Scotland's hopes of a just transition could be shattered by the break-up of Britain’s electricity pricing system into regions, according to one of the country's biggest windfarm developers.
In what is a hugely significant intervention, Alistair Phillips-Davies, the chief executive of SSE, said plans to invest tens of billions in Scottish renewables projects would "all be in jeopardy" if the UK Government introduces zonal pricing.
That could spell the end for 25,000 ScotWind jobs which are the backbone of the transition from oil and gas to renewables, potentially creating economic carnage in the north of Scotland.
Writing in The Telegraph today, Mr Philips-Davies said overhauling the UK power market risked a “political and economic disaster” that would create a postcode lottery for bills.
Currently, the entire UK has one national electricity price. Critics including Octopus Energy say this makes bills higher for everyone as grid operators are forced to balance the system using expensive interventions, such as paying wind farms to switch off at certain times.
'Don't blow it now'
Advocates of a zonal system argue that it would incentivise developers to build wind and solar farms nearer to centres of demand, such as industrial areas and cities. This would mean less cabling infrastructure would be needed, ultimately saving money for consumers, supporters say.
However, Mr Philips-Davies said Mr Miliband’s clean power mission required “post-war levels of infrastructure development and great feats of engineering”, which would “all be in jeopardy” if the government pressed ahead with the reforms.
He said: "We’re talking about post-war levels of infrastructure development and great feats of engineering: installing 110m high wind turbines hundreds of kilometres out at sea; subsea cables bringing renewable power from the north of Scotland; and creating giant water batteries by blasting 12km tunnels through Highland hills.
"However, this could all be in jeopardy if the government deviates from the plan, by tearing up the current energy market structure and introducing a “zonal” pricing system – essentially dividing the country into regions with their own varying, and unpredictable, electricity prices based on local supply and demand."
“The clean power prize is a golden economic opportunity for Britain that is achievable without this costly distraction – don’t blow it now.”
He claimed the zonal reforms would take until at least 2032 to deliver and would jeopardise plans laid out by Mr Miliband, the Energy Secretary, to deliver a clean power system by 2030.
And Mr Philips-Davies said the policy would push up the cost of the energy transition because wind farm developers such as SSE would have to seek bigger returns to compensate for the unpredictability of zonal pricing.
Trouble for Sarwar
The move to zonal pricing, if it were to halt ScotWind projects, would create a political headache for Scottish Labour Leader Anas Sarwar, who is hoping to become first minister in next year's Scottish election.
Speaking to the Holyrood Sources podcast ahead of his party conference, Mr Sarwar said he was raising the ScotWind investment concerns with Mr Miliband and Michael Shanks.
He said: "There are are mixed views on zonal pricing, and I think we have to be evidence led, because we can't have an approach that undermines investment, because we need large scale investment into Scotland."
However, Mr Sarwar said reform is needed to bring bills down for consumers.
A UK Government spokesman said: “In an unstable world, the only way to guarantee our energy security and protect consumers from future energy price shocks is by moving towards home-grown power.
“We are considering reforms to Britain’s electricity market arrangements, ensuring that these focus on protecting bill payers and encouraging investment. We will provide an update in due course.”