Scottish independence: The real reason for SPR’s delay for Tiree Array ?
Below are extracts of Peter Atherton’s evidence to the Commons Energy and Climate Change Committee’s scrutiny of the impact of potential Scottish independence on energy and climate change. The Committee met on Tues 24th April 2012
Peter Atherton is head of European utility sector research at Citigroup Global Markets and the author of a controversial Nov 2011 report addressing the independence issue and Scottish Government’s Renewable policy .This NOV report suggested that an independent Scotland would “probably not” be able to support a large-scale renewable energy industry, and offered,in Nov 2011 , this emphatic view on the development of Tiree(Argyll) Array;
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We would be very surprised if Scottish Power /Iberdrola were to go ahead with the Argyll Array until the constitutional position of Scotland within the UK was settled
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Alex Salmond ridiculed this Nov report
Mr Atherton advised the committee :-
- “All” of the investors he had spoken to had decided to halt investment on their offshore wind projects until the post-referendum regulatory regime was settled
- It was “questionable” whether the current UK-wide renewables subsidy would continue if Scotland seceded.
- Investors “cannot and will not make these investments” without the guarantee of ongoing subsidies “
- Current investments were “small-ticket items”, inadequate to realise Scottish Government’s “big plans”
- “From the corporates who are involved in investing in offshore wind, particularly in Scotland, that we have been talking to in recent months, all of them have said to us: ‘We will not progress with offshore wind projects in Scotland until such time as we gain that certainty’.”
CITI group has a client relationship with Iberdrola, SPR’s parent company
An article in today’s Oban Times is headed Argyll Array cllaims ‘nonsense’ says Scottish power Renewables’
The company claim the delay is entirely to give time for further environmental studies.
It does seem a bit poor for NTA to demand more investigation into environmental issues then to make politics out of thin air when these demands are acknowledged and acted on.
Moderators Comment:. As of writing this comment , the Oban Times issue to whiich you refer has yet to arrive on Tiree . At this stage NTA cannot offer a specific response to the article . However as to your comment that ” It does seem a bit poor …. when these demands are acknowledged and acted upon ” shows a lack of understanding of the underlying detail and timing of SPR’s announcement . It is naive to believe SPR acted upon, or acknowledge any demands made by NTA . NTA would be flattered if that was the case! These environmental issues have existed from the outset of this project . SPR hi-lighted them in their own Scoping request to Marine Scotland in Aug 2010. For reasons only known to SPR they have not progressed them to maintain their original schedule. SPR, on their own admission do not have an engineered design for the Array. CITI groups statement re investor doubts is fact not fiction. It is co-incidental that NTA’s hi-lighting environmental issues co-incided with SPR announcing their 18 months delay on making a possible submission. There are a host of reasons delaying this project,all of which NTA has been hi-lighting since last qtr 2011.
Having now read the Article, NTA can comment as follows:-
(1) It states;- NTA “pointed to evidence given to the Commons Energy and Climate Change Committee”. This evidence is in the public domain.
(2) How the Oban Times reported that evidence is the prerogative of the OT
(3) How SPR commented on that evidence is also SPR’s prerogative.
It would be naïve to expect SPR to confirm the CITI report.
Renewables Energy is subsidy driven. It is dependent on current UK Government policy. Obviously, the subsidy policy of a possible Independent Scotland, is a matter of concern to investors.
SSE has been much more forthright on this issue, and was reported in April, to the effect, that it would honour existing investment in Scotland, but warned that the uncertainty created by the 2014 referendum could jeopardize future investment plans. (http://scottishutilities.co.uk/news/78.htm)
NTA is not making politics out of thin air.
Seems from the latest reuters report that…the bitish taxpayer will indirectly help bail out Spain through whatever we pay into Iberdrola coffers…Big business, gotta love it…maybe the anti-globalisation campaigners are right ?
The JNCC report released in 2009 in relation to the Great Northen Diver issue covers several years of data collection…I do not see how a couple of years extra data generated by SPR will negate the fact that the area they are looking at has been noted by both the JNCC and SNH as requiring SPA status…Simply meeting the criteria means that the area is protected by EU law. The same applies to MPA status.
It is unfortunate that SNH did not raise these points with SPR in their reply to Scoping Option…but HS also forgot to mention to the developer that the Skerryvore light was within the proposed Array area…is this a failing in the system or a deliberate act…it is definately negligent.
SPR have also contacted me clarifying that they will study the affects on local climate pre-development (I await the outcome)
As for what is written in the press…well all news is good news if you are on the winning side…right ?
