-term support and promotion across a number of sectors (industry, government and research). Critically, independence will not help address the current barriers facing RET deployment to date.


(c)      There is not as much scope for influencing policy under the proposals as one would expect in the event that Scotland becomes independent, due to the retention of existing arrangements and the centralised nature of the CfD FIT mechanism. Whether independent or not, Scotland would still need to take into account renewable energy policy at the EU level. Further, there is the very real risk that Scottish renewable electricity policy would remain exposed to UK policy risk and doubts remain over the Scottish Government’s ability to influence outcomes in its favour. 

What is clear is that there is an increased need for a debate on the future of renewable energy and energy policy in general, irrespective of the independence referendum. Given that the major political parties opposing a yes vote have all offered further devolution in the event that the Scottish public vote to remain within the UK, this is all the more relevant. 

This leads, however, to a key distinction between a vote for independence and a vote to remain in the UK. What role and how much influence will an independent Scottish Government have in any subsequent negotiations? This is important. With the major political parties offering substantial new devolved powers if the Scottish public vote no, this opens up a new space to negotiate irrespective of the referendum outcome. The key difference is that if Scotland’s constitutional position remains unchanged, then there is no real guarantee of the further devolution of powers or the type and nature of the powers or in the potential outcomes of any such debate. In other words, although some form of negotiation will occur it will not be the same process as those taking place with an independent Scotland. Scotland will be in a stronger position when it comes to the inevitable compromises. Or will it? 

Finally, one particular issue completely unexplored to date is whether Scotland actually needs a 100 per cent equivalent target of gross electricity consumption from renewable electricity sources by 2020. Given the equivalent will come from fossil fuels and a declining nuclear power base, it is hard to fathom the environmental and sustainability aims of this target. Further, reaching this target would result in more electricity needing to be transmitted out of Scotland, whether to the rUK or abroad. Ultimately it is the consumers who would foot the bill, irrespective of which side of the ‘border’ they sit and experience suggests that the energy companies would not rush to return any profits to the consumer. 

Dr Geoffrey Wood is based in the Centre for Energy, Petroleum and Mineral and Law and Policy at the University of Dundee. 

This blog is based on a forthcoming paper: Post-devolution policy and practice for renewable electricity technology deployment in Scotland: Is the independence referendum that important?

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