Wales to set up own public energy firm after Scots Gov blows plan

A publicly-owned, not-for-profit energy company was the centrepiece of Ms Sturgeon’s main speech to the SNP conference in 2017.

She said it would be set up before the 2021 Holyrood election so that consumers would pay “as close to cost price as possible”.

She said the idea behind it was “simple”, with the state-owned company acting as a selfless middle-man between energy wholesalers and customers.

But after spending £500,000 on consultants and an outline business case, it was finally killed off last year.

Social justice secretary Shona Robinson said in September that the project had been “very, very challenging to do under devolution”.

The failure to create a state-owned energy company which could have sold the new ScotWind electricity to the grid and retained operating profits, has led to concerns that the nation will lose between £3.5 billion and £5.5 billion every year – about a tenth of the current Scottish budget.

Now it has emerged that the Welsh Government is planning to set up a publicly-owned renewable energy firm.

The company - yet to be named - will initially look at developing onshore wind farms on Welsh government-owned woodland estate, which covers 6% of Wales and is largely made up of hilly, windy sites.

Set up in response to energy insecurity, the cost-of-living crisis and the climate emergency, the new firm will launch in April 2024 becoming the only government-run company of its kind in the UK.

Pen Y Cymoedd, one of Wales' largest onshore wind farms, isrun by Swedish state firm Vattenfall and is capable of producing enough energy yearly to power 15% of Welsh homes.

The scheme delivers land rent, jobs and sizeable community benefit funds, but profits go back to Sweden instead of being reinvested back into Wales.

The Welsh government is now hoping to establish its own company that would see "significant" profits reinvested back into the community. Income would also go towards making homes more energy efficient and creating clean energy jobs.

The respected independence-supporting Scottish think tank Common Weal says the failure to capitalise on renewable energy profits by setting up an energy company is "arguably the greatest economic failure of the last decade".

At the start of the year, 17 ScotWind projects, with a combined potential generating capacity of 25GW, were offered new rights to specific areas of the seabed for the development of offshore wind power.

It says that as with Scotland's offshore oil energy boom, one of the main reasons for the rise of the Scottish National Party in the 70s, the overwhelming winner from ScotWind projects was privately owned supermajors such as BP and Shell, which has won nearly a quarter of the projects.

It produced blueprint for a National Energy Company that would own Scotland’s energy infrastructure and a Scottish Energy Development Agency to determine where future infrastructure should be built three years ago.

One of its authors, Dr Keith Baker asked the Scottish Government what powers the Welsh Government had that Scotland lacked and what it intended to to to secure the extra devolution rghts.

In response, Christine McKay of the Scottish Government's National Public Energy Agency and Future Trust said: "I would advise that it is not for the Scottish Government to comment on the powers that the Welsh Government has. As we have previously stated, it is our ambition to explore fully the opportunities across the energy sector for public ownership in an independent Scotland.

"In these circumstances, we would have full powers in relation to energy generation and borrowing and as such would enable Scotland to consider public sector involvement or ownership in key technologies."

Dr Baker responded saying: "This reply from the Scottish Government to an enquiry addressed to ministers of the Scottish Parliament is yet another feeble excuse for inaction. We know full well that they have the powers they need to establish an asset-owning public energy company, not least because we investigated them as part of writing our original policy paper.

Source: GCU

“We did not ask for 'comment', we were asking for statement of fact, and if they didn't have those powers, we would be lining up with them to demand they be devolved.

"The facts are plain and simple. The First Minister has twice promised a public energy company, and twice reneged on that promise. The Scottish Government wasted almost half a million pounds of public money on a feasibility study for establishing a retail-only company, which any expert worth their salt could've told them for free was a bad idea.

"Then the SNP and Greens voted against an amendment by Monica Lennon MSP to establish one.

"The membership of the SNP and Greens have consistently supported establishing exactly the sort of company that the Welsh Government has announced, so we are left to conclude that the resistance comes from their leadership. And we should all be asking why those members are being ignored over what would be hugely popular policy capable of attracting considerable cross-party support." In their 2021 manifesto, the SNP said that work on the public energy company had been "halted" during the pandemic, and efforts were being "refocused" on a public energy agency.

It said the agency would "coordinate and accelerate" the delivery of heat and energy efficiency work as well as "informing and educating" the public on required changes.

There were fresh calls to revive the plan by SNP activists, but when asked if the Scottish government had dropped it altogether, Energy secretary Michael Matheson said the party "had not anticipated" as great a need for decarbonisation in 2017.

He said: "The reality is a public energy company will not resolve what are very serious systemic problems in the UK energy network and the UK energy system that the UK government have failed to address over many decades.

"There's been a significant change in both the market and what we now need to do to meet our climate change targets."

Rather than having a state-owned company, Mr Matheson said the Scottish government hoped to move to a model based on district heating - taking heat energy from a number of different sources and passing it to consumers through insulated pipes.

He said this would help meet the target of decarbonising the heating of more than one million homes and 50,000 businesses.

In September, Ms Robison said the issue surrounded devolution powers.

She said: "These are very, very challenging issues to do under devolution. That's why we need the powers to do these things.”

Asked if Ms Sturgeon didn’t know it would be difficult when she announced it, Ms Robison said: “Well, I think many of these things are very, very challenging to do under devolution, as we find out on a day-to-day basis when we really look to see what more we can do.”

She then seemed to blame the opposition parties at Holyrood for asking too much of the Scottish Government, despite the energy company being the SNP’s idea.

“But the opposition quite often ask us to do things as if we already have the full powers of independence in the demands that they make,” she said.

“And of course, we are very constrained by what we can do, which is why of course the UK government needs to do far more than they are doing to help family budgets.”

Scotland gains from the Crown Estates Scotland auction of the ScotWind seabed plots around the Scottish coast, netting a one-off £700m. Its profits are given to the Scottish Treasury or split between some local authorities.

But based on proposed project rents outlined by seabed managers Crown Estates Scotland, it emerged that ScotWind projects operating at its full capacity would be estimated to bring Scotland between £50m and £90m each year - a tiny fraction of the billions expected in profits.

When the new ScotWind projects were announced, Nicola Sturgeon said it was “possibly one of the most significant days in energy and industrial terms that Scotland has seen for a very, very long time”.

Robin McAlpine, head of strategy and Common Weal said: “It is disappointing that Common Weal’s energy policy work is having much more impact in Wales than in Scotland, which is why the convener of our Energy Policy Group wrote to the Scottish Government. The reply is equally disappointing.

"Common Weal supports independence but it is simply unacceptable to use it as an excuse for making bad decisions which have cost Scotland billions of pounds.”