The question of independance is but one of many reasons why the proposal could be delayed…SPR say the Environmental studies…this poses a question:
The more the input on survey to unravel the complex ecological issues, the more the ecological issues come to the fore. SPR wish to understand what is in the area so they can mitigat impact…mitigation does not mean removal, it means to reduce impact to as low as is reasonably possible…The “low” bar in the case of the Tiree is obviously going to be quite high…at what point is too high a reason to cancel the project ?
It is more that obvious that given the extensive surveys in the proximate area of Tiree that simply having SPA/MPA or SSSI is not enough to stop development in it’s tracks. If it was then SPR would not be here.
One has to cast ones mind back to SPR’s comments at the original community consultation meeting…it was stated that only the discorery of an exceptionally rare species would or could stop the project. Do we assume then that in the case of the Argyll aka Tiree Array the bar was already set by the Scottish Government, and in the case of this project that the environment comes in second place to the development.
Only time will tell…but until then anther species ontop of the Great Northern Diver already noted that they have again missed in all of their posturing…
In the sublittoral zone of Tiree and the south coast of Col, the relatively exposed
nature of the area restricted sedimentary habitats to coarser sands and gravels, in which the large cerianthid anemone Arachnanthus sarsi has been recorded for the first time in Britain (Dipper 1981).
Regards
karl
I’m sure there are a multitude of reasons for the delay, this is probably one of them –
Standard and Poor’s the rating agency today downgraded Iberdrola a notch. Some highlighted text in “” below from Reuters.
Asset disposal and capital expenditure reduction are commitments made by Iberdrola’s management. As the domestic situation in Spain is likely to degrade re the eurozone crisis, suspect Iberdrola will be moving to a more conservative approach with respect to the management and servicing of their debt which is no 1 priority in terms of the market.
Not to say they won’t try to ‘sell -on’ their ‘asset’ re the Tiree Array, so all the good work from the folks at NTA will have to continue until this is finally recognised for the madness it is.
“We assess Iberdrola’s financial risk profile as “significant,” based on the
group’s high leverage. We think that deleveraging might be restricted by
potential delays to the receipt of further proceeds from the securitization of
Spanish tariff deficit receivables. Nevertheless, in our base-case credit
scenario, we forecast that, in the near term, Iberdrola will be able to
strengthen its Standard & Poor’s-adjusted funds from operations (FFO) to debt
to 20%, which we see as commensurate with the ‘BBB+’ long-term rating.
We also believe that Iberdrola’s management remains committed to reduce debt
leverage, as evident in the past in asset disposals, the moderation of capital
expenditure (capex), and the payment of scrip dividends. In our view, such
measures could counterbalance to an extent any potential downside in our
base-case forecast as a result of worsening power market fundamentals,
political risk, and/or regulatory decisions that have adverse consequences for
the electricity industry.
Under our criteria, we assess Iberdrola as having “high” domestic country
risk, based on our view of the utility sector’s “high” sensitivity to country
risk, and the fact that about 47% of Iberdrola’s revenues in financial year
2011 derived from Spain. We therefore allow a maximum possible rating
differential of two notches between the ratings on Iberdrola and those on the
related investment-grade sovereign in the European Monetary and Economic Union
(eurozone), that is, Spain.”
Moderators comment; Iberdrola’s debt reduction policy is confirmed by this Platts report (10 May )
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Iberdrola said Thursday, it may dispose of its natural gas business and in particular its US natural gas business in a drive to reduce its net debt…..Galan (Iberdrola CEO ) said the company was targeting debt reduction for the rest of 2012, to bring the figure below Eur30 billion ($39 billion). Besides the interest in selling the gas business, he said that other alternatives were being studied, without elaborating.
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There is a delay, good news ! whatever caused it ! most likely the environmental issues. Lets work on the other obvious delay generating issues , such as the micro-climate issue. There is always a chance that SPR will plan to do this after construction as a mitigation measure, lets not give them the chance. Or the recent release of a JNCC document showing that the Skerryvore Reef also meets MPA criteria ontop of SPA criteria, everybody thought the basking shark hotspots were in Gunna, the mother of them all is now found to be at Skerryvore.
A Wind Turbine proposal with planning permission is worth multiple times the cost £ in getting to that stage, the resale value is based on the guaranteed cash income(grants & ROC’s). It may be SPR’s intention to progress with minimal cost until planning permission is granted and then to sell on to an investment company with a further contract to build and maintain the site for same investment company for a fixed fee. They lose out in terms of total income but short term cashflow is improved and can be reinvested in similar schemes. SPR having current problems raising cash can work both ways in terms of whether the scheme is realised.
Now hopefully this will cause a delay. Pat Sword of Ireland has taken the EU and its 20% reduction in CO2 by 2020 policy to the UN and had it ruled against as undemocratic.
