U.K. Risks Brownout Without Power From Scotland

Scottish First Minister Alex Salmond said England would risk power brownouts without supplies from his region.

“We export a substantial amount of electricity to England and will continue to do so,” Salmond said at the Bloomberg New Energy Finance conference in New York today. “If we didn’t, that 2 percent capacity margin would be minus 2 percent. So you would have brownouts.”

The comments were meant to blunt the suggestion that investment in Scotland’s power industry is at risk because of the chance that voters there opt for independence in a referendum scheduled for September.

Salmond said that even if Scotland broke from the U.K., “independence also means interdependence” and the power markets of the two countries will remain linked.

He brushed aside a U.K. government report suggesting that independence for Scotland risks undermining investment in low-carbon energy because the smaller nation wouldn’t be able to afford the same level of subsidies as Britain combined.

“We have a competitive advantage in virtually all the low carbon technologies, in offshore wind, in carbon capture,” Salmond said in an interview. “We have cost advantages that will make Scotland cheaper on its own.”

Scots would have to fork out 3,800 pounds ($6,363) a person to match the 20 billion pounds the U.K. has pledged toward decommissioning oil and natural gas facilities in aging North Sea fields, the U.K. Department of Energy and Climate Change said today.

Energy Investments

Energy companies have made investment decisions worth 14 billion pounds in Scotland out of 34 billion pounds nationally since January 2010, the department said. That’s a spending level it stands to lose if Scots vote to end the 307-year union in the Sept. 18 referendum, according to DECC.

“The energy sector in Scotland is booming and growing, with more and more jobs and attracting more investment,” Energy Secretary Ed Davey said in a statement. “I fear the economic and energy progress will be seriously affected by the uncertainty and disruption of independence, as investors will hold onto their cash rather than risk it.”

The announcement fleshes out comments made last month by Davey, when he said Scots would face higher energy bills if they decide to break away from the U.K.

Scotland raked in 560 million pounds of renewable energy subsidies in the most recent tax year, or 28 percent of the U.K. total, while accounting for just 10 percent of electricity sales, according to today’s report.

Separate Scotland

The department also said that England and Wales may choose to buy electricity from continental Europe in the event of Scottish independence. About 4.6 percent of energy used in England and Wales comes from Scotland, it said.

“If Scotland became a separate country then it would be competing with other countries, who might be able to provide cheaper electricity,” the department said. “This would have a direct impact on Scottish jobs.”

Salmond said Scotland had 25 percent of the potential capacity for offshore wind and tidal power in the European Union and that no matter how Scots vote on independence in September, much electricity will continue to flow from there.

“Scotland has vast energy resources,” Salmond said. “We want Scotland to be the home of new offshore innovation. We welcome business from across the planet to realize that.”

Before it's here, it's on the Bloomberg Terminal.