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Could Scotland become the World’s First ‘Hydro-Economy’?

By Rob Hull on September 10, 2010

Scotland’s first minister and leader of the Scottish National Party (SNP), Alex Salmond, has informed the Scottish Parliament that he aims to confer new powers on the state-owned utility Scottish Water in a bid to turn Scotland into “the world’s first hydro-economy”.

It is thought the new powers would enable Scottish Water to develop an extensive portfolio of wind farms, ‘green’ power stations and hydro projects, however, if Mr Salmond wishes to realise his green ambitions, he must continue to resist the UK Government’s efforts to dismantle and reorganise Scottish Water.

One of Scotland’s few remaining state-owned firms, Scottish Water possesses all the credentials to succeed as a major player in the green renewable energy sector.

Currently positioned as the UK’s fourth largest water utility, Scottish Water comprises assets worth around £5.5 billion and annual revenues of approximately £1 billion. Crucially, Scottish Water owns some 80,000 acres of land, much of which is said to be ideal for the creation of wind and hydro energy projects.

Turning Scotland into a ‘hydro-economy’ may be a political stretch too far – and one that perhaps ought to be expected ahead of the Scottish elections in May – but any intention to develop green renewable schemes should be encouraged on environmental grounds.

If Scotland were able to harness substantial quantities of energy from onshore wind farms and hydro schemes, the nation would benefit from lower carbon emissions and, potentially, reduced fuel costs. Domestic energy consumers in the UK can already choose to power homes and fuel central heating systems via renewable sources, the availability of which would surely increase if Scottish Water is given more room to grow.

Mr Salmond’s own economic advisors and the UK Government are thought to be keen on raising funds through the mutualisation of Scottish Water, which would save the taxpayer £140 million per year in subsidies and generate £2 billion for the UK Treasury and £1 billion for the Scottish Government. A mutualised Scottish Water would also produce revenue ahead of anticipated spending cuts of £3.7 billion, which may be introduced next month.

The fate of Scotland as a hydro-economy appears to hinge on political, not environmental, factors.

The legislation Mr Salmond has introduced to the Scottish Parliament would allow Scottish Water to defend itself against mutualisation. The UK coalition Government requires the support of the Labour Party to amend the legislation to enable mutualisation, which would help offset spending cuts.

The value of Scottish Water as a producer of renewable energy appears to be of secondary importance.