As the Scottish independence referendum looms (18 September), renewable energy in general — and wind power in particular — remains a key battleground for both campaigns.
Scotland's population makes up only 8.4% of the UK total, but the partly devolved country provides more than a third of the UK's renewable electricity generation and its 4.44GW of operating onshore wind makes up 64% of the UK onshore wind total. In the pipeline is around 11GW more onshore wind.
Scotland's share of operating offshore projects is smaller, at just 190MW of the total 3.65GW and only another 7MW currently under construction in Scottish waters. However, of the 5.51GW of consented but yet to be built offshore projects, 1.94GW is off Scotland.
UK capacity: Operating wind farms in Scotland and England
Recent opinion polls have shown the gap between the independence "yes" and "no" votes narrowing and the emotional temperature rising. The profound political differences between Scotland — an energy exporter - and the London-dominated south are reflected in attitudes towards renewable energy. The Conservative-led UK government has become less favourable towards onshore wind and more pro-nuclear. But Scotland wants 100% of its electricity to come from clean non-nuclear sources by 2020. Indeed, the governing Scottish National Party (SNP) sees Scotland as a "Saudi Arabia of renewable energy" within an integrated UK-wide electricity market.
Politicians and civil servants on both sides of the border have been staking out their bargaining positions should the referendum result in Scotland seceding from the UK. But even if the Scottish people vote to stay within the union, which dates back to 1707, further devolution of powers looks inevitable.
According to the unionists, Scotland cannot simply go it alone after more than 300 years of integration. Pricey renewables and declining oil production will undermine a central plank of a new Scotland's economy - energy, they say. Moreover, a UK shorn of Scotland may choose not to buy Scottish electricity, the British government's Department for Energy and Climate Change (Decc) warned in April.
Much is uncertain regarding fundamental economic and monetary issues such as whether a separate Scotland would have the British pound, how much of the UK's debt it would assume, and even whether Scotland would remain in the European Union.
For many businesses, the vote and any subsequent transition is indeed risky. "Whatever happens in the referendum this September, there's a huge amount of uncertainty around the framework that will underpin the future development of renewable energy," says Niall Stuart, CEO of trade body Scottish Renewables.
Kirsty Macpherson, who heads the energy and climate change group at Edinburgh law firm Gillespie Macandrew, says "a good chunk" of any meeting with their London-based clients these days is about Scottish independence. "People are starting to get more twitchy," she says. "No one really expected it to be a yes vote, but suddenly it's a lot closer than anyone anticipated."
Back in February 2012, energy giant SSE, one of Scotland's largest companies and a major wind player, acknowledged the obvious. "The forthcoming referendum increases the risk of regulatory change and legislative change with regard to the electricity and gas industry in Scotland," it said. Unionists trumpeted the statement as proof that independence would be bad for the economy. Similarly, banking giant Citigroup noted the uncertainty of public funding for renewables and that subsidies to meet Scotland's renewables target would be "at grave risk" with independence.
Others have been more guarded, publicly. "We do believe the Scottish government is very supportive of offshore wind," notes Jinho Paik, UK representative for offshore wind development at Samsung Heavy Industries, which is considering an offshore manufacturing hub in Fife, Scotland. "Independence itself is not a big issue for manufacturers," he said. However, Samsung has yet to select a Scottish site.
Last October, Gamesa executive chairman Ignacio Martin conceded that independence could alter the company's plans to build a factory in Scotland. "(But) we believe that in the end, there won't be any macro-economic change (if Scotland secedes)," he said. "If Scotland isn't part of the European community ... If Scotland doesn't use the pound ... If, if, if. For sure it will affect the offshore business, but I don't think there will be a major change."
So can Scotland, or the UK without Scotland, keep the lights on if there's a yes vote? If the UK electricity market remains integrated, what would happen to renewables incentives, given Scotland's smaller population base, as well as trading, system operation and regulation?
There are few relevant parallels whereby a country with a major penetration of variable renewable energy has seceded, notes David Toke of the University of Aberdeen. Nor has the SNP been specific about its vision of an integrated electricity market. If there is a yes vote, the structure would be subject to complex political negotiation as Scotland separates over the 18 months following the September referendum.
Has there been a lull in wind investment? Kieron Stopforth, an analyst at Bloomberg New Energy Finance in London, scrutinised the consultancy's data. "There's no discernible slowing in investment in Scottish wind at this point," he told Windpower Monthly. "More important factors driving UK renewables investment are the renewables obligation and the upcoming transition to the contracts for difference scheme" under the UK's electricity market reform (EMR). The reform is seen as less favourable for green energy than the current set-up.
"(But) this could all change if there is a 'yes' vote," says Stopforth. "We'd expect to see a drop in investment until the UK-Scotland independence settlement was worked out. If Scotland becomes independent, it unleashes this massive negotiation that has to take place - currency, business arrangements, Scotland's share of oil and gas. At this stage it's impossible to know what the energy sector would look like." Negotiations could include a plan tailored for renewable energy, or the sector could just become a bargaining chip.
The British government's report, Scotland Analysis: Energy, argues that consumer bills would rise in an independent Scotland partly because of renewables. "The Scottish consumer would see their energy bills rocket if they have to pay for Scottish renewables alone, without contribution from the rest of the UK," warned UK energy secretary Ed Davey in April.
Toke disagrees. He and the other authors of the report Delivering Renewable Energy Under Devolution (Dreud) now believe that an independent Scotland could achieve its 100% renewables target more cheaply than if it stayed in the UK. From mid-2020, electricity could be delivered more cheaply to Scottish consumers than to those south of the border, they say.
The report first concluded, in early 2013, that reaching the Scottish government's 100% renewables target would be more expensive for an independent Scotland than if it stayed part of the UK. The authors made their U-turn, said Toke, based on the EMR 2017/8 renewables incentive levels and the projected cost of the UK government's new nuclear reactors, announced later in 2013.
Regarding who would pay for renewable projects installed before independence, Toke said that it would be "fanciful and legally dubious" to have an independent Scotland do so alone. "More practically, it's the British electricity majors who would suffer," he argues. The majors would want a "grandfathering in" of renewable obligation certificates (ROCs) for existing Scottish investments, he suggested, and probably for all projects installed prior to independence.
Peter Strachan, of Aberdeen's Robert Gordon University and a co-author of the Dreud report, points out that the UK has an electricity crisis, but Scotland has a surplus. "For the first time in ages, (the UK) is facing the very real prospect of blackouts, or a significant spike in electricity prices," he says. Indeed critics of London's scaremongering argue that an independent Scotland is likely to continue selling electricity to the UK precisely because much of it will be onshore wind, and cheaper than imports from Iceland or the continent.