Labour appears to be showing an SNP like focus on the wrong problem in terms of net zero as it prepares to exempt some of the energy transition’s biggest winners from its windfall tax hike.

With Sir Keir Starmer making the plan to “switch on Great British Energy” one of the five missions at the core of the party’s campaign for the general election, Labour clearly recognises the political importance of the green agenda.

The plan for GB Energy which it unveiled in Scotland in advance of publication of the full manifesto last week was clearly intended to help the party win seats from the SNP.

Team Starmer probably believed the promise of 50,000 clean energy jobs in Scotland would blunt the attacks of oil industry leaders who warned plans for an increase in the windfall tax on oil and gas firms could wipe out 42,000 North Sea jobs.

Sir Keir had some grounds for confidence given that the most vocal criticism of the windfall tax plan came from the SNP, whose leaders appeared happy to abandon the oil and gas industry so long as they saw more political mileage in courting the greens.

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However, even people who may be more generously inclined to Labour might be concerned that the GB Energy plan appears worryingly reminiscent of SNP puffery.

Claiming the energy revolution will be made in Scotland the plan says Labour will build on the country’s reputation as an energy world leader and secure long-term, highly-paid roles for workers across the nation.

It reckons Labour will maximise the potential of Scotland’s renewable energy assets with a focus on the drive to develop floating wind farms. These can operate in much deeper waters than traditional developments, which utilise turbine towers fixed to the seabed.

The SNP Government has enthused about the potential for floating wind to support a big increase in renewables generating capacity while delivering big economic benefits by creating work for the supply chain.

But the hype surrounding floating wind at Holyrood may reflect a measure of desperation on the part of the Scottish Government, which hugely over-estimated the economic potential of traditional windfarms.

While giant windfarms have been developed off Scotland the lion’s share of the related contracts have gone to firms based outside the country.

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Sector experts have warned that floating wind remains a nascent technology and there are big questions about the related economics.

Shell bid successfully for acreage in the flagship ScotWind leasing round in the belief it could harness expertise in deepwater developments to prosper in the floating wind business. Chief executive Wael Sawan subsequently made clear that after looking at things more closely Shell was not sure that it could generate the required returns on floating wind investments.

At the recent All-Energy conference in Glasgow specialists highlighted uncertainties about the cost of developments.

They also noted concerns about whether developers would be prepared to pay the premiums required to meet targets for the use of local suppliers. Banks appear to have been playing hard ball in terms of the amount of risk they expect developers to assume.

The enthusiasm for floating wind in Labour’s GB Energy plan is concerning given the number of questions that remain unresolved.

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But even if the economics of floating wind seemed clearer it may not make sense to develop projects. The excitement about windfarms fails to take account of the problems caused by the fact that weather conditions mean their output is intermittent. The UK has not developed anywhere near enough capacity to store the huge amounts of renewable energy that can be generated at times of low demand. This has resulted in operators being paid absurd amounts to constrain their potential output.

Labour’s GB Energy plan recognises there is a storage issue but only includes a passing reference to it. There appears to be no recognition that Scotland has much to offer in terms of storage given the potential of its hydroelectric assets.

Some reckon the UK Government could provide a big boost to the net zero drive and help create thousands of jobs by maximising this.

Scotland has played a pioneering role in the development of a tried and tested storage technology that could make a much bigger impact. The ‘Hollow Mountain’ Pumped Storage Hydropower development in Argyll and Bute was used for years to store power generated by nuclear plants for when required and is now playing the same role in respect of windfarms. It works by harnessing flows of water between a reservoir in the hills and Loch Awe below to power a turbine housed in a turbine hall that was hollowed out of Ben Cruachan.

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The operator Drax has developed plans for a huge increase in capacity which would involve creating a new turbine hall.

SSE is working on plans for a huge pumped storage hydro development at Coire Glas in the Highlands.

Other firms including Norway’s Statkraft are working on large scale pumped storage hydro projects in Scotland. If the plans go ahead thousands of construction jobs would be created with many more in the supply chain.

Drawbacks include the fact the schemes would take years to complete and entail huge upfront investment. Backers want the Government to develop a support mechanism that will mean they can be sure of generating appropriate returns.

SSE favours a cap and collar mechanism, under which it would be compensated if market prices fall below an agreed floor. If prices exceed the specified cap it would hand over any excess.

SSE bosses refute suggestions cap and collar schemes would involve profitable energy giants getting subsidies. They says their purpose is to provide comfort to banks that developers would be able to repay the huge amounts of debt that would be used to fund developments.

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SSE Renewables development director Mike Seaton told The Herald the only people who would get their money back if prices fell below the collar under the kind of scheme it has in mind would be banks.

Such comments might allay concerns that support schemes for pumped storage hydro developments could bankroll energy firms. However, they also highlight how much benefit banks stand to enjoy under arrangements that effectively mean commercial risks that lenders might be expected to bear are transferred to the public sector.  

The costs of the Contracts for Difference programme that has been used to support the development of offshore windfarms are added to the bills of householders.

Look at the list of banks that have provided debt for big offshore windfarms and it appears financial giants have ultimately been among the biggest beneficiaries of the programme.

With banks also enjoying a huge boost to the profits they make on consumer lending following interest rate rises, the case for an increased tax surcharge on big players looks strong. Rishi Sunak cut the surcharge from 8% to 3% from April last year.