THE Scottish Government has set ambitious targets for decarbonising Scotland and tackling fuel poverty, but these ambitions risk failure without some significant innovations when it comes to buildings and transport.

One is their commitment to establishing a publicly owned National Energy Company (NEC) to help transform the energy system and markets. However, it is unclear how it will undertake that task.

In our paper Powering Our Ambitions, Common Weal sets out how we believe the NEC should be established and develop over time and, more importantly, how Scotland’s energy policy-making would benefit from establishing a Scottish Energy Development Agency (SEDA). This dual-track approach would mirror the success of the Danish Energy Agency. We believe this can help revitalise moves to rapidly decarbonise Scotland and overcome the problems that arise from viewing the NEC as purely an energy supply company. Witness the sad demise of Our Power – largely funded by the Scottish Government.

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The SEDA would prioritise and co-ordinate the distribution of funding related to energy R&D, strategic planning and overcoming the rural-urban fuel divide. These sums are considerable and may amount to over £500 million in 2018/19 and a further £1.25 billion in affordable housing and energy efficiency over four years, which must increase to meet climate change objectives. It would prioritise the training of experts in district heating technologies which have the potential to decarbonise heat in homes, offices and hospitals, alongside insulation where appropriate.

It would work with local authorities, health boards, housing associations and other agencies to identify fuel-poor and vulnerable households and ensure schemes which meet their needs are prioritised. This would end the present system whereby authorities, in effect, bid for funding. A more holistic approach should enable the wider government’s social and economic objectives to be better incorporated. The SEDA would report directly to the Scottish Government.

The NEC would initially act as a preferred contractor for suitable schemes prioritised by the SEDA, particularly district heating schemes, and would employ experts trained through the agency. Most district schemes are unlikely to be commercially attractive to competing energy firms, so the NEC would co-ordinate their construction and own and manage the infrastructure, in much the same way that Scottish Water does. This would ensure compliance with regulator Ofgem.

Many technologies can fuel such schemes, notably large-scale solar thermal, geothermal, hydro and wind combined with inter-seasonal heat storage and heat recovery systems. Which is used will depend on the location, so part of the NEC’s role will include the development of local sustainable fuel supply chains.

The NEC should enable rather than compete with other non-profit or community-owned energy companies, perhaps through a separate technical consultancy company. It could also integrate the development of electric charging points with small-scale renewables and storage in rural areas that are off grid or have low-voltage cables.

Scottish Power Energy Networks and Scottish Hydro-Power Distribution are rationalising their structures towards becoming distribution system operators. But the NEC should not directly compete with their grid management function and should focus on developing microgrids and heat networks.

We believe the NEC will grow over possibly a decade. It provides opportunities to decarbonise Scotland’s energy, tackle fuel poverty, offer skilled employment and enable social and economic regeneration of deprived communities. We hope the Scottish Government considers our proposals and acts on them.

Gordon Morgan has led energy policy research for Common Weal since 2014