For those interested in European politics, the last year has been an interesting one, not least due to last week’s Scottish referendum to vote on whether the country should break away from the UK. However, Scottish independence had repercussions beyond the devastation to the flag of the United Kingdom.
If Scotland had voted in favour of independence, Bloomberg New Energy Finance forecasted that such a move would damage clean energy investment, “at least in the short term, as developers and banks are gripped by uncertainty over the future shape of the power market and incentives for renewables.”
“During this period of negotiation, with oil, power and renewables support under discussion as well as the currency, defence and national debt, clean energy investors would feel less than confident about future prospects, and decisions will inevitably be delayed,” Kieron Stopforth, an analyst at BNEF said of the possibility.
“These delays could hit projects in the whole of the UK for a time, but the longer-lasting effect would be on those in Scotland if they are unable to compete for support under the Renewables Obligation or Contract-for-Difference schemes.”
However, with the ‘No’ vote rendered last Thursday, existing subsidies supporting the clean energy sector will remain intact, continuing support of wind and solar power projects.
Electricity in Scotland is dealt with by the United Kingdom as a whole — ie, not in Scotland — one of the many reasons that an independent Scotland would have heralded a massive period of unease and shift for energy companies and investors. With Scotland breaking away, the many agreements and policies would have had to be redrawn. Understandably, many projects had been put on hold awaiting the pending result of the referendum.
According to Bloomberg, “leaving the union with the UK would have raised questions about the future” of payments that obligate utilities to buy clean energy to support the renewable energy industry.
By choosing to remain tethered to the U.K., Scotland removed a major question mark underpinning 14 billion pounds ($23 billion) of investment and 12,000 jobs in renewable energy.
“We are delighted with the result,” said Ian Warwick, chief executive officer at Deepbridge Capital LLP, an investment manager in renewables. “It allows us to now progress plans to invest further in Scotland. Scotland is full of great entrepreneurship and innovation and is a great area for renewable energy projects, all of which require investment, which we can now continue to facilitate.”
With the ‘no’ vote securely settling matters for the next decade or so, investment into Scottish energy can again continue apace. Bloomberg quotes that the country currently accounts for 43% of the UK’s wind power capacity, and given the region’s propensity for favourable wind energy conditions, that figure is only likely to rise as we continue moving forward.