Guest Blog: Mervyn Bowden – Worst Case Scenarios in the Scottish referendum

Having been burnt too many times when taking an optimistic view of things I’ve learnt a lot (I hope) about risk management over the years. Now I always keep a […]

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By Vicky Ellis

Having been burnt too many times when taking an optimistic view of things I’ve learnt a lot (I hope) about risk management over the years. Now I always keep a weather-eye on what the possible Worst Case Scenario may be in any situation.

Which brings us to the many uncertainties in the wider energy sector in the event of a Yes vote in the Scottish referendum (I shall continue to reserve judgement on this).

An area of particular concern is over the ongoing subsidies to projects in Scotland, through ROCs, FiTs and the RHI. These are very significant given the massive uptake for things like onshore wind generation. If currently funded by central UK government, these will undoubtedly add to the financial burden on Scottish purse strings given Alex Salmond’s aspiration to be 100% renewable in the foreseeable future.

Clearly there will need to be some serious legal reviews of contracts which straddle the new border, should independence become reality. Not least because most Scottish-based renewables are likely to be funded by English and international finance which will need assurance that their loans are secure.

Filed in the “It’s never going to happen” tray

What is most worrying, and raises the spectre of many Worst Case Scenarios becoming reality, is the complacency amongst our leaders which an 18% poll margin in favour of the No vote engendered as recently as early August. You could almost hear the politicians/bureaucrats mentally filing most key issues resulting from a Yes vote in the “it’s never going to happen” tray or the “why should we waste our time on this” tray.

I may be horribly wrong but I sense that there are so many Worst Case Scenarios which have not been given any thought or planning that the unplanned-for shock of a Yes vote will cause mayhem, not least for the commercial sector which has had to put up with massive uncertainty over many years and, let’s face it, downright incompetence.

For Scotland the Worst Case Scenarios also need to take account of things like their overall generation mix, upgrades to the transmission network and its funding and the massive issue of future energy security. Who knows, there may be more cause for optimism on this in Scotland than the rest of the UK. Clearly there will certainly be multiple knock-on issues for Ireland being, as it is, at the end of the line.

Indeed, has any thought been given south of the border on the implications of separation from an energy supply perspective – if it has, it’s been done very quietly?

Recipe for bureaucracy – and disaster?

The Worst Case Scenarios for energy? Massive amounts of work for the legal profession and similarly massive amounts of extra bureaucracy to create new audit trails and supporting documentation. All this is likely to take many years, add hugely to costs with no improvement in efficiency/productivity. This is truly a recipe for disaster…

(And that’s before you consider the withdrawal of EU funding from a non-member state.)

Touching briefly on the politics…

A Yes vote for the Tories, aside of current leadership, may actually be beneficial in the longer term without Scotland – with currently virtually no representation in Scotland things could only improve for them;

The Lib Dems may also benefit but more likely will maintain the status quo, wherever that takes them.UKIP seem irrelevant to the Scottish debate as an independent Scotland wouldn’t necessarily be in the EU anyway and certainly wouldn’t be allowed to vote in a What’s Left of UK referendum on the subject in 2017 or whenever it happens.

That leaves the Labour Party who could reap the consequences for another disastrous legacy of their period in office. If there has been one amusing aspect of this horribly serious and far-reaching vote it has been the abject panic of Labour on realising the potential consequences of some of its prior actions as the polls have been unveiled. Plus ca change…

Labour supporters in Scotland voting Yes would most likely consign their party to oblivion in England, probably Scotland as well and would be most akin to turkeys voting for Christmas. Stranger things have happened!

For those pessimists among us the Scottish vote represents an eclectic opportunity to consider Worst Cases all around and for a very long time. Optimists haven’t yet got the vote on independence… neither have the English. Maybe it would be nice for the English to determine what happens in England for a change.

Mervyn Bowden is the Managing Director of Intuitive Energy Solutions Ltd.