Mike Vickers' Blog

March 20, 2014

Ian Marchant ex of SSE on Electricity and Scotland

Filed under: DHI SPIF, economics, Europe, Scotland, Scottish Independence — derryvickers @ 7:46 pm

Ian Marchant ex CEO of Scottish and Southern Electricity spoke to the David Hume Institute on who he sees the future of Energy and particularly Electricity in the UK and the impact on an Independent Scotland.

The points that got to me – not in seminar order

  1. Energy is the foundation of modern civilisation
  2. The Electricity Industry has had 11 Ministers in 11 years – this is not the way to run a major service
  3. Political interference is endemic – Either Regulate or let the market compete – in the UK we are doing neither with the government sitting in the middle – No stability – Marchant indicated that State owned government, before competition introduced, provided stability
  4. Labour’s proposed energy price freeze would undermine the market – tackling the wrong problem.
  5. Decarbonisation is key – whether we concur with climate change or not it’s just good risk management to decarbonise
  6. Cost and carbon – see table below
  7. Scotland is rich in Renewables but they take time to come on power – Off Shore wind needs to come down in price – other technologies could be at hand for Off Shore – Jim Steele of Morrison Construction (also presenting) mentions Sea Towers,  Hydro and biomass.  Tidal and wave, may be.
  8. Yet Scotland needs other sources to keep the lights on  – Gas quick to build – covering the next 10 years.
  9. And yet gas fired generation is not profitable; Peterhead Gas powered power station running at only 2/3rd capacity.
  10. Shale gas fine for the US where the geology is good – the US has more onshore drilling capability than the rest of the world put together – but not obvious in the UK.
  11. We will need to import more and more gas and be subject to Global Market – not helped at present by the Crimea.
  12. Scotland ideal generation portfolio: 20% small, 40% renewables, 40% gas.
  13. The UK has been complacent on power construction – generation is still surviving on CEGB power stations – but this is coming to an end
  14. You can tell Ian Marchant is a Perth Generator man.  Nothing on Supply side!
  15. UK is a Single Electricity Market – it would be good for an Independent Scotland to keep this, but it takes Two to Tango.   Jeremy Peat added  at end of the seminar  like ‘a Common Currency Union’.
  16. Transmission costs are a mess and presently smeared across the whole of the UK – currently amount to £10 -£20  of total consumer cost – costs must mount for an Independent Scotland.
  17. Finding capital is difficult with UK prevaricating on its membership of the  EU
  18. Energy is a good employer – long term jobs.  Jim Steele bemoans lack of engineers (I thought this was one of the priorities of the Wood Report?)
  19. Jim Steele again – there has to be shared risk in major construction: Government, Operator and Contractor.  Morrison dropped out of Off Shore because the operator wouldn’t play ball
  20. Energy needs to be conserved – totally rebuild Scotland’s housing stock – modern building technology could save 50% energy
  21. Marchant’s Energy Policy for an Independent Scotland
    1. Ten years of Regulation and then open the market to competition
    2. Politicians keep out

 

Generation Average Domestic Cost Carbon emission Marchant’s comments
Average £250 2.5 tonnes  
All Coal £200 4.0 tonnes Provides capacity
Gas fired £250 1.5 tonnes By2020
Onshore wind £380 / £250 zero Golden age is ended – few new sites
Offshore wind £600 zero Must come down
Nuclear £370 Zero 35 years lifetime – storage of waste
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