The Scottish renewables sector is on track to deliver on the potential of Scotland’s wind wave and tidal resources, according to attendees at the Scottish Low Carbon Investment conference held in Edinburgh in September.
The upbeat tone was boosted by a keynote address from Al Gore, the former vicepresident of the US, who praised the Scottish government’s vision of renewable energy’s place in the country and its support of the sector.
Gore said: “Scotland has not only provided inspiring leadership, you are exploiting one of the greatest resources anywhere on the planet, with wind, onshore and particularly offshore. “People and businesses have this opportunity of enormous potential for jobs. The amount of energy to be harvested once it’s worked out is enormous.”
First minister Alex Salmond also pointed out to delegates that the low-carbon market was on an impressive growth trend. From an estimated value of £8.5bn in 2007/08 the low-carbon market is expected to rise to £12bn by 2015/16 which would represent 10% of the Scottish economy, he said.
The Scottish Government’s desire to secure a share of the critical turbine manufacturing market is being backed by hard cash. And at the SLCI conference Salmond announced the establishment of a £35m fund to support the development of offshore renewables in Scotland. This money would be used to support the production of full-scale prototypes of the next-generation of offshore wind turbines.
The fund will aim to build on successes in attracting turbine manufacturers such as Gamesa and Mitsubishi to the region and leverage up to an additional £80m in private investment. Scotland does not have a clear field in the race to develop a market leading position in the low carbon sector and the offshore wind sector in particular.
There is at present a fierce battle with Humberside also in the running for the lucrative bounty of jobs and spin-off benefits to local economies. The North of England has the advantage of already having turbines in the shallow waters off the coast. In Scotland’s favour, the waters off its coast hold the promise of greater electricity-generating potential, though this has to be extracted from a harsher climate.
Scotland is also favoured by the close proximity of engineering expertise from the North Sea oil and gas sector which is firmly rooted in Aberdeen, with tentacles reaching out across the Central belt. Some insight into which way the wind is blowing will be provided when a decision is made by Spanish turbine maker Gamesa on the location of a £150m wind turbine manufacturing plant, with Dundee vying against Hartlepool for what could bring 800 jobs to either place.
Gamesa has already opened a £12.5m centre to develop offshore wind technology at Strathclyde Business Park in Bellshill, near Glasgow. The company, which employs 40 engineers at the centre, hopes to have more than 100 staff by the end of the year and 180 within three years.
The choice of Scotland for research facilities has a track record with Doosan Power Systems announcing a major initiative to enter into the Scottish wind power business with investment of up to £170m over the next ten years, announced in March of this year. Supported by Scottish Enterprise, the South Korean engineering company will locate its R&D Centre of Excellence for Renewables at its current site in Renfrew, near Glasgow creating up to 200 jobs.
It is hoped that a second phase will see the establishment of assembly and manufacturing facilities in Scotland. The Japanese wind industry has also declared its interest in Scotland as a viable base for turbine development with Mitsubishi Power Systems Europe announcing an investment of £100m in a research and development centre for the development of advanced offshore wind turbines in Edinburgh in December of last year.
However, it may not prove to be the case that the race to become the leading location for offshore wind facilities is a winner takes all. Niall Stuart, chief executive of industry trade body Scottish Renewables, believes the potential for low carbon technologies is such that there will be enough business for everyone.
“The next couple of years is going to be crucial for offshore wind in Scotland,” says Stuart. “But no single place is going to do it all. It’s too big.” Indeed, Siemens has had meetings with the large Scottish ports following its decision to set up a turbine manufacturing plant in Humberside, indicating that plants may be needed in more than one location.
“That so many companies such as Mitsibushi, Doosan Babcock and Gamesa are now investing here show that there are definitely things happening,” says Stuart. “However, big developments are still a long way away from planning consent. Until there is certainty over order book these companies are not going to make decisions.”
Stuart also praised the Scottish government’s efforts in promoting Scotland’s potential in the renewable field. “There’s is no doubt that what makes Scotland so interesting is the support of the first minister and the Scottish government.
The commitment to targets, smother consenting regimes and prototype development - the market has taken note. The industry feels there is not the same level of support from Westminster as from Scotland.” Politically, Alex Salmond has put his neck on the line with ambitious targets for generating both jobs and electricity from renewables. But, says Euan McVicar, partner in the energy and infrastructure team at McGrigors, these targets are realistic.
“The 130,000 jobs target set by Alex Salmond is achievable though it will take a bit of time,” says McVicar. “Sir Ian Wood (of oil services company Wood Group) made a great speech at SLCI conference where he compared the emerging industry to the nascent Scottish oil and gas services sector of the 1970s.
He made it clear that we are not aiming to compete with the oil and gas sector but that renewables would be additional to oil and gas strengths. The skills base is complementary.” Despite the distinction being made between the stance of the Holyrood and Westminster governments McVicar still has fears that the development of renewables both in Scotland and elsewhere could be hampered by wider political concerns.
“At the moment there is a growing feeling of nervousness in the industry around energy pricing, what with Cameron holding talks with the Big Six, that there may be a knee jerk reaction leading to the withdrawal of support for low carbon technologies,” he cautioned. “In Scotland we need to keep looking at ways to improve our appeal whether that be by looking at business rates or further grants.”
Further out there is considerable potential and growing interest in the marine energy sector with the Carbon Trust predicting that there is the potential to generate up to £76bn to the UK economy by 2050, supporting more than 68,000 UK jobs. Most recently the poster child of the wave and tidal sector in Scotland is Aquamarine Power with a recent announcement of a £3.5m commercial loan from Barclays Corporate and a further £7m from stakeholders signalling the sector’s proximity to maturity.
It is the first time a UK marine energy project has succeeded in securing bank debt finance. Aquamarine Power’s Oyster wave power technology captures energy in nearshore waves and converts it into clean sustainable electricity.
The loans will provide funds Aquamarine Power needs to complete a 2.4MW Oyster array, located at the European Marine Energy Centre (EMEC), Orkney. According to Jan Love, director of project finance for Barclays Corporate Scotland, the Aquamarine loan deal was sealed by the fact that the company had the strategic support of key stakeholders. Love also praised the quality of the management team in place and that the company had already attracted grant funding.
“The quality of management in the renewable sector in Scotland is generally very good with key players in position,” she says. “There are also very large energy companies involved in the sector. The Scottish government has been very helpful in boosting the marine sector here where they get a higher ROC level than elsewhere in the UK. But it’s not just the marine sector where we see potential. We’re actively looking at onshore wind, solar, hydro and biomass.”