Has Ed Miliband turned SNP?

The Net Zero Secretary is considering making green energy cheaper in Scotland, but would England buy it?

For once, Ed Miliband’s hyperbole is justified. The Moray West wind farm off Aberdeen, which becomes fully operational today, really is a massive project—of the kind Isambard Kingdom Brunel would approve. Sixty giant turbines, each the height of the Eiffel Tower, will generate enough electricity for half the homes in Scotland. All the more unfortunate, therefore, that many of them are likely to be turned off.

Last year, British consumers paid wind farm operators a cool £1 billion to switch the turbines off—either because it was too windy or because the electricity grid couldn’t cope with the power the turbines were generating. If you were wondering why British electricity bills are still higher than before the energy crisis, this is one of the reasons. To put it in terms British Rail might have understood, it is just the wrong kind of wind.

Most of the demand for electricity is in the South, in England, while the turbines are in the North, mainly in Scotland. We have an electricity grid that was designed in the days of coal, when power was generated in big cities—think Battersea Power Station. The cost of re-engineering the grid—creating the networks of pylons and cables to get the power from there to here—is immense: around £100 billion in the next decade alone.

The operators of Moray West aren’t losing much sleep, however, because they are paid handsomely to stop the giant blades turning. They are compensated by what are called “wind curtailment payments”. However, it drives green energy evangelists like the Net Zero Secretary, Ed Miliband, to distraction. All that cheap energy, wasted, while we have to fire up gas power stations on a regular basis just to keep the lights on.

Actually, wind is not all that cheap, as we are learning—but it is a very significant energy resource and a major contributor to energy security. It is criminal to waste it. But it is not an easy matter to cut bills, as this Labour government has learnt to its cost. Only last year it was promising to cut bills by £300 a year; instead, the price cap rose again this month.

In desperation, Ed Miliband is now reportedly looking at zonal pricing of energy. Why not make it cheaper to use in Scotland, where the power is landing? He has asked the current Review of Electricity Market Arrangements (REMA) to look at whether regional pricing could make bills cheaper.

It could—but it might make other bills more expensive. The Net Zero Secretary is not a Scottish nationalist, yet he is inadvertently taking on one of the SNP’s major campaigning themes: the fact that Scots are paying some of the highest bills in the UK while generating not just wind, but all that North Sea oil and gas that Labour wants to turn off.

But it’s not just the nationalists who like the idea. Zonal pricing has long been canvassed by the publicity-savvy, eco-capitalist Greg Jackson of Octopus Energy. He has said that Scots could have “the cheapest bills in Europe” if only they were charged what wind energy costs to produce instead of contributing to the cost of sending it south.

“Billions are being wasted,” he says, “in payments to switch off wind farms when demand is low.” He thinks addiction to subsidies has prevented the renewable energy industry from seeing how a freer market in energy could help solve the problem of ever-rising bills. He may wear tee-shirts and jeans but he is talking the kind of language Milton Friedman would approve. Why allow an effective oligopoly to fix prices instead of the cost of production?

Other energy companies, and other eco-capitalists like Dale Vince of Ecotricity, are not so enthusiastic. The idea of making energy costs relatively more expensive in the South, where most economic activity takes place, is the kind of big idea that civil servants call “courageous”. Imagine the outcry from English pensioners at the idea of Scots being energy-privileged when they already receive those generous subsidies through the Barnett Formula.

Moreover, energy bills are what helped make British Steel’s Scunthorpe plant uneconomic. UK electricity costs to industry are currently twice as high as in Germany, and four times as high as in the USA. And Mr Miliband wants to increase them? He insists that zonal pricing would not lead to higher prices, presumably because the over all cost would decline as production became more efficient. That is possible. But it involves heroic assumptions about how quickly the the grid can be rewired to lower all boats, as it were,

Greg Jackson seems to think it would be a simple matter to move energy-intensive industries like data centres and car manufacturers to Scotland to take advantage of cheap energy. That might well happen over time. But in the meantime, there would be an energy revolt in the South. Just imagine the Daily Mail headlines.

Ironically, it is Scottish Power and Scottish and Southern Electricity who are most opposed to regional pricing of power. Along with 53 other energy companies, they wrote to Miliband this monthsaying that zonal pricing is “logically flawed” and would create a “postcode lottery” for energy bills.

But what they are mainly worried about is the loss of those high overall prices, which they believe are necessary, not just to attract investment into wind projects, but to pay for the hundreds of billions necessary to make the UK grid Net Zero-ready. And yes, as Mr Jackson suggests, they are not all that keen on losing the billions in wind curtailment payments.

Scottish nationalists have leapt upon zonal pricing, which confirms all they suspected about perfidious Albion. Scotland is a net exporter of renewable energy, just as it was with oil and gas, yet Scots are the last to benefit from it. Just as it was “Scotland’s Oil” fifty years ago, is it not now “Scotland’s Wind”?

Why shouldn’t energy be cheaper where it is producted? Shetlanders are incandescent that they pay some of the highest electricity prices in the world while having been pioneers in becoming self-sufficient in wind. There is a persuasive economic logic, moreover, in encouraging economic activity to relocate to where land, housing and energy is chearpest.

But it would be England paying the bill - at least that is how it might appear. I can’t see Keir Starmer risking political capital when energy bills are such a sensitive issue. Public support for Net Zero is already waning. Just talking about zonal pricing just hands a propaganda gift to the SNP. I suspect he will urge Ed Miliband to stop having big ideas about energy.