Utility Week

10 | 1st - 7th August 2014 | utILItY WEEK Head-to-head Scottish referendum IN I n September, people in Scotland will make one of the most important decisions in their history – whether to stay in the UK, or leave it and become an independent state. My department has already published its energy analysis of Scotland's place in the UK and how that would be affected by inde- pendence. This shows conclusively that right across the energy mix, Scottish businesses, industry and households stand to benefit from being part of a United Kingdom. Scotland is one of the world's energy hubs, with oil and gas in the North Sea and a thriving renewable energy sector; but being part of the UK is fundamental to the success of Scotland's energy industry. The size of the UK economy, the integrated market, our shared regulatory regimes and the scale of financial support create the right conditions for business from across the whole world to invest in our domestic energy industries. Scotland is better off as part of the UK, and the UK is stronger with Scotland as part of it. As part of the UK, costs of energy for Scottish consumers and businesses are kept down with costs shared across the UK for network investment, low carbon incentives and protection for remote communities. This includes up to £6 billion (for 2013/21) for electricity transmission projects in Scotland (almost 30 per cent of total upgrades across the UK); some £560 million of support for the renewables sector (28 per cent of the UK total) in 2012/13; and support to 690,000 North of Scotland domestic electricity consumers to protect them from the high costs of distribut- ing electricity over remote and sparsely popu- lated areas. Given the UK's fully integrated energy market is ten times larger than Scot- land's alone, these costs can be spread across 30 million households and businesses rather than paid for solely by those in Scotland. For instance, staying in the UK would keep future energy bills for Scottish households up to £189 a year lower and £608,000 a year lower for a medium-sized manufacturer. In the current system, I work closely with the Scottish government on energy issues; we have proved that can happen effectively and that the system works. Independence means "doubling up" in various areas: two separate states means having two separate regulatory systems, and so on. What's so effective about the current integrated system is that we've been able to keep prices lower across the UK and attract more investment at a cheaper rate. Although Scotland is a net exporter of electricity to other parts of the UK – with net exports ranging from 11 to 23 per cent of total Scottish generation between 2004 and 2012 – this represents only a small proportion of demand in England and Wales. This demand was met mainly by domestic generation, with the rest from imports – with net imports from continental Europe exceeding those from Scotland in 2012. Across a sample period from 1 April 2011 to 8 January 2014, imports from Netherlands (1.98 per cent) and France (3.05 per cent) contributed a higher proportion than imports from Scotland (4.59 per cent). That means in the event of independence, there would be no need for the continuing UK to support an independent Scottish state's energy costs to ensure its own security of supply. Even in a hypothetical scenario where there were no flows of electricity between an independent Scottish state and the rest of the continuing UK, there would only be minimal impacts on security of supply. The UK is one of the most attractive des- tinations in the world for renewable energy investment, particularly offshore wind. Busi- nesses have announced more than £34 bil- lion of investment in the renewables industry between January 2010 and February 2014 – more than £14 billion of which is in Scotland – with the potential to support about 12,000 Scottish jobs. However, it is only the broad shoulders of the UK that can support Scot- land's growing renewables sector. The scale of the UK economy provides an attractive environment for investment, which makes it easier and cheaper to achieve our shared energy goals: protecting our energy security while building a low-carbon energy mix and keeping bills low. An independent Scotland would have to attract investment to a smaller market at a higher cost, with a new regulatory regime with no track record. There are also the likely higher costs that will be incurred in balancing demand and supply across the electricity transmission system. Our long history of working together across the UK is creating the right conditions for future investment in our infrastructure, helping to build a stronger economy and a fairer society across the country. Ed Davey is secretary of state for energy and climate change Both Scotland and the UK will be stronger if they remain together, argues Ed Davey, UK energy secretary. Mar '13 May '13 Jul '13 Sep '13 75 50 25 0 Percent The courT of public opinion: polling Mar 2013-Jul 2014 Yes No Don't know Mar '13 May '13 Jul '13 Sep '13 THE COURT OF PUBLIC OPINION: POLLING MAR 2013-JUL 2014

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