I have long been an advocate for the renationalisation of energy. My father was a veteran of both the pre-WW2 private electricity industry and post war nationalisation.
He ended up as a group manager with MANWEB but retired early when the Government announced it was privatising the industry.
Despite having always been a staunch Conservative voter he was wholly opposed to privatisation and forecast pretty accurately the shrinking of a well-respected, global and broad based manufacturing supply chain, the fracturing of the supply companies into increasing numbers of “Carpet Baggers” (his description) the acquisition of large parts of the supply industry by overseas players and as the City realised the potential to make money its involvement would ensure R&D funding would soon disappear in favour of shareholder interest.
As we know to our cost in Scotland that meant the almost immediate abandonment of the wind turbine development programme at Howden Engineering in Glasgow. Fortunately for the planet the Danes and Germans recognised the potential for wind energy, picked up where the UK left off and the rest as they say, is history.
Today we find ourselves with a reported sixty or so different electricity supply companies, but it is thought that because of the dramatic increase in wholesale gas costs, the impact of that on electricity prices and their now unachievable customer promises, a number of those sixty will go bankrupt probably even before COP26 takes place.
The extent to which we still depend on gas is illustrated by the electricity mix on the day I wrote this column, which showed that it accounted for 45% of all electricity generation. It’s not always like that of course and is often considerably less but I’ve also seen it a lot higher.
Variable gas demand could of course be smoothed out by ensuring there was enough storage capacity.
Unfortunately, we lost 70% – about 14 days’ supply – of UK storage capacity when Centrica – with full government approval – closed the Rough End gas storage facility in 2017. The UK Govt determined that the market would cope with it. They were wrong about that as well as the benefits of privatisation.
Dependence on gas and particularly imported gas has long been a concern especially as some of that gas is coming from some unsavoury sources. Reducing and ultimately eliminating the need for gas imports should surely be a primary aim.
Why the price of gas and electricity has soared is open to debate but ultimately doesn’t matter. It could be Brexit or increased demand particularly in Asia or Russia throttling back exports but it’s how we respond to it that’s the real issue.
Isolating ourselves from energy price shocks means not relying on the market and is not easy if you also want to maintain resilience by having the ability to store energy as I can now.
There is a way though and that’s by using green hydrogen which just like oil and LPG, we can store and don’t have to import. Produced using wind, solar and tidal the cost of the electricity used to power the electrolyser banks remains pretty much constant. Storing will hedge against periods of low wind.
It’s not as if Scotland couldn’t do this. It already generates considerably more electricity than it uses and whilst it now exports that surplus to the rest of the UK perhaps it needs to dedicate a percentage of it to green hydrogen production.
The technology we need all exists although of course Scotland, for the many reasons I’ve discussed before, doesn’t manufacture any of it.
Cop26 coming to Glasgow has already triggered a string of virtue signalling projects including a hydrogen fuel cell railway engine project, hydrogen fuel refuse lorries and others most of which are simply carbon copies of what other countries have already done. In my view we really need a programme that brings a major change for real people. Stable green energy with costs to match would do that.
It is also the sort of programme Scotland needs to implement in order to demonstrate our commitment to dealing effectively with climate change. It might even lead at long last to the development of a Scottish hydrogen technology manufacturing supply chain.
Of course, implementing such a programme would be a huge ideological change especially if the Scottish Government was – as it should be – involved in initially funding it through some form of public interest company arrangement.
Privatisation has proven itself a failure because the market just can’t handle extremes like a near quadruple jump in wholesale gas prices.
If we’re going to achieve the aims of COP26 we need to swap ideology for what will really work and green hydrogen will.
Dick Winchester is a member of the Scottish Government’s oil and gas
and energy transition strategic leadership group.