“By the end of this parliament we will set up a publicly owned, not-for-profit energy company.” That pledge by Nicola Sturgeon at last month’s SNP national conference in Glasgow brought delegates to their feet. The prospect of Sturgeon Power taking on the Spanish-owned Scottish Power had them stamping approval. Kenny Farquharson, my colleague on The Times, recalling the way in which Tom Johnston, wartime Labour secretary of state for Scotland, had brought power to the glens by creating the North of Scotland Hydro-Electric Board, predicted that Ms Sturgeon could become “the Uber of electricity”. After all, the first minister has promised a simple but disruptive intervention in the market. As she described it to her party: “Energy would be bought wholesale or generated here in Scotland – renewable, of course – and sold to customers as close to cost price as possibl e. No shareholders to worry about. No corporate bonuses to consider.” But is this bold national champion of energy supply, whose only job is “to secure the lowest price for consumers”, really what the Scottish government has in mind? The SNP pledge, in its 2016 manifesto, was only to “explore the potential to create a government-owned energy company to help the growth of local and community energy projects”. Note the last ten words of that. There are a growing number of such projects already across the UK. Back in 2002 Aberdeen city council launched Aberdeen Heat and Power to develop and operate district heating and combined heat and power schemes that now cover 33 multistory blocks and 15 public buildings in the city. The Edinburgh-based Our Power supplies electricity and gas on a not-for-profit basis to homes across Scotland. It is owned by social housing providers, community organisations and local authorities. By contrast People’s Energy, the brainchild of Gullane couple David Pike and Karin Sode, which was launched this year, was crowd-funded and intends to return three quarters of its profits to customers. Is Sturgeon Power designed to ensure that many more such alternative enterprises enter the domestic energy market, as the 2016 manifesto indicated? Or has Sturgeon Power gestated into a direct competitor, determined to do to the Big Six commercial suppliers what Uber did to the established taxi trade? If it has, what future is there for enterprises such as Our Power and People’s Energy? When a draft of the government’s new energy strategy for Scotland opened for public consultation last January, it offered a few more clues. A government-owned energy company could support existing alternative suppliers. It also could try to deliver new ones. It could act as an energy supplier. Or it could “administer” a Scottish Renewable Energy Bond to raise funds for new investment by others. Until the final strategy is laun ched, we simply don’t know what kind of energy company Sturgeon Energy aspires to be. If it wants to be a big supply player in its own right, it faces multiple challenges. The first will be start-up costs. The bigger they are, the harder it will be to offer consumers the lowest price.
Times 1st Nov 2017 read more »