Action needed now to meet Scotland’s offshore wind ambitions - Jeremy Grant

If you think that things are starting to slip when it comes to meeting Britain’s net zero targets, you are not alone.

In a letter sent to Prime Minister Rishi Sunak a couple of weeks ago, over 100 businesses warned that “without a renewed focus and commitment to delivery from the government, the UK will be left behind”.

Among them were not only some recognisable high street names, such as Tesco and IKEA, but nine members of the 20 consortia involved in the vast ScotWind offshore wind project in the North Sea.

They included Siemens of Germany, Danish energy group Orsted, French utility Engie, BP, SSE and Fred Olsen Renewables, partner in one of the consortia with Sweden’s Vattenfall.

The UK aims to triple offshore wind capacity from 14 gigawatts to 50 GW by 2050 (Picture: Mike Hewitt/Getty)

While it might be tempting for some to blame slippage on Sunak’s tighter embrace of fossil fuels – seen in last week’s announcement that the government would continue to grant licences to drill for North Sea oil – the reality is that an awkward combination of inflation and insufficient action on the policy front threaten progress on offshore wind.

Vattenfall set alarm bells ringing last month by not only suspending work on a large wind project off the Norfolk coast, citing a 40 per cent increase in costs (much of it supply chain-related thanks to Russia’s war in Ukraine), but also warning that this was putting “significant pressure on all new offshore wind projects”.

The move has cast doubt on the UK’s ambition to triple offshore wind capacity to 50 gigawatts (GW) by 2050, from around 14GW now. ScotWind’s importance here can’t be overstated given that its 20 consortia are together to deliver 27.5GW of power — over half the 2050 target.

While it’s admittedly still relatively early days for ScotWind, there are some key issues that need fixed now.

​Jeremy Grant is a freelance writer and editor, and was a journalist at the Financial Times and Reuters for 25 years

One is an urgent overhaul of planning and regulatory regimes to give businesses the confidence to properly sequence the investments needed to build out the various phases of offshore wind projects.

In a paper out last week, the Scottish National Investment Bank highlighted that because oil and gas revenue declines will not necessarily correlate with an increase in offshore wind supply contracts, a “viable supply chain in place at the point of final investment decisions by offshore wind operators will be crucial”.

Another issue concerns “contracts for difference” (CfDs), a mechanism in place since 2015 through which the government guarantees the price that offshore wind operators receive for selling their electricity.

Scottish Renewables, which represents the private sector, says that the parameters used for the current auction in which developers bid for CfDs don’t take in to account the effect of supply chain cost pressures exceeding headline rates of inflation and that the next one in 2024 must “adequately reflect the prevailing economic conditions at the time”.

The Department for Energy Security and Net Zero recently ran a “call for evidence” on how the CfD could be improved. “We are now considering responses and will publish next steps over the summer,” a spokesperson says.

Meanwhile, there are sensible-sounding recommendations on supply chains, grids and consenting in an April report by the UK government’s “offshore wind champion”, Tim Pick, appointed to this new role in 2022.

But the time for reports and target-setting is over. Action is needed, and urgently.