[UK]
Introduction, Scottish Energy Policy 1990-Present day
UK Energy Policy
The National Grid was established through the Electricity Supply Act of 1926. The act proposed the integration of the UK electricity supply industry via the building and running of a national system of main transmission lines. Prior to 1926 the public supply consisted of a variety of authorities servicing restricted areas. The whole project was completed in 1936.
In 1948 the electricity supply industry was nationalised and the Central Electricity Authority (CEA) was created. With the expansion of the network across the country new boards had to be created, so in 1955 the South of Scotland Electricity Board (SSEB- today known as Scottish Power) and the North of Scotland Hydro Electricity Board (NSHEB- today known as Hydro Electric) were put together. These two boards generated and transmitted and distributed electricity to the regions of Scotland.
In 1957 the CEA was expanded to the Central Electricity Generating Board (CEGB) who generated and transmitted electricity to smaller area boards in England and Wales and to the Electricity Council (EC - Today's Electricity Association). The EC were responsible for advising the government on legislative and policy issues in regards to the electricity industry.
In November 1967 and due to the UK's large external deficit the government decided on the devaluation of sterling from $2.8 to $2.4 . It was believed from previous experience that this would bring an increase in exports. Unfortunately contrary to predictions this devaluation resulted in the worsening of the country's external deficits. In 1969 the government put in place new tax increases and raised interest rate. In 1970 the new government sought to restore stability after an accelerated increase in prices and wages but also amidst a considerable labour unrest. The government's policy was based on public authorities taking a tougher stand towards pay claims and a hardened attitude towards the economy as a whole. This was made evident through the government's readiness to sit out strikes. It also refused to intervene to secure compromise settlements in disputes if Trade Union wage claims were excessive. This leaded major strikes in 1971. In 1972 the coal miners went on strike and while negotiations were taking place the amount of electricity used by industry had to be reduced. This reduction resulted in two and three day working weeks.
The Oil Crisis of the 1970's
left a lasting impression on all dependent countries, and displays the
need for a diverse energy generation sector, which is self-sufficient.
British oil reserves in the North Sea and reserves of coal helped to achieve
this along with the nuclear program.
In 1974 the miners went on strike again and again there was an energy
shortage problem accompanied by the three-day working week. By 1976 the
government's economic situation had deteriorated even further but the
North Sea Oil that was now becoming available looked like it could make
a positive contribution.
In 1984 and while oil and gas were now much cheaper and more popular, Britain started its coalmine closures. The mines were reported to be unproductive and less than 50% of them were being utilised. As more and more mines closed down the miners began to strike. The Government stayed firm to its long-term economic strategies of privatisations and took no action.
Prior to 1988 the only renewable electricity produced in the UK came from Hydro, especially Scotland that had a large amount of deployment including the 400 MW Cruachan Pumped Storage System that was opened in 1965 and was the largest in the UK for some time. In 1988 the Government planned for the development of renewable energy sources. To ensure that these new technologies could compete in the forthcoming open market it set in place an institutional framework that was established as part of the 1989 Electricity Act. The Non Fossil Fuel Obligation (NFFO or SRO - Scottish Renewables Obligation for Scotland) was put in place. This along with the Fossil Fuel Levy (funded by all final electricity consumed as a levy on the consumption set by OFGEM at 0.3% of the cost of the fossil derived electricity) paved the way for the development of renewables.
In 1989 the industry was privatised and the technical operations of the electricity industry were split up into two structures one for England and Wales and one for Scotland. The Electricity Association was now acting as a representative for the private electricity companies to the government. It was also still involved in policy and legislative developments within industry. The Office for Electricity Regulation (OFFER - Now known as OFGEM: Office of gas and electricity markets) was set up. OFFER was to be a market watchdog ensuring a fair and competitive market for all electricity companies (excluding Nuclear Electric and Scottish Nuclear).
