Largely unseen from the mainland, the next era of Scotland’s renewables industry is rapidly dawning around its coast.
Work on the £2.6bn Beatrice project – one of the largest private infrastructure investments ever seen in Scotland – is now in full swing in the Outer Moray Firth.
The world’s first full-scale floating wind farm, Hywind, has also started to take shape 25km out to sea from Peterhead.
Deep under the waves in the Pentland Firth, three tidal stream turbines recently set a new global record for monthly production from a tidal stream energy project.
Such projects highlight the diversity of the renewables sector in Scotland, a valuable attribute given the challenges in the wake of subsidy cuts which have inevitably impacted on the pipeline of future projects based on the more mature renewable technologies such as onshore wind, solar and hydro.
While some of the under-construction projects won’t come on stream for many months, Scotland’s existing renewables portfolio continues to set generation records.
In the first six months of 2017, enough power was generated by wind turbines to supply more power than Scotland needed for six days.
Although the sector is already making a significant contribution to the energy mix and economy, the Scottish Government is preparing to announce plans for it to play a much greater role in the years ahead.
A new Scottish energy strategy – the draft version of which was published earlier this year – is expected by the end of 2017 and will set out a vision stretching up to 2050.
The draft strategy sets out an ambitious new ‘all-energy’ target for the equivalent of 50 per cent of Scotland’s electricity consumption, heat, and transport to be supplied from renewable sources.
It is undoubtedly an ambitious goal, although according to an industry survey carried out by Brodies following its launch, 60 per cent of those questioned believe it is likely to be achieved, despite challenges including changes to the UK Government’s renewable electricity subsidies regime and the absence of support schemes of similar scale in the heat sector.
To achieve its aims, the strategy recognises that Scotland will need to develop new energy sources and technologies, like hydrogen and Carbon Capture and Storage (CCS).
But it also promises a major role for wind, the technology which has already seen huge growth in the 21 years since the first Scottish wind farm – ScottishPower’s Hagshaw Hill in South Lanarkshire – began generating.
Latest figures show onshore wind activity now accounts for 30 per cent of total Scottish low carbon and renewable turnover. A new policy statement for onshore wind is being developed to sit alongside the strategy and will aim to reduce planning hurdles while also protecting the environment to support further growth.
Despite the inevitable impact on the pipeline of new projects, there is still an appetite from investors and developers, evidenced by the owners of the UK’s last aluminium smelter near Fort William recently announcing £170m plans to build a 54-turbine project. The site will supply electricity for GFG Group’s Lochaber Smelter and power for Motherwell’s Dalzell steel mills.
David Bone, head of energy and natural resources at Harper Macleod, says the most important objective in the Scottish Government’s strategy is to get such large-scale, efficiently operating wind farms built.
“There is a clear message that if industry can solve the no-subsidy issue, the Scottish Government will provide the planning flexibility required for larger and therefore more profitable turbines,” he says.
“Scotland has decarbonised electricity quicker than the rest of the UK but now we need to push on with heat and transport while the others catch us up,” he adds.
Andy Drane at Davidson Chalmers argues that the final strategy will also need to encourage the return of investment from smaller generators. He points out that cuts to renewable energy subsidies mean it is now “primarily just the big utility players who are still actively pursuing schemes”.
“This is disappointing as we now appear to be reverting back to a more monopolistic energy sector. If Scotland is going to continue to be able to generate significant amounts of renewable energy, the Scottish Government will have to provide a framework which supports all projects, including those run by small operators who are largely now frozen out due to existing UK policy.”
Repowering of existing wind farms which have reached the end of their operational life will have a major part to play in meeting the long-term targets but Pinsent Masons’ Gary McGovern warns that a “clock is ticking” on the first generation of projects as they start to reach their end-of-life.
“With the typical lifespan of a wind farm ranging between 20-25 years, the earliest schemes of the 1990s will soon reach their natural end-of-life and operators need to decide if those wind farms can be repowered or will be decommissioned,” he points out.
McGovern says there is a conundrum facing local planning authorities which dates back to initial planning applications made some 25 years ago or more.
To address concerns over visual impact, planning was – unlike most other development – typically granted on a time-limited basis with an assumption of ‘reversibility’.
“It became assumed that, when projects reached end-of-life, they would be taken down, not extended or repowered,” McGovern adds.
Against this backdrop, Scottish Natural Heritage (SNH), has been charged with developing guidance for repowering applications.
“Current indications are that SNH advice is likely to be to the effect that any application to repower a wind farm should be treated as if the permission was being granted for a virgin site, a higher test than one might expect,” says McGovern.
He says that “would go against the grain” of what the Scottish Government is trying to achieve in streamlining the planning process for onshore wind.
“As we move to the new so-called subsidy free world for onshore wind, it is doubly important that decision-makers, locally and nationally, recognise that anything which makes the planning process lengthier, more expensive and less certain, is a further obstacle to achieving their renewable energy targets.”
