George Kerevan: Energy summit could spark a new industrial revolution

Published on Wednesday 3 March 2010 20:07

The Pentland Firth tidal project is fascinating, but the engineering problems equal those to put a man on Mars

Under its energetic chief executive, Ron Hewitt, the capital's business forum recently won the prestigious British Chambers of Commerce Chamber of the Year Award.

Not content to rest on its laurels, tonight the Chamber has brought together Shell UK boss James Smith and First Minister Alex Salmond to debate Scotland's potential to be "the Saudi Arabia" of renewable energy.

According to Hewitt: "Scotland's natural advantages in alternative energy provide us with a once-in-a-lifetime opportunity to lead the alternative sector in Europe. That's the First Minister's view… At Edinburgh Chamber of Commerce we couldn't agree more."

So much for the hype. But just how plausible is this plan to rebuild the Scottish economy around renewable energy – both as a technology and an energy exporter?

Between now and 2030, according to the International Energy Agency (IEA), global primary energy demand could jump by 40 per cent, with electricity use growing by three quarters. The cash required to fund this new energy infrastructure is massive – $1.1 trillion a year till 2030, or roughly 1.4 per cent of global GDP. Everybody will want a piece of that action, not just Scotland. But even a piece is worth having.

What about global warming? Even if you are a sceptic, the coming shortage of fossil fuels relative to demand is going to push up oil and gas prices and create a huge – and profitable – market for renewable power. (Though I'd like the sceptics to tell me where all the energy trapped under the blanket is going, if it is not heating the planet.)

Theoretically, Scotland is in a pole position to supply renewable electricity to western Europe, and to supply the relevant technical know-how to the rest of the world. The reason is our unique geographical proximity to potential wind, wave and tidal power.

Scotland has 12,000km of coastline – more than the entire eastern seaboard of the United States. Wind turbines elsewhere in the EU operate at an average of 25 per cent of their rated power due to the intermittence of the wind.

But Scotland's Atlantic location ensures an average of 40 per cent. If harnessed, the roaring waters of the Pentland Firth could generate more than 15 terawatt hours of power per annum – half of the entire electricity consumed in Scotland.

Can this potential really be harvested? The Scottish Government has given the green light to a raft of onshore wind farms as well as to the controversial Beauly-Denny transmission line, which will run power from offshore turbines in the north.

On the manufacturing side, Scottish Enterprise and Highlands and Islands Enterprise have just published their Renewables Infrastructure Plan, identifying 11 key sites for the production of giant offshore turbines. To speed up research, the Scottish Government has announced the creation of the Saltire Prize, worth 10 million, for advances in clean energy.

But let's stay with the pragmatic rather than the romantic side of the Scottish character for a moment. In the race to supply renewable electricity to the EU, Scotland has a serious competitor – the Desertec project in the Sahara Desert.

Backed by German cash and engineering genius, this aims to cover 17,000 sq km of the sun-soaked Sahara with solar mirrors, photovoltaic systems and wind parks. Desertec could provide Europe with 15 per cent of its electricity by 2050, though it will require heavy investment in new transmission lines to get it there. However, a host of big players are already involved, including Deutsche Bank, Siemens, ABB, and E.ON.

More energy falls on the world's deserts in six hours than humankind consumes in a year. The Sahara is almost uninhabited and close to Europe. Servicing a broken power plant in the Sahara is easier than doing the same thing in a howling gale in the Pentland Firth. Politics are also involved: the French see Desertec as the catalyst for bringing North Africa permanently into the economic and political orbit of the EU.

If Scotland wants to turn its dream into reality – and I hope it will – it must match the scale of the German vision. We would need to create an industrial equivalent of Desertec – EuroPower? – involving the likes of RBS, Shell, the big European power generators and key Scottish renewable technology firms.

And if our (theoretically) publicly-owned banks won't get involved, we could take up the idea proposed by the Scottish Building Federation for the creation of a new, state-owned national infrastructure bank to do the job. This would be modelled on the KfW Bank in Germany, which was formed as part of the Marshall Plan after the Second World War.

Scotland also suffers a major gap in manufacturing renewables. We do not build the giant turbines needed for Atlantic use – that industry is dominated by Germany.

Our research effort is too diffuse and often too un-commercial. The Pentland Firth tidal project is fascinating, but the engineering problems are equivalent to putting a man on Mars. Besides, Scotland has a serious shortage of engineering skills.

There are moves being made to give Scottish renewables strategy more focus. Sandy Cumming, former head of Highlands and Islands Enterprise, has just been appointed to co-ordinate offshore energy policy across the public sector in Scotland. Effectively, Mr Cumming is now energy tsar.

But too often tsars are a public relations exercise, obscuring a lack of real political leadership and serious cash. The top table at Prestonfield House tonight have a chance to do more than make speeches. Messrs Salmond, Smith and Hewitt can also make history by uniting to initiate Scotland's Second Industrial Revolution. I'll toast that.