A SCOTTISH STATE OWNED ENERGY COMPANY
On the 23rd of October 2013 we saw the result of a company (Ineos) playing fast and loose (because it could) with Scotlands major Petro-Chemical site at Grangemouth. We also saw a union with Labour party decision makers behave in a way that played into the hands of Ineos.
As a Scottish society, do we wish to see this kind of chaos raise its head every few years or do we want a situation where this core service is nationalised and the union on the site have a no-strike deal and have a pay board similar to the Police in order to ensure that wages aren’t eroded by inflation each year? I would say the latter would be the least cost and least chaos in the long run. However, security like that costs. Or does it? I’ll let that question cross your mind for a while.
This document represents the beginning of a discussion that may end up with the birth of Scotlands state owned energy company when independent so that we can all benefit from living in an energy rich country.
For the sake of future discussions I offer the name “GenAlba” as the trading name of the company. This name hasn’t been checked against any company databases and apologies go to any company with a similar name.
A Scottish State owned Energy Company
First, let’s answer the obvious question; why have a state owned energy company at all. Not so easy because the mere subject of energy in any country is a multi faceted one and there are many factors to consider.
Scotland produces more energy than it burns. There, that was simple, but that energy is produced via nuclear, gas turbine, oil turbine, coal, hydro and wind power. That mix of sources keeps the wheels turning. In a few years time with regard to the climate change targets, many of the older coal fired power stations will close. The target date is set as 2020. Not too far in the future when you consider it. I’m not going to delve too deeply into this as there are many topics to cover but the National Grid have produced a paper that goes much deeper and will answer many questions. http://www.nationalgrid.com/NR/rdonlyres/1D781F6A-1E62-4744-BE73-B82D8CB0E3E3/55374/ElectricityTenYearStatementWayForwardandStakeholderFeedback.pdf
Through time that mix will alter as we explore and develop the renewable potential that Scotland has in wind, wave and tidal power. Just through these three elements, there is ample power if harnessed properly to drive Scotland and have loads left over to sell abroad. http://www.nationalgrid.com/uk/Electricity/Data/Realtime/Demand/
But what about the trillions of tons of coal that we’re sitting on? At the moment due to reducing carbon output targets, coal fired power stations are due to be phased out as mentioned before, but there is a proposed technology that captures the carbon and turns that into a form that can be pumped to redundant oil pipelines and force back into the porous rock under the seabed of exhausted oil or gas fields. This does have a lot of common sense attached to it but as with all technologies it does have its critics.
If carbon capture coal fired power stations could be brought on stream, these could add to our “renewable” mix even though burning a carbon based fuel is not in itself renewable. The attraction would be the incredibly low carbon footprint of such a facility. http://www.sccs.org.uk/ It is not too far a step to imagine that oil and gas turbines could have a carbon capture setup but this hasn’t been talked about as far as I can see.
Nuclear is not attractive as a long term solution and even though the build of say, Hinkley Point in England is costed at just £15 Billion, the major cost involved with such a facility is the cost of reprocessing and storing waste and finally after the 60 year life, the huge cost of decommissioning the nuclear power plant. So in the long run, nuclear is possibly the most expensive way to produce electricity when the costs are calculated throughout its life (and death). It is my humble opinion that when the nuclear power stations have completed their lifecycle that they are decommissioned and no more of these white elephants are commissioned in the future. There are those that would disagree with me on this but thankfully they are becoming the minority.http://www.oecd-nea.org/ndd/docs/2000/sen-ndc2000-6.pdf
Energy security is a question of timing and that timing applies to both the technologies that are being phased out and those that are taking up the slack. The planning for that needs to be brought under one single body and that is possibly the greatest reason to have a state owned energy company. This would bring all future planning for energy needs and its geographic displacement under one roof.
At the moment, work is being carried out to upgrade the power lines that traverse Scotland but the most troublesome aspect of getting the power onto those lines is the “final mile” which is the point at which an electricity generator hooks onto the grid. That is relatively easy when that generator is a major power station but more difficult when it’s a coastal wind or wave or subsea generator field and the terrain is very difficult. This pushes up the cost of delivery of such an energy generation scheme. In the case of subsea, wave and coastal or offshore wind, that “final mile” may involve laying many miles of expensive subsea cables. Such a grid is necessary though to gain the ultimate savings to be made by producing energy from a source that’s effectively “free”. Yet again, another great reason for having such planning, cost sharing and effective provision under one roof.
3. Skills and manpower
The Renewables industry is in its infancy and finding and training manpower will be a major cost. However, many of the skills that will be required are similar to that used in the oil and gas industry. At the moment according to UK Oil & Gas;-http://www.oilandgasuk.co.uk/news/news.cfm/newsid/824
There’s some 28 Billion barrels of oil left to extract [edit – the remaining oil now dwarfs that figure produced by Ian Wood for the UK govt ]
That may take 40 to 50 years to extract. There may be other fields that haven’t yet been discovered containing much more oil, but as the worldwide trend is going to be a steady move away from an oil based society, it is possible that 40 to 50 years is in fact all the time we’ll have at any decent level. This means that there is going to be a large reduction in staff over say, the last 20 years of extraction. It would be sensible to base our long term planning on a technology that would make good use of that skill pool and plan major works to coincide with the run-down of various parts of the oil and gas industry.
4. Wholesale energy
At the moment the major players in the energy industry have consumers, Commercial and Domestic over a barrel. This is due to the greed model that has an ever increasing thirst for profit coming from any operation to keep investors and shareholders locked in. That model is ultimately unsustainable for society. If we remove this greed model from such a core service within the country, prices would naturally fall or could be kept at slightly below present levels and the profits fed into infrastructure to future proof the system of generators and power cables. “GenAlba” would be in direct competition with other energy wholesalers but would easily attract almost all customers in Scotland by offering prices that the traditional wholesaler could not compete with. I won’t explore international sales at this point but one can see that similar to Norway’s Statoil, such a business would have a place outwith our borders.
5. Petrol, Diesel and LPG
Last year we saw a reduction in fuel duty by the UK Treasury for some areas in the Highlands and Islands. That scheme is going to be widened to include other areas in the not too distant future. The problem that occurred at the time of the reduction was that the wholesaler increased the price and swallowed up the reduction for the end user. Not good. GenAlba would operate a complete link from refinery to petrol tank by operating as the wholesaler, delivery tanker operator and garage forecourt retailer. This means that taxation reductions would be guaranteed to directly reduce the cost of fuel in the forecourt for everyone. Any costs associated with doing this would be offset by an upsurge in economic activity and lower costs of food and other items and services due to reduced delivery costs. That upsurge would produce a greater tax take from individuals earning more and companies paying more corporation taxes.
“GenAlba” makes perfect sense for Scotland and will provide energy at a price more in keeping with that of an energy rich country. If it was attempted as a piecemeal plan and evolved over many decades, the final product would be less than ideal, however if built to encompass a pre-planned model, the benefits would be large, immense even. I have left “the elephant in the room” alone with regard to any form of investment in the oil and gas industry which Statoil is involved in but would be surprised if a state owned energy company did not take part in an industry that produces a very large revenue steam for Scotland.
Thank you for your interest.
David Milligan Lvss