CONSERVATIVE MEP FOR SCOTLAND

Speech: Realising the North Sea Electricity Grid

18.03.2015.

Today I hosted an event on creating a North Sea Electricity Grid alongside my colleague Bas Eickhout MEP.  A North Sea grid is vital for Scotland because it could lower energy bills, save on infrastructure costs and reduce emissions by transferring energy across borders.  However, a number of challenges in finance, regulation and market access have stopped the Grid's progression.  There is cross party support in the European Parliament to overcome these obstacles.  On this page you can read my speech to the event as well as the brochure outlining a vision for how we can finally get the North Sea Grid off the ground by giving it the political priority it deserves.

"It is a pleasure to welcome so many of you here today to discuss Energy Union in general and ‘A North Sea Electricity Grid’ in particular.

Some of you will be wondering what on earth brought together a Scottish Conservative MEP and a Dutch Green MEP.  Well, I am tempted to say that Bas is not a typical Green and I am not a typical Conservative, but that would be only half the story. The reality is that we both know an opportunity when we see it, and the Energy Union is just such an opportunity for the countries around the North Sea.

An opportunity you say? But an opportunity to do what?

Well, Bas and I have set out what we would like to see happen in the paper that you have before you, but let me just gently canter through the highlights:

An opportunity to reduce energy bills for consumers and for business.

A means of ensuring that the lights don’t go out.

An export opportunity for our electricity generators. Depending upon the sophistication of the connectivity it may even be possible for consumers to vote with their plugs, and demand green electricity from over the sea in preference to local electricity generated from other sources.

A way of ensuring energy is harnessed where it is most sensible to do so, and transmitted to those with greatest need.  Ultimately it should reduce the need for redundant capacity.

And of course it should help ensure that we continue to progress toward a low carbon economy.

There is also no reason why the North Sea cannot be a significant contributor to the energy security of the eastern Member States, reducing dependence upon foreign oil and gas imports.
Finally, this could create jobs. All the more important at a time when the falling oil price is putting jobs at risk in the North Sea.

How?

By making electricity flow.  Right now we generate electricity in silos, within member states as is our right.  But with a little cooperation, and with a lot of cabling, we can get electricity moving through the North Sea into the countries around it - saving billions in new infrastructure investment, easing scarcity at peak times and allowing investment in low carbon generation.  Interconnectors are not complex, they are just expensive, and take a lot of planning and importantly, cooperation.

Tomorrow the European Council will meet to agree priorities for the North Sea gird.  We want to see ambition from that Council meeting, and the North Sea Grid – which has been discussed for over a decade now – finally put into action.  Now is the perfect time.

Scotland: Challenges and Opportunities

Scotland is blessed with significant renewable, conventional and unconventional energy resources.  As the North Sea enters its maturity as a hydrocarbon basin, ever greater emphasis is being placed upon alternatives.  According to official figures, Scotland possesses 25% of the EU’s offshore wind capacity, as well as 25% of its tidal capacity and 10% of its wave.

However, potential and reality are not the same thing, and at present Scotland continues to struggle to meet its ambitious self-set target of generating 100% of its electricity from renewables by 2020.  Scotland currently manages 32% (as compared to 12% for the whole UK).

The challenge of onshore wind generation is one of intermittency and storage.  Progress toward offshore wind farms has also been haltingly slow.  Endeavours to create a wind farm off the Aberdeenshire coast raised the hackles of Donald Trump, who claimed the windmills spoiled the view from his new golf course. Whilst the two large estuarine wind farms in the mouth of the Tay And Forth Estuaries have raised significant objections from the Royal Society for the Protection of the Birds (RSPB).

Despite talk of wind, wave and tide, much of Scotland’s renewable energy generation (as opposed to capacity) is ‘hydro’ generated by releasing the potential energy stored in great reservoirs. Hydro has the advantage of being particularly responsive to demand. The UK National Grid proudly states that, as the credits of Britain’s favourite TV soap operas roll, a signal is sent to the hydro power stations so that by the time viewers get off their sofa and journey to the kitchen to put the kettle on, there is enough electricity in the system to meet demand.  Hydro power plants can leave their standby mode and be fully operational in 30 seconds.

Pump Action hydro is currently the only means of mass storage of renewable energy.  Water is pumped to an upper reservoir when the country’s electricity demand is low, and released when demand is high. (This process will use more electricity than it produces, but it does one thing that no other power generation can do, and that is to store energy).

Scotland will face serious challenges as it decommissions its remaining nuclear plants (Hunterston and Torness) by 2025, and its thermal power stations (Longannet and Peterhead) struggle to meet the strictures imposed by the EU, and the challenge of transmission pricing.

Although Scotland has the potential to generate and export significant amounts of electricity it is hampered by a failure to develop the capacity and to secure the interconnections to other states.  At present Scotland is only connected to England.  Unless there is a shift in the electricity generation in Scotland, the energy will flow north not south.

Funding

Currently, interconnection is driven primarily by commercial interest. And is generally incentivised by access to a more lucrative energy market.  The challenge for the European Commission is to ensure that it creates an attractive investment platform, while retaining the interest of those enterprises which have already committed to laying cables between nations.

Funding will remain critical. The Commission must be clear about money: (i) how much will available for the North Sea Project; (ii) Who can access the money? (iii) What are the conditions?

Governance

There is much rhetoric around the issue of Energy Union, much of it unrealistic.  If the concept is to move forward then it must strenuously avoid a one size fits all approach administered from an office in Brussels.  The divergences between the electricity generation zones are too different to achieve harmony and unity in a single step, even if such a step were desirable, which it isn’t.  Every effort must be made to devolve management of the initiatives from Brussels to the generation zones.

Innovation

For many in the north green energy has become synonymous with onshore wind energy.  Endeavours to capture energy from wave and tidal power have run in to significant problems.  Such new technologies often require support, of the very type administered by the European Commission through the Horizon 2020 research fund.  It is therefore a profound disappointment that the Commission has chosen to pull €2.7bn from the fund and place it at the disposal of President Juncker, for other initiatives.

Action so far?

The Commission Vice President for Energy Union, Maroš Šefčovič, has stated that he will deliver the first ‘State of the Energy Union Address’ by the end of the year.  There is much that we need to hear in terms of progress on realising a North Sea Electricity Grid.  I have already asked First Vice President Frans Timmermans to ensure that only a single impact assessment for North Sea Grid development will be required, so reducing the risk of internal conflict or confusion across the basin. I have sought assurances from Mr Sefcovic that he will publish a report on progress towards realising the North Sea Grid by September 2015.  I have also challenged Energy Commissioner Miguel Arias Cañete for seeming to prioritise Russian gas transit projects in terms of Projects of Common Interest (PCIs) funding.

‘The Vision Thing’

We need a regional approach to Energy Union.  The North Sea Basin is such a region.  Member states must agree to a common approach to transmission, but thereafter the initiative would sensibly be taken forward by North Sea Countries’ Offshore Grid Initiative (NSCOGI).  The Commission role should be to act as guarantor, becoming involved only when an impasse has been reached.

There must be adequate funding for the initiative, both European and from Member States. Funding from Horizon 2020 should also be prioritised.  Member states must be free to determine their energy mix.

The ultimate aim should be the creation of a free market in energy, with electricity generated in the most sensible places, transmitted to where it is needed, and prices reduced across the region.

The Next Step
At tomorrow’s Council meeting we now want to see the North Sea Grid set as priority, with an instruction from the Council to the Commission to move this project forward.  We need to find the financing and the agreement to make this work.  The time is now for a North Sea Grid.