Offshore Renewables
The final item of business is a members’ business debate on motion S3M-6366, in the name of Maureen Watt, on the offshore valuation study. The debate will be concluded without any question being put.
Motion debated,
That the Parliament notes the publication of The Offshore Valuation Study at the All Energy Conference in Aberdeen; believes that its conclusions demonstrate the scale of economic opportunity available to Scotland in the offshore renewables sector, and acknowledges the report’s conclusion that the development of a European super-grid is integral to the future success of the industry.
17:04
I thank all the members who have stayed for the debate and those who signed the associated motion. Given that the Scottish low carbon investment conference took place this week, I believe that it is a timely moment to discuss the offshore valuation study and the challenges and opportunities that it sets out for Scotland’s renewables industry.
The subject is often discussed by members of all parties, and I believe that all members want Scotland to lead the way in harnessing the renewable energy off our shores to drive forward our economy. To get there, however, it is imperative that grand vision is matched by robust calculation and strategy.
The offshore valuation study is an important document that goes a long way towards quantifying what must be done in the coming years and what the potential rewards will be. It is a solid basis for the long-term planning that will be the bedrock of making the most of the renewable energy resources off our coasts.
Last year, the Parliament passed its world-leading Climate Change (Scotland) Act 2009, which is one of the most important actions that members have taken since devolution began. The challenges of meeting the target of a 42 per cent reduction in carbon emissions by 2020 and an 80 per cent reduction by 2050 are significant, and the nature of our energy supply will play a key role.
It is estimated that, across the United Kingdom, electricity supply will need to reduce its carbon emissions by 80 per cent before 2030 if we are to stay on track to meet the 2050 carbon emissions reduction targets. In Scotland, we have the opportunity to be well ahead of that curve. The First Minister announced just days ago that Scotland should aim to produce 80 per cent of the electricity that we need from renewable sources by 2020, and that there is the real prospect that 100 per cent of our electricity demands will be met by renewable means by 2025. Those are challenging goals, but they are made possible by the rate of progress in recent years.
As important as it is for us to support the development of renewable energy for climate change reasons, there is an unprecedented economic opportunity for our nation, too. The offshore valuation study estimates that the UK’s offshore renewable energy resources would, if developed to full capacity, produce six times the current UK electricity demand, or 2,131TWh. While any conventional resource will inevitably diminish with time, renewable energy by its very nature will always be there for us to take advantage of with the right infrastructure and equipment.
The offshore valuation study outlines three scenarios that could be delivered with appropriate levels of investment. The first is that the UK would develop offshore renewables to the point at which any further development would require electricity to be exported. The second is that we would push past that to the point at which electricity exports would be equivalent to the electricity that is produced by all means other than offshore renewables. The third is that enough electricity would be produced to match the energy that is generated by electricity, gas, oil-based fuels and other sources. The aspiration to produce clean, renewable energy that provides for heat and transport needs across the UK in that way is hugely ambitious, but it is conceivable if enough was to be invested.
Each scenario is progressively more ambitious, with greater initial investment demands and greater rewards in the longer term. The scenarios provide highly illustrative demonstrations of the level of investment that is required, but also the level of energy and wealth that can be produced.
It is clear from the scenarios that if we have the ambition to export renewable electricity to other parts of Europe, the creation of a European Union supergrid is fundamental. The access to a European energy market that a supergrid would bring is essential if the potential revenues from offshore renewables are to be secured. The EU has identified the development of a European supergrid as a key infrastructure priority, but we cannot rest on our laurels and assume that that infrastructure will automatically be built without Scotland’s continued input.
As long as Scotland does not enjoy its own voice in Europe, I hope that all parties in the Parliament would push the UK Government at every opportunity to lead the progress that must be made on delivering a supergrid. That is a development of critical national importance for Scotland’s economic future.
Of course, a supergrid is not the only infrastructure that will be needed to make a success of offshore renewables. Sites around Scotland that, with the right investment, can become hubs for the offshore renewables industry are identified in the national renewables infrastructure plan. In the north-east, Aberdeen is already the energy capital of Europe, thanks to the oil industry. It has rightly been identified as integral to the future of offshore renewables, too.
Getting the right investment in place is critical if Scotland is to fully develop its own centres for manufacturing, maintaining and operating offshore renewables technology. We have a wealth of offshore expertise, thanks to the oil industry, and we can develop that expertise further to provide real jobs and economic opportunities to thousands of people throughout Scotland in the offshore renewables industry. Fully developing our supply chain is a key part of the progress that we must make if we are to ensure that the cost of offshore renewables is not to be prohibitive and that the Scottish economy enjoys maximum benefit from the industry’s growth.
