Questions remain, but renewables could prove winner for Scotland

AFTER a fiery week for Scotland's energy companies with the controversy over the Beauly-Denny line, many will applaud the prospects for the offshore energy sector outlined by Ian Marchant, chief executive of Scottish & Southern Energy and First Minister Alex Salmond yesterday. The Scottish Government confirmed rights have been granted to build two massive wind farms in the seas of Scotland's east coast – in the Firth of Forth off Fife and in the Moray Firth.

They would have the combined capacity to power more than two million houses – or almost every home in Scotland. These would take Scotland's total projected offshore wind capacity to over 11 gigawatts by 2020, drawing in more than 30 billion of investment.

The First Minister believes that the offshore renewables industry could create as many as 20,000 jobs over the next ten years, opening up a major new growth sector for an economy currently mired in recession. But the prospects will also be warmly welcomed by environmentalists who have long supported the case for renewables but who are opposed to the landscape spoliation brought by onshore wind farms and especially the 600 gigantic pylons that will form part of the Beauly-Denny power line. How ironic that within days the worst and the best of the renewables challenge should be presented.

The offshore development potential is as great an opportunity for Scotland as was North Sea oil in the 1970s. While it presents great logistical challenges, it also offers the prospect of tapping huge amounts of clean energy that will come to replace our dependence on the finite resources of oil and gas.

However, still to be resolved is how this massive investment will be paid for and who will pick up the final bill. A major row is looming over the issue of transmission charges, which appear to be stacked heavily on those projects harvesting energy from remote locations.

The energy regulator Offgem will impose strict limits on the charges that National Grid can levy. Its profits are already tightly controlled. Ofgem will also be active in ensuring that consumers are not saddled with huge increases in power bills that they cannot possibly pay.

The renewables industry has expressed concern over the potential scale of transmission charges and this will need to be urgently clarified before investment can proceed. All this points to even greater government subsidy and at a time when the Treasury cupboard is bare.

A further problem is how to ensure that as many of the new jobs as possible are located in Scotland. So far all the turbines installed in Scotland have been manufactured abroad. However, installation and repair and maintenance work does offer the prospect of substantial employment in the years ahead. And commitment to offshore development on such a massive scale could well see turbine manufacturing moving closer to the point of physical installation. That would make the prospect truly a 'win-win' for Scotland.