Launching the UK Government’s Energy Paper analysing the potential impact of independence on Scotland’s energy, Edward Davey MP, Secretary of State for Energy and Climate Change, made the positive case for the UK’s single energy market, showing how independence would increase people’s energy bills.
Speaking to a conference of energy industry stakeholders in Edinburgh, Edward Davey argued that because the single UK energy market is ten times the size of Scotland’s energy market, Scottish energy bills are lower. He listed a range of reasons, including the way investment in transmission and distribution networks are currently shared across the whole of the UK, to the way the subsidies for energy distribution in remote rural areas like the Scottish Highlands and Islands are currently paid for by all British consumers not just Scottish bill payers.
The UK Government’s analysis shows that energy bills in an independent Scotland would be higher by at least £38 a year and perhaps by up to £189, once the full cost of supporting renewables are included.
In addition, if the full costs of supporting large scale Scottish renewables fell to Scottish bill payers the total potential increase would rise considerably for businesses as well to around £110,000 for energy costs for a medium-sized manufacturer in 2020 and £608,000 for a medium sized manufacturer in 2020.
These figures do not include the costs an independent Scotland would face for its share of decommissioning and legacy costs for old coal and nuclear industries and oil and gas infrastructure. Nor do they include the likely increased costs for consumers of reduced competition.
Secretary of State Edward Davey said: “The UK works better together, and our single energy market shows why. As a United Kingdom, we keep energy bills down for all consumers, regardless of where they live, and this works well, especially for people in Scotland.
“Without unrestricted access to the integrated GB market, the costs of supporting Scottish energy network investment, small-scale renewables and programmes to support remote consumers would fall on Scottish bill payers alone – this would add at least £38 to annual household energy bills and around £110,000 to energy costs for a medium-sized manufacturer in 2020.
“In addition, if the full costs of supporting large scale Scottish renewables fell to Scottish bill payers the total potential increase would rise considerably up to £189 for households and £608,000 for a medium sized manufacturer in 2020”.
“Right across the energy mix, Scotland benefits from being part of the UK’s strong, stable consumer and tax base – supporting thousands of jobs, creating new supply chains and cementing the energy sector as the engine room of the economy.”
The Secretary of State for Scotland Alistair Carmichael said: “This paper shows how the broad shoulders of the UK benefit Scotland – and how the rest of the UK benefits from Scotland being part of it.
“Sharing the cost of research and infrastructure keeps fuel bills down in every part of Scotland, from the big cities to the most remote communities.
“Scottish ingenuity and innovation helps the UK lead the way in developing a new energy mix for the future.”
The analysis breaks down the costs as follows:
- up to £6 billion from UK investment in electricity transmission and distribution networks (almost 30 per cent of total GB upgrades over the next seven years);
- some £560 million (28 per cent of the total) of GB’s support for the renewables sector in FY12/13; and
- around £92 million (2009/10 prices) of approved spending between 2014/15-2020/21 for supplying gas to remote Scottish communities under the Statutory Independent Undertaking arrangements;
- around £54 million in 2013/14 (2013/14 prices) to support the infrastructure needed to distribute electricity over remote and sparsely populated areas in the north of Scotland under the Hydro Benefit Replacement Scheme.