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One day this summer a tugboat called Thor Goliath left Norway and made its way to the blustery west coast of Scotland. It was towing a pair of black plastic pipes, each as thick as a tree trunk and 620m long – the length of more than a dozen Olympic swimming pools laid end to end.
They were destined for an ambitious engineering project; a vast underwater cable that will link a seaweed strewn beach in North Ayrshire to the Wirral peninsula near Liverpool. Its purpose? To help transport renewable energy generated in windy, wave-lashed Scotland to households and businesses south of the border.
Yet work is starting on this £1bn cable, which will join Scotland and England like a thick black umbilical cord, just as the countries are contemplating tearing apart. And while Alex Salmond, the Scottish Nationalist leader, predicts a prosperous future for an independent Scotland as the “Saudi Arabia of renewables”, critics argue the biggest threat to the sector is independence itself.
A Yes vote in next week’s referendum would be “a disaster” for renewables, says Peter Atherton, an energy sector analyst at Liberum, a broker. “The Scottish National party have two major polices, one is this great push into renewables, the other is independence. The two are incompatible.”
There is no doubt that Scotland has made a successful push into green energy. It generated 36 per cent more wind power last year than the year before and is responsible for about a third of all the renewable electricity generated in the UK.
The subsea cable, a joint venture between ScottishPower Transmission and the National Grid, is testament to that success: there is now so much renewable electricity flowing out of Scotland that the two overhead lines that take it south of the border are full to bursting.
But at the minute, the Scottish renewables sector is supported by the whole of the UK. The owner of a typical wind farm sells electricity at a wholesale price of about £50 per megawatt hour and receives another £40 or so from the UK’s renewable obligation certificate scheme. That top-up makes the eye-wateringly expensive projects worth building in the first place. The cost of those ROCs is spread across all 30m UK households and businesses. Scotland, with about 8 per cent of the UK population, receives 30 per cent of the subsidies.
But the UK government says that, if Scotland leaves the union, it should not assume that money will necessarily keep flowing north – for future or existing projects. The UK would probably still import energy from Scotland, it has said, but those decisions would be taken on a “commercial basis”.
Nick Butler, a visiting professor at King’s College London and a former BP executive, believes that could be a body blow to Scotland’s renewables ambitions. Unlike Saudi Arabia, which is the lowest cost producer of oil in the world, he says Scotland does not have a unique cost or climate advantage in renewables. “It depends on public policy,” he says. “If the public policy’s there they can be good businesses, but you are dependent on that policy remaining in place – and I don’t think they could afford the renewable policy on their own, it is dependent on them being part of the UK market.”
The Scottish government contends it would be in the UK’s best interests to keep the single energy market and its “system of shared support for renewables and capital costs of transmission”. The UK needs Scottish renewables to meet its legally binding European Union targets, it says.
In truth, no one knows for sure what would happen, including the UK and Scottish governments themselves. These issues, such as questions over the currency and defence, would be thrashed out in the negotiations that would follow a Yes vote. In the meantime, investors are left with the one thing they hate most: uncertainty.
The share price of SSE, a Scottish energy company with renewables exposure, has fallen 3.3 per cent this month as the polls have narrowed. Infinis, a renewable energy company, has said it would not build two Scottish wind farm projects until after it knows the referendum result “and its potential effect on energy policy”.
Mr Atherton says that attitude has become typical as the vote has neared. “In the last year there’s been a marked slowdown . . . particularly in big-ticket items getting financial close.”
As for existing investors, he says, “the metal on the ground is the metal on the ground, there’s nothing you can do, you’ve just got to cross your fingers that either there’s a No vote or some sort of deal is hashed out that protects your revenue.”
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