Meeting of the Parliament 11 November 2015
I, too, congratulate my friend Mike MacKenzie on securing this important and timely debate.
Last year, I was delighted to host an event in Parliament with Heriot-Watt University on its energy academy. We heard about the wide variety of technological storage solutions being researched by the university’s talented team. Mike MacKenzie and Sarah Boyack mentioned some of that work in their speeches.
This is no academic subject. Last week we saw the practical consequences of not investing in energy storage. We are repeatedly told that blackouts are the stuff of science fiction, but last week they nearly became a cold reality—with the emphasis on “cold”. National Grid had to issue an emergency request for electricity due to an unexpected spike in demand. Its winter outlook report revealed capacity margins as low as 1.2 per cent, as Mike MacKenzie mentioned. The safe level is 5 per cent. A capacity margin is the average amount of extra electricity available compared with peak winter demand, so 1.2 per cent is worryingly low.
I was very pleased to hear that Mr Ewing had written to the responsible minister at UK level, Amber Rudd, to warn her against her complacency in the matter. It is well known that UK energy policy, which she presides over, discriminates against Scottish renewables; it is also well known that it discriminates against generators such as Longannet, which is being forced to close early because of unfair transmission charges. It is less well known how it discriminates against storage technology, another area in which Scotland can lead.
As Mr MacKenzie mentioned, that discrimination not only damages Scotland but contributes to supply issues right across the UK. As the WWF briefing for the debate says,
“The current UK energy market framework does not provide an adequate revenue stream for large storage projects, and there are no targeted support mechanisms.”
That point has been repeated to the Economy, Energy and Tourism Committee by other experts and by the generators themselves, notably Scottish Power and SSE.
We have two shovel-ready projects that are being held up by the UK Government’s policy failure on storage: the Cruachan extension, which is included in the national planning framework 3 as a nationally important piece of infrastructure; and Coire Glas by Loch Lochy. Between them, those two projects would bring pumped storage capacity in Scotland to well over 2GW by 2030. To put that into context, there is currently around 3.24GW of storage capacity in Britain, so those two projects alone would make a significant contribution, although they would still not bring us anywhere near Germany, which already has 7GW of storage, Spain, which has 8GW of storage, or Japan, which has 25GW of storage. Storage provides more flexibility, as those countries understand and as expert witnesses told the Economy, Energy and Tourism Committee. The Institution of Mechanical Engineers also said as much last year in its important report on the subject.
Managing supply and demand when it comes to electricity is a fine art and, when it has failed to balance supply and demand, National Grid has been forced to pay large sums of money just to maintain some kind of equilibrium. We are always hearing about the constraint payments to wind farms, the energy from which we all accept is intermittent, but it is not just renewable energy generators that receive those payments—they go to power stations as well. For example, in 2012-13 National Grid paid out £170 million in constraint payments overall, of which wind generators received just £7 million.
Now the public is becoming aware, with some degree of alarm, of something called demand-side balancing reserve, whereby National Grid pays large industrial customers not to use power. Those payments also run into millions of pounds and are set to increase, although there seems to be considerable secrecy around them.
Meanwhile, the UK plans to address the crisis by spending billions doubling the interconnectors with the continent and investing in nuclear energy. It would be so much easier and cheaper to allow Scotland to develop its strengths in renewable energy and storage potential, but only this week we learned that Amber Rudd, while implementing policies that cut off investment in Scotland’s renewables projects, is planning to pay to import renewable energy.
The UK Government and its regulator, the Office of Gas and Electricity Markets, are presiding over a system in which consumers are paying through the nose for a system that could have been invented by Lewis Carroll—it is quite simply absurd. One week we are paying firms to switch off, and the next week we are paying astronomical amounts to keep the lights on.