Ministers, businesses, and the public have been alerted to the potential risk of losing up to £30 billion worth of planned investments in Scottish renewable energy projects. This warning comes as the government considers implementing zonal energy pricing proposals later this month.
Currently, more than 10GW of onshore wind projects are in Scotland’s development pipeline, according to recent findings from the onshore wind sector deal. Independent consultancy firm Biggar Economics conducted research for the Fairer Energy Future campaign, examining the economic benefits of delivering these projects to Scotland.
The analysis suggests that for every 1GW in developed countries between 2030 and 2035, around 800 building jobs would be done, as soon as a complete functional reaches another 200 operating jobs per GW. Today, Scotland's onshore area supports more than 12,000 jobs, many of which depend on the approval of this development pipeline.
When we talk about onshore wind energy, each gigawatt (GW) comes with a significant upfront cost of about £1.5 billion. Over its 30-year lifespan, the total investment can soar past £3 billion per GW. This means a staggering £30 billion in economic benefits and the creation of roughly 8,000 new jobs for Scotland's economy.
Sadly, these ambitious plans are hitting some serious roadblocks because of the uncertainty surrounding the proposed zonal energy pricing. The UK government is in the midst of considering significant reforms to the electricity market in Great Britain, led by the Department for Energy Security and Net Zero. Stakeholders in energy and infrastructure from all over the UK, including groups like Scottish Renewables, UK Steel, and OnPath Energy, have expressed worries that these proposals could impede the essential investments required for renewable energy. With the energy transition needing urgent action, any delays caused by vague policies are perceived as a major setback.
The Fairer Energy Future campaign is pushing for a fresh approach called ‘Enhanced National Pricing.’ This stands in stark contrast to the regional pricing model, which could lead to unfair energy costs for both consumers and businesses throughout Great Britain. Instead, the campaign is all about promoting a more equitable and unified solution that keeps energy prices fair while also supporting the shift towards renewable energy.
Commitments of Fairer Energy Future
The Fairer Energy Future campaign has laid out some important steps to create an energy system that’s fairer, greener, and more affordable for both consumers and businesses. Here’s what they’re proposing:
Boosting price competition in short-term markets: This means taking a closer look at retail, wholesale, and balancing markets to tackle any unfair market power and stop price gouging, especially during times when the system is out of balance or overly reliant on gas.
Reforming interconnectors: There’s an urgent need to reform how we plan, fund, and operate interconnectors to make energy trading more efficient and secure. This includes weaving these systems into the energy strategies we need post-Brexit, working together with neighboring markets, and improving cross-border trading.
Revising costs on consumer bills: The campaign is calling for a fresh look at how we handle environmental levies and fixed charges, suggesting we might want to shift towards carbon-based or more progressive general taxation. They’re also recommending a thorough review of the Renewable Obligation Certificate (ROC) Scheme, exploring possibilities for the government to either buy out ROCs or transform them into Contracts for Difference (CfDs) through auction processes.
By implementing these practical steps, the campaign believes we can create an energy system that operates more effectively, paving the way for a cleaner, fairer, and more cost-effective energy future for everyone.
Opposition to Zonal Energy Pricing
Critics of zonal pricing suggest that it could help the UK meet its net zero goals, but research indicates otherwise. Significant renewable investments and thousands of associated jobs are at stake if these proposals proceed.
A spokesperson for Fairer Energy Future explained, “Proponents of a zonal energy pricing system argue that it will help the UK reach net zero. On the contrary, the latest research shows that billions of pounds worth of renewable investment and thousands of jobs would be at risk if these proposals are greenlit by the government.
Following the uncertainty of Brexit and the pandemic, including wars on the continent which have driven up energy prices, it’s clear that now is not the time for more risk for business.
Our ‘Enhanced National Pricing’ proposal provides a more suitable and sensible alternative to Zonal Pricing. It’s fairer, cheaper and greener, getting us to clean power by 2030 without the uncertainty and unknown zonal pricing it brings with it.”
The spokesperson concluded by emphasizing the importance of economic growth, jobs, and productivity, stating that Enhanced National Pricing is the far better solution during this critical period of energy transition.
The campaign has received backing from leading manufacturers and energy organizations such as UK Steel, Ceramics UK, and OnPath Energy, who are urging the government to consider the risks and opt for a more balanced, national pricing framework to ensure a sustainable and equitable energy future.
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