Scottish Energy Policy 1990-Present day
Scottish policy throughout this time period is a changing picture as it begins under Westminster rule and ends with the power in the now Scottish Parliament in Edinburgh. The total amount of electricity generated in Scotland increased by 32% between 1990/1991 and 1999/2000, although consumption only increased by 8%. With Scotland's capacity for electricity production exceeding its demand, an increasing amount of electricity generated in Scotland is now transferred to England and Wales. In 1999/2000, 25% of the electricity generated in Scotland was exported to England and Wales. Scotland's Renewable Resource is estimated at 213, 955 GWh compared with its average consumption of 32,500 GWh2
Figure One: Proportion of electricity generated by renewables, 1988-2000
In 1990, the Electricity pool was established which was a trading mechanism based around electricity companies bidding to buy electricity from generators. At the same time the market for customers with a demand of over 1 MW was opened up to competition. This was paving the way for small independent generators to have access to the grid, this is important for utilising renewable energy.
In 1991 Privatisation of the Scottish electricity companies took place. By this time Scottish Nuclear had been created, but as was the case in England and Wales the company was still government owned. In Scotland, there are three major companies, Scottish Power, Hydro Electric and Scottish Nuclear. The first two companies have generation, transmission and distribution functions whilst Scottish Nuclear is solely a generator. Furthermore Scottish Power and Hydro Electric were obliged to buy all electricity generated by Scottish Nuclear at a preferential price Similar to that of the Nuclear Levy.
1993 saw the Government publish "The Prospects for coal", this stated that no coal pit was to be closed without being offered to the private sector and also that cleaner technologies were to be developed to help the industry become more environmentally friendly. At the time there were no major developments in policy regarding renewable energy, with fossil still under scrutiny and a large nuclear deployment in Scotland.
1994 saw the electricity
market opened to generators above 100kW, this again was important to realise
the implementation of small-scale renewables. Also in this year the first
Scottish Renewables Order (SRO-1) was initiated which made for 76 MW Declared
Net Capacity (DNC)
In 1995 Nuclear Electric and Scottish Nuclear come together and become
UK Energy, and in 1996 UK Energy was privatised (today BNFL).
1997 saw the second Scottish Renewables Order (SRO-2) initiated, which made for 112 MW of DNC. In this year the Government also announced that the privatised utilities would have to pay a one off windfall tax due to the excessive profits they had made, expected to raise £5.2 billion.
The Kyoto Agreement of 1997 required the UK to reduce its emissions of greenhouse gases by 12.5% in the period 2008-2012 compared to 1990 levels. The 1990's saw a reduction of 9%, but the Government went beyond the requirement and suggested a domestic goal of 20% reduction by 20103 as well as the United Kingdom National Air Quality Strategy4.
In 1998 Devolution from the UK Government occurred and the Scottish parliament was realised. In 1999 the Scottish Parliament was created and was now in charge of setting the regulations on electricity for Scotland. These were in line with legislations in England and Wales but were tailored to the Scottish needs and resources. The Electricity market was also finally fully opened in this year. In March of this year the third Scottish Renewables Order (SRO-3) made for 150 MW of DNC. 1999 also saw the Government announce its intention to introduce a Climate Change Levy on the supply of energy to business. November of this year saw the UK target of 10,000 MW capacity of CHP by 2010, more than doubling the capacity at the time, and also making CHP exempt from the Climate Change Levy where the electricity is used on site or sold direct to the consumers.
With the increase in oil prices (from 1990 standards) and seeing the various power shortages in North America the UK redirected it's attentions on the Electricity market from privatisation, competitiveness and low prices to security and diversity of supply. Previously, from the 1980's onwards the government's energy policies were focused on freeing up the energy market through privatisation and the introduction of competition. It was this policy that has allowed for all British Consumers to have a choice of supplier. Furthermore this theme has been carried further with the introduction of the New Electricity Trading Arrangements (NETA) in 2001 in England and Wales. But in view of the changes in the global energy markets, the increase in environmental awareness, and the fact that the market for renewable energy technologies as a whole has evolved in recent years the UK government has readdressed the issue of renewables. This is evident in the replacement of the NFFO and the Fossil Fuel Levy with the Renewables Obligation and the Climate Change Levy.
Click for more information on the Renewables Obligation for Scotland, and for the Climate Change Levy. Use BACK on your browser to return to this page. To help with the development of Offshore Wind and Energy Crops the Government announced Capital Grants. £39 million for offshore wind, and around £50 million from the New Opportunities Fund (NOF) for both technologies, funding are being given up to a ceiling of 40% of eligible costs5.
Policy, Denmark, USA, Scotland presentation