13 January 2011

S3M-7693 Electricity Market Reform

The Deputy Presiding Officer (Alasdair Morgan): The next item of business is a debate on motion S3M-7693, in the name of Jim Mather, on electricity market reform.

... ... ...

Stewart Stevenson (Banff and Buchan) (SNP):

I was delighted to respond to Liam McArthur's motion on renewable energy on 28 October. In my speech on that day, I focused on the fossil fuel levy, which has been part of the discussion today. It is slightly disappointing that, with 50 minutes to go in the debate, I am the last speaker in the open part. I am, however, happy to use as many of those minutes as the Presiding Officer allows me.

Today, I read a statement by Georg Adamowitsch. He said:

"The North Sea has different conditions and potentials for the generation of renewable energy. Scotland is a fine example of how different offshore technologies (wind parks, wave and tidal technology, onshore potentials, various wind potentials) can be combined to form a coherent approach."

Of course, if we want more and more of the energy that is used in the UK and Scotland to come from renewable sources, that means implicitly that the shift will be towards electricity. Therefore, it is right and proper that we focus on transmission of that electricity from where it is generated to where it is required.

There are, of course, a number of low-level issues that will be discussed on another occasion, such as the fact that if we are to have electric cars, we must also have local delivery of electricity for them to use. Today's debate is much more about transmission over the high-voltage network, which involves minimising transmission losses so that we can deliver from one end of this island to another.

Liam McArthur: I hope that my intervention will help Stewart Stevenson to get through the 20 minutes that are available to him. Transmission is an important issue, but will he touch on the importance of storage? Everyone who has spoken in this debate has been guilty of glossing over that issue, which involves issues around transport and other factors.

Stewart Stevenson: I am not sure that the Presiding Officer responded to my suggestion that I should speak for 20 minutes—

The Deputy Presiding Officer (Trish Godman): We could suspend.

Stewart Stevenson: Hopefully, not by a tender part of my anatomy.

In response to Liam McArthur's point, it is quite interesting to note that one of the storage mechanisms that is mentioned in the Redpoint Energy report is pump storage. Electricity is going to be a key part of producing hydrogen, which might turn out to be one of the main fuels of choice for transport in the future and, of course, there is a range of challenges in relation to how one stores hydrogen because, being the smallest atom that exists, it sneaks through almost any metal and dissipates rapidly.

I will turn to issues that are a little more parochial. In Aberdeenshire, we have some of the highest transmission charges in Scotland, at some £20 per kilowatt, which is in contrast to the subsidy of over £6.50 per kilowatt that is available in the south of England. That does not seem to be fair, and it does not seem to serve the interests of any part of these islands. As Georg Adamowitsch's contribution to the debate illustrated, Scotland has a huge potential to be the renewables powerhouse of Europe, which will benefit Europe and the UK and will, fundamentally, create economic opportunity for Scotland. We have won the energy lottery again, so it is important that we have in place the right policies and practices that will allow us to capitalise on that.

We and the UK Government share a 2050 target of an 80 per cent reduction in carbon emissions, and the effective generation and delivery of electricity is vital to that.

A huge proportion of the UK's gas supply comes ashore in my constituency adjacent to Peterhead, and there is a gas power station in Peterhead itself. It has been very disappointing that because the charges are so great, there is a real risk that one of the generation units could be closed. The unit has to pay £29 million a year for access, whereas an identical power station in the London area would be paid £3 million to generate the power that is required.

There is a broad consensus among energy producers, business groups and trade unions that locational transmission charging is no longer appropriate, and we very much welcome that. Broadly, I have heard no dissenting voices on that, and the issue has now been picked up in the UK Government's consultation. It is a shame in some ways that we did not get to that sooner.

As there are some 26,000 potential Scottish jobs in renewable energy, it is important that we make progress and move away from a model quite distinctly different from that which is used elsewhere in Europe. The Scottish Government has continuously pressed for a change in that regard. As Scotland generates some 12 per cent of the UK's electricity but is forced to pay some 40 per cent of the transmission costs, significant change is in the interests of everyone in these islands.

There has been one disappointment that I have found in my research for which I have not really found an answer. I had thought that there were significant transmission losses when electricity was pumped over long distances, but there is a clear assumption, even in the UK Government's consultation document, that what you put in is what you get out at the other end. I am obviously wrong on that, and I have been corrected by reading the UK Government's document.

It has been entirely appropriate to take a consensual approach on this subject. It is fundamentally clear that any policies in this area will outlast the term in office of any Government in any part of these islands; it is probable that a series of Governments will continue to engage in the policies that are set as a result of the current consultation. It is important that we all contribute, and that we express clearly and unambiguously today the needs of Scotland and the opportunities that we have to provide for the energy needs of our neighbours elsewhere in these islands, and further afield through interconnectors to other countries in Europe.

I will address—perhaps in a slightly contentious way—the point that Stuart McMillan raised about the performance of individual managers in banks, whether those are green banks or otherwise. I came into politics to purge myself of the taint of having worked for a bank for 30 years. We should perhaps start to call bonuses "performance-related pay" and they should perhaps be taken away from a person's pay if that person does not deliver. If we consider the issue in that sense, performance-related pay is not a bad idea, provided that it delivers for the public good and for customers, and is focused on the outcomes that an individual has delivered. In any case, it should be paid only from profits, should there be any.

I will draw my remarks to a conclusion, Presiding Officer, to—as I can see—the great relief of many of my colleagues in the chamber. I welcome the support that I heard in Liam McArthur's reading of his amendment, which confirmed what I took from it. His party can deliver a positive contribution in Government at Westminster via the UK Government's consultation, to give us equitable access and go a little way towards offsetting some other areas of disappointment.

I particularly welcomed Chris Huhne's recognition yesterday that the SNP Government is led by one of Europe's leading energy economists. It should be no surprise that our First Minister has long been engaged in criticising the access regime and the effects that it has on Scotland and on energy supply in the UK as a whole. The existing process of charging must change. I am happy to support the minister's motion—and to allow others to try to fill the time.


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