You may find this hard to believe but the UK Labour Government has just done something extremely sensible although you probably won’t have noticed.

Not only is it sensible, it is hugely significant to the transition to a world of low carbon energy, wonderful news for Scotland and excellent proof of the enduring benefit of Scotland being part of the UK.

Most incredible of all, the hero of the hour is none other than Ed Milliband.

What Ed has done is say that the UK Government will enter into contracts with operators of pumped storage energy systems to guarantee a price for the electricity they generate.

We have now removed coal from the UK energy mix and there is a rapid build-up of both solar and wind energy.

This is a good thing but it is steadily reducing the reliability of our electricity supply as we don’t build new nuclear power quickly enough, or at all in Scotland, and the gas-fired generation we have becomes old and is not replaced.

The trends in how our power is generated have two linked consequences.

First, there is a genuine risk that within a few years if there is a prolonged cold and still spell in the winter we could have power shortages.

Second, it has huge implications for the price of power. By investing enough we can solve the problem of getting power from the wind from those parts of the country where it is generated to those where there is the highest demand. There will, however, be times when wind-generated electricity is not just cheap but potentially worthless because there is simply too much of it.

The same is true of solar power. Over time the position will develop where there will be so much solar power generation during the middle of long sunny days that again it risks being worthless; we can’t use it at the time it is generated.

You might think that battery storage can be a big help in this situation but most of the battery storage systems we have are designed to provide power for only one or two hours. They stabilise the grid and help overcome short-term issues but they can’t do much more.

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Which is where Ed Milliband, Scotland’s topography and the UK consumer ride to the rescue.

In pumped storage systems, water is pumped up to high reservoirs when electricity is plentiful and cheap and, released from those high reservoirs through generation turbines when demand and prices are high.

Pumped storage is less effective when there are days on end of no wind but it can contribute hugely for most of the time to provide power when it is needed and to moderate the swings in the price of power.

Although the UK’s biggest current pumped storage system is in Wales there are some in Scotland, the biggest of which is Cruachan in Argyll, and there is significantly more potential for further schemes in Scotland than anywhere else in the UK.

Pumped storage systems of scale are, however, hugely expensive and take years before they produce positive cashflow. For them to be financed needs a government which represents a lot of energy consumers. Scotland on its own simply does not cut it. We simply don’t use enough power.

(Image: Ben Cruachan)

For Scotland’s wind generation and pumped storage to work economically, they need to be directly connected into a very large body of electricity consumers. The scale of that consumption needs to be large enough for it to be sensible for a government to promise the developer of a pumped storage system to pay for their output at an agreed price for many years into the future. Unless the government providing that contract controls a power grid which has enough customers who will need that power it would be running an enormous financial risk; Scotland alone simply could not do it at sufficient scale without being financially reckless.

Scotland tried it once before when it was cornered by the Gupta Empire into guaranteeing the price of power from a hydro-electric plant because it foolishly believed Gupta were going to use the electricity to power an aluminium car wheel plant in the West Highlands. Not Nicola Sturgeon’s finest hour.

Within the UK as a whole however the equation is entirely different. England represents a huge market which cannot store enough green power even if it could generate it. Scotland can both generate it and once several more pumped storage plants are built, it will have sufficient storage capacity to fulfil England’s power needs much more of the time. Both parties win. By combining England’s consumers and the UK Government’s ability sensibly to guarantee the price of electricity at scale, Scotland’s hills and rivers can deliver huge wealth creation and new jobs in Scotland.

Better together indeed.