Scotland Becoming Global Leader in Renewable Energy
by Bob Shively, Enerdynamics President and Lead Facilitator
When I travel on vacation, I always enjoy learning about the energy situation in the countries I visit (much to my wife’s amusement, who often asks me “why are you taking a picture of that?”). On a recent trip to Scotland, I learned about a country that is well on its way to becoming a world leader in renewable energy.
Already generating 68% of its electricity from renewable sources, Scotland expects to achieve its goal of 100% renewable electricity by 2020. But Scotland is not planning on stopping there. It also has goals of 11% renewable heating by 2020, 50% total energy from renewables by 2030, and a phase out of gas and diesel passenger vehicles by 2032. Interestingly, this is all being driven by a government that has limited powers given Scotland’s status as part of the greater United Kingdom (U.K.), which controls energy regulation and market structures via the U.K. parliament in Westminster, England.
Here is a quick overview of the Scottish energy marketplace:
- Scotland is part of the larger United Kingdom gas and electricity marketplace, and the gas and electric grids are integrated with the grids in England and Wales.
- Grids are owned by investor-owned utilities and are regulated by U.K. energy regulator Ofgem.
- While regulation is set at the U.K. level, planning has been devolved to the Scottish government, allowing it to control approval of new power plants and transmission lines.
- Most of the electric infrastructure in Scotland is still owned by vertically integrated utilities, operating each sector (generation, transmission, and distribution) as separate companies.
- Retail gas and electric supply is open to full competition and all customers buy from retail marketers. More than 40 retail marketers are active in Scotland.
- A controversial new transmission line, the Beauly-Denny 400 kV line from northwest Scotland to near Edinburgh was completed in 2015 to carry renewable power from the windy Highlands to the population center.
- Scotland typically exports close to 30% of its generation to the English grid but does depend on England for power on rare days where there is insufficient wind generation to cover Scottish loads.
- A new high-voltage direct current (HVDC) transmission line is proposed from Norway to eastern Scotland to tie Scotland into the greater European electricity marketplace. Scotland has visions of becoming a major renewables supplier to Europe.
As you can see from the above graph, Scotland is blessed with significant wind and hydro resources (blessed at least from an energy standpoint, maybe less so if you don’t like walking in rainy, windy weather!). Scotland also has significant biomass resources that will contribute to its renewable heating goals. Significant additional untapped renewable resources are available; Scotland is well on its way to developing large amounts of offshore wind generation and is becoming a world leader in tidal power development.
But the Scottish government does have its concerns. Given the structure of the U.K. marketplace, many believe that energy rates have risen well beyond acceptable levels and that the energy network companies' profits are too high. Indeed, government statistics indicate that over 30% of the population is living in fuel poverty (defined as having to spend over 10% of their income on household energy costs). But since regulatory policy is set by the U.K., Scotland is limited in how it can address network charges or prices charged by competitive retailers.
Instead the government focuses on helping consumers use energy more effectively. Scotland is creating a government-owned energy retailer/energy services company that focuses on low-cost household energy supply, energy efficiency projects, new heating technologies, and local energy projects such as district heating. The company may also issue renewable energy bonds to help fund ongoing renewable generation projects. It is hoped that a non-profit company focused on consumer needs instead of profits can address current issues with the energy markets.
There are many paths to a renewable energy future that also take consumer needs into consideration. Scotland has studied its unique situation and concludes that strong government involvement is warranted. This is helped by a national culture that believes more in collectivism and less in the pure capitalism currently in vogue in England. As events unfold over the next few years, it will be interesting to observe how well Scotland achieves its two goals of addressing energy poverty while becoming a world renewables leader.
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