26.Jul.2018

Opportunities abound for offshore wind: will Scotland capitalise?

The renewables sector in Scotland has every reason to be cheerful based on announcements this week confirming May 2019 for the next auction for Contracts for Difference and further auctions every two years.

These auctions will focus on ‘less established technologies’ - in essence offshore wind (almost certainly fixed foundation) and the so called ‘remote islands wind’ – with government backing of up to £557 million. 
 
The announcement is not unexpected, but is, nevertheless, very welcome to underpin the forthcoming licensing rounds by both Crown Estate Scotland and The Crown Estate. It is, after all, what the industry has been calling for – a clear signal that the UK Government sees merit in these significant projects, which are capable of producing clean power at scale and at the lowest cost and, hopefully, supporting the creation of jobs and industrial clusters – breathing new life into some of our coastal communities. 
 
So is Scotland well positioned to take full advantage of this opportunity? 

For ‘remote islands wind’ read projects in Shetland and the Western Isles, which have fought long and hard to share in the ‘less established’ support mechanism. The support is required to help them absorb the significant additional transmission access and charging costs their onshore projects will incur over and above those faced by other generating stations, including some offshore generating stations against which they will now compete for CfDs in the next auction. This may be viewed by some, of course, as the UK Government making an uneasy compromise to kick the task that is really required – a full review of transmission charging – into the long grass for a little longer.
 
And what of our offshore wind aspirations? 

Well, it’s not just a question of government sending out the right signals through the support mechanism. We’ve been involved in enough of these highly complex and challenging infrastructure developments to know that bringing them to fruition requires having all the ducks in a row.
 
As noted above, Crown Estate Scotland is making available new areas of seabed for leasing for the next generation of offshore wind. And, in a recently closed consultation on scoping ‘Areas of Search’ for offshore wind energy in Scottish Waters, Marine Scotland all but shuts the door on new fixed foundation options, focusing instead on deep waters suitable only for floating wind technologies. Floating wind is a terrific option…for the late 2020s perhaps… but what about a pipeline of fixed foundation developments over the next 10 plus years to take us there? 
 
In the background to all of this, progress is being made towards establishing a Sector Deal for offshore wind, a key requirement of which is the supply chain piece. We failed to secure the full economic benefit that the spectacular growth of onshore wind could have delivered across the UK and there is a real determination not to let that happen again. If you ask the supply chain what it needs to commit to offshore wind, you may receive a few asks, but I’d wager at the top of the list is a foreseeable pipeline of contracts. 
 
Scotland is a small nation with big potential. It cannot be beyond our collective communication skills to ensure that we identify sufficient options for development of fixed foundation offshore wind developments to create that foreseeable pipeline of work – alongside the remote islands developments – to see this latest opportunity maximised here as well as in UK Waters over the next decade.

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