The European Commission’s North Sea grid co-ordinator, Georg Adamowitsch, recently said:
“Taking into account the wind, wave and tidal resources of Scotland, you are in a position to help the rest of Europe to achieve its climate goals.”
A real leadership role is available for Scotland to grasp in moving towards offshore renewables to help to tackle climate change. The findings in the offshore valuation study are an invaluable outline of the challenges and opportunities ahead. We must ensure that we build on them to help Scotland to achieve our potential in the area.
17:11
I congratulate Maureen Watt on securing the debate and highlighting the work of the offshore valuation group, and am delighted that there is cross-party enthusiasm for a project that was, of course, given the green light by Ed Miliband as Secretary of State for Energy and Climate Change. There is also cross-party enthusiasm for a European supergrid and offshore renewables in general. However, it is easy to talk a good game on renewable energy; it is much harder to deliver.
It is more than seven years since I gave consent as the responsible minister for Scotland’s first offshore wind farm at Robin Rigg in the Solway Firth, and it is four years since ministers at Westminster gave the green light to wind power generation from the Beatrice oil field in the Moray Firth. Since then, important steps forward have been taken in recognising the potential future contribution of offshore wind, but there are still vital decisions to be made. The next 10 years will be critical in realising that potential.
The world’s biggest offshore wind farm was officially opened the other day, but it is not in Scottish waters—it is off the coast of Kent. Just because we have the best natural resources, it does not automatically follow that we will capture the economic benefits that those resources can bring. To do that, we have to recognise and be honest about the challenges in funding the necessary infrastructure and delivering the necessary consents. Anyone who is tempted to believe that that will be easy needs to reflect for a moment on the record on onshore wind.
Since the current Scottish Government took office, ministers have made decisions on 16 new onshore wind farm applications. They have approved 11 of them, with a combined potential output of 1,676MW, and rejected five, with a combined potential output of 1,153MW. That is a 60:40 ratio. In other words, ministers have approved 60 per cent, or three out of every five, potential megawatts of new renewable energy from new onshore wind farms since May 2007. Hence the need for realism as well as ambition in relation to offshore wind. Scotland can compete, but it can compete for offshore investment only if the strategic environmental assessment for Scottish waters supports wind power development as much as it is supported elsewhere in these islands, and if the consenting authority for Scotland’s marine environment is able to deliver an approval rate for projects that is better than 60 per cent.
We need to be realistic about a European supergrid. Norway’s grid company, Statnett, is very interested in bridging the North Sea in order to export Norway’s surplus hydro power to these islands. Such an interconnector might hinge on a mid-sea supernode in the central North Sea that gathers demand from oil platforms and supply from offshore wind farms. That would certainly be good news for Aberdeen, as the headquarters of offshore energy operations on the UK continental shelf.
The offshore valuation group supports a Norway-Great Britain link, as the European Wind Energy Association said last year that it does, but in its report it highlighted the importance of doing other things first and anticipated that landfall for such a link would be in England rather than in Scotland. The table that shows the initial supergrid layout, which is on page 72 of the report, makes clear that the first priority is to link all parts of these islands and to connect Great Britain to Norway and to Denmark, Germany and the Netherlands via a mid-sea supernode in the next 20 years. A Scotland-Norway direct interconnector is envisaged only in the 2030s.
I hope that the Scottish Government will be an enthusiast for the North Sea supergrid, and that it will have cross-party support. The first part of achieving the supergrid should be development of our interconnectors within these islands and then from Britain to continental Europe via the central North Sea. Politics is about priorities, and those should be our shared priorities as we go forward.
17:15
I congratulate Maureen Watt on securing this useful debate.
I am often involved in discussions about the output of wind farms and so on. I must point out that when Lewis Macdonald commented on the 60:40 ratio of consents to rejections, he was probably including the Lewis wind farm—I see that he is confirming that—which all members know was never going to be consented in the form that was proposed and is a lesson to us all. If we leave aside the Lewis wind farm, our success rate is far higher than the member suggested it is.
I am interested in the member’s comment. Why does he think that the Lewis wind farm could not have been consented?
I think that we all recognise that there are issues in various parts of the country. The Lewis wind farm application represented the worst possible way to go about securing a large project. Given the islanders’ response—let alone the applicants’ lack of environmental sensibility about the peatlands on which they proposed to build the wind farm—absolutely the wrong climate was created for taking such a project forward.
The motion is about the offshore valuation group’s study. The group made the sensible proposal that wind farm round 3 grid connections must be supergrid compliant. During the European recovery package discussions, money was given to the UK Government to take forward the North Sea grid. I want to know exactly how that money has been used, because it was supposed to be used this year.