The UN-ECE Compliance Committee of the Aarhus Convention has now ruled in the case Pat Swords v European Union. The ruling has implications far beyond this case.
http://www.irisheconomy.ie/index.php/2012/05/14/pat-swords-v-the-world/
To recap, Pat is no friend of renewable energy. He complained about the government’s renewable energy policy to every authority in Ireland and was either ignored or told to go away. So he complained to every European authority with the same result. And so he complained to the United Nations Economic Commission for Europe under the Aarhus Convention on Access to Information, Public Participation in Decision Making and Access of Justice in Environmental Matters.
In February 2011, the Committee admitted Pat’s complaint. This is significant. Ireland did not ratify the Aarhus Convention. The EU did, however. Because Brussels handed down its renewable energy policy, Dublin is bound by Aarhus.
Moderators Comment; NTA was aware of this judgement and is considering its implications as to its deployment in seeking NTA’s objectives.
Thanks JohnH for bringing up a good point.
This shows we must continue to bring pressure to prevent Planning Permission being given, even if euro crisis and technical diificulties slow it down.
It would seem that there are too many people with vested interest in this project who are involved in the planning permission. I dont trust Argyll and Bute council as they obviously want it to go ahead as it would bring more business and money through their coffers without negative affects in Oban or Lochgilphead. It would also appear that parts of Tiree are already selling out with these talks between various parties for ” careers” linked with the windfarm.
Dont forget as well as being ringed by a fence of turbines the island could also be turned into an Industrialized wharehouse and Helibase. ( interesting to note if you switch an “a” for an “O” and an “i” for a “L” in that description )
Keep up the good work NTA
Moderators Comment:NTA’s assumes switching the “a” for and “O ” was not the “a” in ‘helibase’ !! Jesting aside, the social implications from the very real possibility of an all- male itinerant labour force of between 79-89, in effectively dormitory accommodation must be subject to very close study arising from the Tiree On shore Scenario Mapping exercise. NTA suggests you make your point direct to the Steering Committee
Thought this was an interesting write-up from last week’s evidence to the Energy and Tourism committee at the Scottish Parliament.
http://www.telegraph.co.uk/news/uknews/scotland/9301048/Alex-Salmonds-46-billion-green-gamble-with-Scotlands-economy.html
At some point you’d hope that facts and figures would start to have an influence on Scottish Government policy, Alex Salmond is an economist by trade after all.
Moderators Comment; Mr Athertorn/CITI group has been a thorn in the flesh of Scottish Government since their Nov 2011 report which stated , boldly ;
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We would be very surprised if Scottish Power /Iberdrola were to go ahead with the Argyll Array until the constitutional position of Scotland within the UK was settled
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Six months later, not only has SPR delayed its planning application till late 2014 but in doing so has delayed its ‘final investment decision‘ in all probability into 2017 thereby making any investment decision after “the constitutional position of Scotland within the UK was settled”
The SNP and Alex S were dismissive of the Nov 2011 CITI forecast.
Scottish Power in delaying Tiree(Argyll) Array has confirmed CITI’s forecast .
For Peter Atherton’s evidence to the committee go to :
http://www.scottish.parliament.uk/S4_EconomyEnergyandTourismCommittee/Minutes/20120530.pdf
Thought this was interesting and actually one of the most concerning and devious developments I’ve seen since this campaign started, not just for Tiree but for Scotland. Basically SPR through Iberdrola is becoming a ward of the Spanish state and we (Scotland, Tiree) are potentially handing over our natural assets, landscape and environment to a Parliament/Senate that we have absolutely NO influence on whatsoever. Utter madness if we (Scotland) let this happen. The Spanish Government have figured out that UK/EU subsidies from their subsiduary companies (SPR) are going to save their fiscal bacon and are stacking legislation to make sure nothing changes to alter the flow of money into their fiscal imbalance (they’re broke and we’re going to pay for it through destruction of our environment). If you’ve been sitting on the fence about what this means for Tiree which is basically industrial exploitation on a grand scale I’d suggest waking up quickly and getting involved to fight a change that will destroy our environment for the benefit of the Spanish state.
http://www.businessweek.com/news/2012-06-06/spain-plans-to-shield-repsol-iberdrola-from-hostile-takeovers
Moderators comment;-
This raises some very important issues . This proposed legislation by Spanish Govt is specifically to cater for the current corporate difficulties, nationally and globally of 2 major Spanish energy companies IBERDROLA ( owners of Scottish Power ) and REPSOL [ 25% partner with SSE (75% ) in the Beatrice Offshore wind farm,for which the planning application was submitted, to Marine Scotland, last month] .
Such are the issues raised, that NTA has asked Scottish Government to comment.
SG has replied to NTA. It would appear SG confused the Spanish Government’s share protection proposals with nationalisation of Iberdroala. Hence SG has not answered NTA’s specific enquiry . NTA await SG’s further response.