Meanwhile, although the promised economic boost to Scotland from development of the offshore wind sector has been slow to materialise, 2017 has seen some significant progress.
As well as the Beatrice and Hywind projects now moving forward, a Court of Session decision in the summer cleared the way for the £2bn Neart na Gaoithe (NnG) offshore wind farm to be built off the East coast of Scotland.
However, a recent move by RSPB Scotland to appeal the decision over concerns around impact on seabirds has now delayed progress.
Almost 30 companies have formed the NnG Offshore Wind Farm Coalition to campaign in support of the project, which is the only major infrastructure project that is ready to build in Scotland next year.
An economic study undertaken by the Fraser of Allander Institute for Mainstream Renewable Power, developers of the controversial project, suggest it could generate around £827m for the Scottish economy.
While the outcome of the legal wranglings over the NnG project may not be known for some time, Scottish firms are being urged to look at tapping into the growth that is underway in the wider offshore wind sector.
With global offshore wind expenditure expected to rise to more than £350bn between now and 2026, significant opportunities are seen for Scotland’s subsea companies to use skills developed in oil and gas to diversify.
Neil Gordon, chief executive of Subsea UK which recently staged an event in Aberdeen to look at the opportunities, says the “incredible” rate of growth being seen in the sector presented a wealth of opportunities for the UK supply chain.
“The UK is home to some of the world’s largest wind farms across all stages of production, including operation, construction, and in planning,” he says.
“However, there are still a number of challenges to overcome to ensure that offshore wind fulfils its potential. It’s vital that the industry works together to share knowledge, get costs down and find smarter ways of working to increase the UK’s competitiveness in a growing global industry. This means building alliances, strengthening the supply chain and embracing new technologies.”
Although offshore wind currently makes only a small contribution to the 21,000 current jobs in the renewables industry in Scotland, that is set to change rapidly in the years ahead.
The NnG project alone would see about 600 jobs created during construction and operation, and could support an estimated 13,900 “person years” of employment in its lifetime.
EDPR, developers of the planned Moray East Offshore Windfarm in the Outer Moray firth, estimate nearly 2,000 jobs will be created over the course of its 30-year production.
Michael Lynch, divisional manager, renewable energy for recruiter Eden Scott in Edinburgh, says the projects underway and planned in Scotland were creating a “strong feeling of optimism within the offshore renewables sector”.
“Offshore wind as an industry has performed beyond expectation in recent years, with significant strides made in technology advancement and supply chain innovation which in turn has reduced the cost of offshore wind per megawatt hour.”
Lynch says that progress bodes well for upcoming announcements under next round of the UK Government’s Contract for Difference (CfD) scheme which supports large scale renewable projects.
“Hiring activity both north and south of the border will largely be impacted upon by the CfD outcome,” he says.
The marine renewables sector, which went through a particularly difficult time with the high profile collapses of Pelamis and Aquamarine Power, now also appears to be making progress and attracting much-needed investment.
Atlantis Resources, the Edinburgh-headquartered group that is behind the MeyGen project in the Pentland Firth, recently broke a record for reaching £1m of subscriptions within 24 hours of the formal launch of a five-year bond.
Its three turbines operating at MeyGen, which also achieved a world generation output record in the summer, are eventually hoped to grow to up to 269.
Nova Innovation, which is also based in Edinburgh, has recently been appointed to lead a £17.6m European-funded project to extend the existing Bluemull Sound tidal array off the coast of Shetland to six or more turbines in a bid to increase the commercial viability of tidal power.
Harper Macleod’s Bone believes the difficulties suffered by the marine sector in its earlier years may now be paying dividends.
“Adversity has led to some real innovation and that’s the key to developing a sustainable marine energy sector,” he argues.
Although progress is being made, Paul Minto, of Addleshaw Goddard, points out that the sector is “still largely at the research and development stage” although he highlights initiatives such as the European Marine Energy Centre, which has operations across the Orkney islands, as providing worldclass facilities and support to move on from that.
“It is to be hoped that UK Government’s industrial strategy will continue to provide the support framework for the commercialisation of these devices and deployment,” he adds.
Although the renewables industry in Scotland has witnessed huge growth – generating capacity has more than tripled in just eight years – recent announcements from Holyrood and Westminster on sales of new diesel and petrol cars should underpin significant further expansion in the decades ahead.
Jenny Hogan, deputy chief executive of trade body Scottish Renewables, says: “A focus on ultra-low emission vehicles, and particularly a drive to encourage their uptake by public bodies, will help move our transport system to one powered increasingly by renewables.”
Keith Patterson, co-head of renewables at Brodies, argues economic and technological changes are transforming the electricity sector, “seemingly by the day”.
“Yet, despite all the change, we have only touched the surface of what is required if we are to decarbonise our energy supply –Scotland is transforming its electricity supply but we are only at the starter’s gun as far as decarbonising transport and heat are concerned,” he points out.