I am fascinated by the arguments in the study about financing the process. I have no doubt that the minister will talk about that. The group talks about hundreds of billions of pounds per decade, which gives us an idea of the scale of what is proposed. People outside the chattering classes and the oil and renewables industries perhaps do not get the size and cost of what is proposed, although the issue has been brought to our attention as a result of the proposals for a green investment bank, in relation to which it has been suggested that about £550 billion would be needed over the period of development of the technologies. Such a sum would be needed; the oil industry was able to find the money for the recovery of oil from the North Sea, but who will pay for the expensive processes that are required in relation to offshore wind, tide and wave energy is a moot point.
In The Herald yesterday, Ian Bell pointed out that Alex Salmond, as other people have done, has come up with a figure of £200 billion for the private investment that will be required to secure a future for renewables in Scotland. That is a massive sum. In the Scottish context, it is important that we know how the process will work in Britain so that we can eventually feed into the European grid.
My point is that if we have to get Scotland’s contribution maximised, the cross-party support for a green investment bank sited in Edinburgh, and backed up by the powers of our financial community and the location here of many of the headquarters of the renewables companies, is an important part of that, because in order for us to get the money that is needed to make the necessary progress, it is essential that people see that the people who are involved in it are based here and not in London. I hope that members of the coalition Government will be of a mood to think about that as well.
Many things could be said about what has been achieved. The Thanet scheme has benefited from the jackets that are built at Burntisland Fabrications in Methil. It is an international industry. The deep waters of the Moray Firth are going to be dealing with the technologies that will be exported. The deep waters of the USA and Brazil are looking to the prototypes at the Beatrice wind farm scheme to be expanded to 200 or 270 machines that might be capable of producing 8MW each by the time they are built in 2020. That is the technology that is going to be exported. The shallow-water technologies are not at the cutting edge, and that is another reason why the offshore valuation study has to recognise the difficulties, but also the opportunities, that are created by what we can do in Scottish waters.
17:21
MSPs who represent the north-east of Scotland, such as myself, clearly see the importance of the oil and gas and offshore renewables sector and view it as being pivotal to the future economic prosperity not only of our part of Scotland, but of the entire nation. I have lived in Aberdeen all my life, and I have seen how the oil and gas industry and its daughter industry, the renewables sector, have provided growth and jobs to the local area.
It is often overlooked that the oil and gas sector, which is predominantly located in the north-east, currently accounts for more than 50 per cent of Scotland’s gross domestic product receipts that go to the Treasury. It is therefore exciting that Scotland could be in a position to harness the offshore renewables sector’s potential. With three of the world’s largest offshore renewables projects in the pipeline and set to come on stream in the next four years, we need to do more to ensure not only that the north-east and the rest of Scotland benefit from the development, but that the jobs and economic growth that might stem from it are maximised. The offshore valuation study clearly points to how that potential can be realised through the development of a European supergrid. The study suggests that harnessing just a third of Scotland’s practical offshore wind, wave and tidal resource by 2050 would take the country’s installed offshore renewables capacity to 68GW.
As everyone knows, I do not always agree with the First Minister, but I fully endorse the comments that he made this week at the low-carbon investment conference in Edinburgh and the launch of the offshore wind industry group’s route map. With required capital expenditure in offshore projects estimated to be at least £177 billion in Scotland alone, it is vital that all political parties work to demonstrate the opportunities that exist for private finance leaders to seize the multibillion pound opportunities in renewables and low-carbon technology and, more importantly, to demonstrate that Scotland is not only open to business but has people with the transferable skills that can give businesses a competitive advantage. The jobs potential cannot be underestimated, with up to 60,000 new green jobs potentially being created across the low-carbon sector by the end of this decade, some 28,000 of them directly servicing domestic and worldwide offshore wind markets.
Although the First Minister is not here this evening, I am sure that he would want to acknowledge and warmly endorse the decision by the Conservative-Liberal Democrat coalition Government at Westminster to review the transmission rates scheme and the coalition Government’s agreement to work to deliver an offshore electricity grid in order to support the development of a new generation of offshore wind power.
The future development of the renewables sector in Scotland will go hand in hand with the future of the oil and gas industry, and the many present and future opportunities that both sectors offer our country. However, there are many challenges—not least the need to develop the sector skills that will be required to take advantage of the jobs and economic potential that the renewables sector can develop.
I believe that all political parties can see that potential, and what we need now is the political will to create the right environment for business enterprise, and lower regulation that will allow that potential to be delivered.
