The UK has long depended on its ports as critical gateways for trade and economic growth.
With government ambitions for clean energy generation at an all-time high, the role of port infrastructure within the clean energy sector has never been more important. A number of challenges lie ahead, insofar as much of our port infrastructure has not seen investment for decades and it will require a herculean effort to deliver the port upgrades required across most of our coastline, in order to ensure the ambitions of the UK Government in relation to multi-technology clean energy deployment can be realised.
The race to ensure our ports are fit for purpose is all the more time-critical, given the content of the latest report from the UK Government (the “Clean Power 2030 Action Plan”, published in December 2024), which aims to transition to a clean power system by 2030.
The report makes it clear that the Prime Minister has placed delivery of clean power by 2030 at the core of one of his five missions and Plan for Change. As a statement of intent, this is a powerful message to the market, particularly in terms of providing clarity for developers and potential investors, but the fact remains we have five years to do this, which is quite the challenge.
Within the context of ports, there are a number of hurdles in relation to ensuring Scotland’s port infrastructure is fit for purpose and the clock is ticking (very loudly) to get there on time.
Many of Scotland’s ports last saw investment decades ago (during the oil and gas boom) and so there is an extensive proportion of ageing infrastructure now requiring significant upgrades to accommodate modern shipping needs and the demands of the clean energy sector.
Clean energy demand is particularly significant – offshore wind is a good example, where there are a number of offshore wind projects from the ScotWind leasing rounds coming down the track – 20 projects, with a combined 27.6GW of capacity, were awarded options by Crown Estate Scotland and the market was bolstered further in March 2023 with an additional 13 projects offered exclusivity agreements in the (INTOG) leasing round.
All of these projects will require access to ports and the lack of fit-for-purpose port infrastructure is particularly acute for the floating offshore wind industry, which requires specialised facilities for construction, operation and maintenance and storage.
The challenges around financing are also a concern - we know that billions will be required in order to facilitate the infrastructure upgrades required and whilst there is plenty of liquidity in the financial markets, the flow of investment into ports is not happening at the pace and level required.
That is due partly as a consequence of the risk profile of these projects (they are complex engineering-infrastructure projects with a sizeable capex, numerous environmental, planning and regulatory requirements and each of them will require significant structuring from a financial and contractual perspective).
On the positive side, there are some excellent examples of private sector ports making some in-roads into what is needed.
The significant investments into Ardersier, Nigg, Leith and Hunterston are to be applauded (for example Ardersier Port secured an initial £300 million investment by leading US energy investment firm Quantum Energy Partners to accelerate the port’s redevelopment, as well as £100 million of debt financing from the National Wealth Fund (NWF) and SNIB), but there remains a concern that they are exceptions in a market where progress in port infrastructure development simply has not kept pace with the offshore wind sector.
The UK Government recently announced that at least £5.8 billion of the NWF’s capital will focus on five other sectors relevant to clean power, one being ports, which is a welcome signal to the market (albeit it is unclear how much of that pot will be dedicated specifically to port infrastructure).
There is also mention in the Clean Energy 2030 Action Plan of Great British Energy supporting the growth of clean power supply chains around the U K, with ports set to play a significant role in the supply chain. These announcements, along with other forms of support initiatives (the Strategic Investment Model and the Floating Offshore Wind Manufacturing Investment Scheme (FLOWMIS) being good examples), are encouraging.
However, the government investment announcements are not enough on their own, as the total finance requirement for port infrastructure upgrades is going to run into at least the tens of billions.
We need a developed methodology around how to leverage investment in order to attract further investor, commercial bank and institutional investment market players to the table. It is also evident that a blended finance solution will be needed for most port infrastructure projects and so a multi-layered, grant funding, equity, subordinated debt and senior debt solution will be needed.
This is where the NWF can really add value and has the potential to become a really impactful player in this market, given the suite of financial instruments they offer and their ability to crowd in other financial players. The real question is whether that finance can be mobilised, structured and deployed quickly enough, particularly when the Government target is 2030 and the construction period for some projects will be a few years.
The UK Government has recognised that the delivery of Clean Power 2030 will rely heavily on collaboration and input from numerous public and private sector organisations and there is an expectation that Government expects to work closely with these groups to deliver Clean Power 2030.
Inevitably, the ambition to transition to a clean power system by 2030 presents both challenges and opportunities for port infrastructure development.
Addressing ageing infrastructure, securing investment, navigating regulatory frameworks and coalescing the relevant players are amongst the biggest challenges, but the opportunities are enormous.
Certainly the UK Government has articulated its commitments in the Clean Power 2030 Action Plan - as an industry we need to embrace the challenges and help to drive the collaboration between government, private sector, and communities that will be essential in the short term to realise our port potential.
Shepherd and Wedderburn is headline sponsor of All-Energy, the UK’s largest renewable and low-carbon energy exhibition and conference, taking place in Glasgow on 14-15 May 2025. Visit the All-Energy hub to find out more.