Comment: Renewables industry must be given clarity

Wind farms in the Moray Firth Beatrice Offshore Wind Ltd and Moray Offshore Renewables Ltd were consented in March this year Picture: Ian Rutherford

Conditions off the coasts of Scotland, particularly in midwinter, can be atrocious.

Winds well in excess of 100mph, towering waves of more than 60ft, ferocious tidal currents and sub-zero temperatures mean our seas are one of the most challenging places on the planet in which to work.

For renewable energy developers, it is the power in those winds, waves and tides which makes Scotland attractive. But 2014 was a challenging year for marine energy in Scottish waters – particularly for our nascent offshore wind industry.

Be under no illusion: the opportunities opened up by the granting of consent for the Neart Na Gaoithe, Inch Cape and Seagreen Alpha & Bravo projects off the coast of Fife and Angus are immense.

The Scottish Government estimates these four projects alone could generate up to £1.2 billion for the Scottish economy over their lifetime, and support up to 13,600 construction jobs.

The other wind farms in the Moray Firth – Beatrice Offshore Wind Ltd (BOWL) and Moray Offshore Renewables Ltd (MORL) – were consented in March this year. In total, the six projects could deliver more than 4GW of offshore wind capacity and power almost three million homes.

There remain, however, numerous challenges to delivering these schemes – challenges which will be discussed in detail at Scottish Renewables’ Offshore Wind and Supply Chain Conference in Aberdeen in January.

Importantly, most of the projects still need to secure revenue support, either through the new Contract for Difference (CfD) mechanism established by the UK government, where projects compete for funding, or the more familiar Renewables Obligation (RO).

The pot of £235 million made available for “less mature” technologies like offshore wind in the first allocation round of CfDs was significantly lower than the industry expected, effectively capping the amount of offshore wind that can be built around the UK between now and 2020.

ScottishPower Renewables has already stated its intention to scale back the size of the East Anglia ONE scheme, a joint venture with Vattenfall off the coast of Suffolk, because of the size of the first allocation round pot and other developments may well be considering similar strategies. The UK has long been one of the most highly-rated international markets for renewables. However, in recent years the uncertainty caused by Electricity Market Reform has pushed the country down the competitiveness league tables.

Offshore wind developments are enormous infrastructure projects. The lead times for their investments amount to several years and investors need a stable framework. That’s why Scottish Renewables has stressed that early indication of the next budget for the allocation of CfDs and of the Levy Control Framework beyond 2021 is so important.

The outcome of ongoing deliberations around the CfD process remains hugely important to Scotland, its economy and its environmental aspirations. It is too early to say how this process will play out.

That uncertainty is also causing problems for investment in supporting infrastructure and the offshore wind supply chain. It is hard to develop a strong supply chain without clarity over the size of the market and how long it will take to develop, but it is equally challenging for the industry to develop in the first place.

Towns like Wick – the preferred site for the BOWL project’s operation – and Eyemouth in Berwickshire, which has invested £75,000 in marketing activity to tempt wind farm survey and supply vessels into port, have seen the potential benefits of offshore wind.

Ardersier, near Nairn, has ambitious plans to rejuvenate a former oil industry fabrication yard with green energy jobs and infrastructure, while Montrose in Angus has invested in deep-water berths and large handling and storage areas to service the offshore renewables industry.

This type of preparatory work is creating a strong base for our offshore wind industry. The consents have got us to the starting line, but there is still a long road ahead. The ultimate prize, however, remains billions of pounds of investment and the creation of thousands of jobs for Scotland over the next quarter century. That’s surely a goal worth striving for.

• Hannah Smith is policy officer at Scottish Renewables.