After earlier disappointments when offshore windfarms in the country failed to secure contracts from government auctions, Scotland’s offshore wind energy industry has the wind in its sails
Recent months have been good ones for Scotland’s burgeoning offshore wind industry, with Hywind Scotland, the world’s first floating offshore windfarm, starting to deliver electricity to the Scottish grid, having been formally opened by the First Minister of Scotland, Nicola Sturgeon, and EDPR’s Moray East offshore windfarm off the northeast coast of Scotland securing a Contract for Difference in the latest round of auctions.
After a further challenge to the project by RSPB Scotland, the fate of another project, Neart na Gaoithe, hangs in the balance, despite potential economic impacts associated with building it that are said to amount to £827M (US$1.1Bn) to the Scottish economy, but the industry as a whole is in an optimistic frame of mind, as Scottish Renewables’ head of policy Michael Rieley told OWJ.
“Offshore wind holds huge promise for Scotland” he told OWJ, noting that the country is quickly emerging as an international centre of offshore wind innovation. “Scotland is home to approximately 25% of Europe’s offshore wind resource, and we are now starting to build out projects that will harness this potential,” said Mr Rieley.
“Projects like Beatrice, Hywind, Aberdeen Bay, Kincardine and Moray East are part of a new chapter for our renewable energy industry. They will enable our offshore wind supply chain to start to capitalise on the experience it has gained working on projects in the rest of the UK and further afield and begin to deliver increased benefits in Scotland. In addition, the Scottish Government has shown its ambition to generate the equivalent of half of all energy consumed from renewable sources by 2030, and offshore wind can play a key role in meeting that goal.”
Asked about his reaction to the UK Government’s Clean Growth Strategy and the funding allocation for 2019, Mr Rieley said Scottish Renewables believed that the strategy provides some important commitments that will further the transition to a low-carbon economy and, potentially, benefit industry in Scotland.
“The renewed support for offshore wind deployment and innovation and the commitment to work with the industry on a sector deal is to be welcomed and will help move the UK towards its goal of reducing carbon emissions while delivering affordable energy and clean growth,” Mr Rieley said, “although it is disappointing that no commitment has yet been made to allow onshore wind and solar PV – the cheapest forms of new power generation – to compete for contracts to sell the clean power they produce.
“The strategy includes a number of positive steps,” he told OWJ, “but the government still expects to miss the fifth carbon budget unless it purchases international carbon credits, and although the announcements made in the strategy on cutting carbon in the heat and transport sectors in particular are welcome, the government will need to go further still if it is to meet its legal requirements on climate change and its global commitments under the Paris Agreement.”
Overall, said Mr Rieley, the Clean Growth Strategy includes a number of measures with potentially positive effects for renewables and Scottish renewable projects. These include the fact that the government remains committed to carbon pricing to help reduce emissions in the power sector, with further details on carbon prices for the 2020s to be set out in the autumn 2017 budget. The Levy Control Framework will be also replaced by a new set of controls beyond 2020/21. These will be set out later this year. On renewable technology and projects, the strategy stated that the Department for Business, Energy and Industrial Strategy will “improve the route to market for renewable technologies such as offshore wind”.
On offshore wind specifically, Mr Rieley noted that the government said it will work with industry as it develops an “ambitious sector deal for offshore wind” and that, provided costs continue to fall, this could result in 10 GW of new capacity built in the 2020s with opportunities for additional offshore wind deployment in the 2020s, if this is cost-effective and deliverable. The government also said it will work with The Crown Estate and Crown Estate Scotland to understand the potential for deployment of offshore wind in the late 2020s and beyond.
Asked how important Crown Estate Scotland’s role might be in this process, Mr Rieley said that, since its establishment in April 2017, Crown Estate Scotland has said it is committed to continuing to support industry and help Scotland meets its ambitious renewable energy consumption targets. “The Crown Estate has worked with developers and licensing bodies for many years to plot the potential energy resource under, on and above our seas and to help deliver the technologies that are now enabling us to capture that resource,” he explained. “We fully expect that Crown Estate Scotland’s role in future will remain just as vital to the development of a sustainable offshore renewable energy sector.
“In particular, Crown Estate Scotland has said it will work with offshore renewable energy developers to identify new development rights and additional targeted capacity for new projects, as well as creating policy for extensions to existing commercial and test sites. That is work that will allow the continued development of offshore renewables in Scotland, bringing down costs and helping tackle climate change by reducing the carbon emissions from our energy sector.”
The government, in partnership with the Research Councils and Innovate UK, is also expected to invest around £177M (US$233M) to further reduce the cost of renewables, including innovation in offshore wind turbine blade technology and foundations. Asked what role Scotland might play in this, Mr Rieley told OWJ that cost reductions displayed by many renewable energy technologies – and particularly offshore wind – to date have been “astounding” and highlighted the fact that further innovation could be made possible by the funding in turbine blade technology and foundations, and new innovation opportunities are likely to arise in a number of areas, including floating offshore wind.
“In September 2017, a Scottish windfarm – the Moray East project – was awarded a contract for difference at just £57.50/MWh (US$75.85/MWh), showing that the efforts of developers and the supply chain over recent years are bearing fruit,” Mr Rieley told OWJ. “The Scottish supply chain has played a part in the deployment of offshore wind across Europe, providing skills and technology that have enabled these rapid cost reductions. That supply chain’s continued development, particularly now that projects like Beatrice, Hywind, Aberdeen Bay, Kincardine and Moray East are either under or approaching construction, will continue to provide benefits to a rapidly developing industry at a time of unprecedented cost reduction.”
Asked about the Offshore Renewable Energy Science and Innovation Audit that was commissioned by the government to set out the UK’s strengths in key areas, Mr Rieley said the report highlighted the strong contribution Scotland and the north of England make to offshore renewables, noting in particular our world-class research and strong supply chain, as well as the many innovation programmes and strong collaborations between industry and academia.
“Of particular interest in the audit was Scotland’s expertise in heavy industry, specifically in offshore oil and gas,” said Mr Rieley. “Offshore renewables contracts that have been awarded in Fife, Nigg and Stornoway have already shown that expertise can be tailored towards the needs of the green energy sector, and it is hoped that further linkages between fabricators and port facilities can provide more of a compelling offer to offshore developers, increasing the UK share of major contracts and growing UK GVA.”
The findings of the audit will now be used to develop the government’s industrial strategy and as evidence to support negotiations on a sector deal for offshore wind.