17:25
I, too, congratulate Maureen Watt on bringing her motion to the chamber for debate. It is sad that so few members have stayed to debate what is going to be an enormously important part of our future economy.
I would like to reflect on four things, the first of which is the Crown Estate. I understand that Richard Lochhead has already started discussions with local authorities and others about how the Crown Estate should perhaps be modified and how our involvement with it should change in such a way that Scotland’s communities can benefit from the natural resources off our shores and the benefit is not all transferred straight to London. I do not think that one needs to be a nationalist to see that there is a point in there, and it is one that the Scottish Government needs to pursue with some vigour.
Secondly, I reflect on the sheer scale of the opportunity, which others have mentioned. The numbers are quite staggering. I endorse the thought that the First Minister expressed in his speech earlier this week about the need for the financial institutions to recognise that they have an opportunity to invest in something that is genuinely new. They can put money—and it will be very big sums of money—into developing something that is simply not there at the moment. Their investment will not just change the value of other assets but create new ones. We have to enthuse the financial institutions around the world to get behind this sensible investment for the future.
I also make the point that some of the things that we know about the oil industry are not true of the renewables industry. The maintenance side of the business will be much more about ships than about helicopters. Clearly, the oil comes up and the helicopters can come down, but when a lot of what we are doing involves turbines, we will not be able to get helicopters in there, so the maintenance industry, at least for offshore turbines, will be different. That will make our ports more important, which is my third point.
Members who are in the chamber at the moment know an awful lot about Aberdeen. We also recognise that Dundee is well placed, and it will make its case. However, I observe that the smaller port of Montrose is an extremely important part of the equation. Indeed, it is mentioned in the study. Montrose is already interested and active in the oil industry, and it is well placed for the future. I had an interesting discussion only last week with the chief executive of Montrose Port Authority, John Paterson, about deepwater harbours and serious efforts to be involved in the offshore renewables. I encourage the minister and the Government not to forget Montrose.
One thought on Montrose is that a railway goes through the centre of the town, but there is no railhead for cargo. There is surely an opportunity for a containerised railhead. A lot of other products could go through such a facility, but I certainly think that those who are trying to do engineering in the area would be grateful to be able to get their goods, containerised or otherwise, on to the railways. I do not think that we really want to run everything on the roads of Angus. There are good reasons for not doing that.
The fourth point that I would like to reflect on is not just the scale of the money that is involved, because banks know about big sums of money, but the challenge to integrated decision making. If we are going to make this work, we must ensure that investments, Government authorities, planning authorities and all the other custodians of decisions, checks and balances, safety and so on recognise that we need to make it happen. It only takes one party to get in the way. We need a collective, national decision that we are going to win the battle, that we are going to win the race, and that we are going to be the renewables powerhouse of Europe. Only when we all do it is it actually going to work.
17:29
I am keen to congratulate Maureen Watt on bringing the debate to Parliament in a significant week in which we have had an extremely constructive PILOT meeting in Aberdeen, at which the UK Government, the Scottish Government and the oil and gas sector came together. Charles Hendry, the new UK energy minister, was there. There was plenty of evidence of the respect agenda and a genuine desire to work collaboratively—which we very much welcomed—a point that he made when he opened a dinner that we had and again when he closed it, and which he made again in opening and closing the following day’s session. He carried that message on to the low-carbon finance conference that was held on 28 and 29 September, which was attended by between 400 and 500 people. Today, we had the hydrogen conference, so the tempo is increasing.
I intend to run an amnesty on competing on our approval ratings because I think that the collaborative, cross-party approach—which I think is the tone that I detected earlier today—and the respect agenda in the renewable energy sector are vital in offering the greater sector, the finance sources, the UK Government and the EU a sight of cross-party cohesion and a single voice from Scotland. We have a monumental opportunity. If we can show constancy of purpose as a Parliament and as a society, the prize will be all the more achievable and all the more deliverable. Hence, we all have part-ownership of a legacy that will be hugely important to Scotland.
I am extremely grateful to Maureen Watt for securing the debate on an issue that is as hugely important as I have just said that it is. The offshore valuation study did Ed Miliband no harm, and I believe that it will do Scotland no harm. It has validated our energy policy, which favours the comparative advantage that Scotland has to offer, and it further strengthens our view that Scotland should have better grid connections to continental Europe. I will expand on that point for a moment, if I may.
It is clear that the supergrid is a shared priority. Georg Adamowitsch, who, as the European Commission’s electricity grid co-ordinator, is the personification of grid and the continuity figure in Europe, was back in Scotland this week for the third time to talk about the supergrid and the potential of an EU common energy market. He got great feedback from Scotland. I urge members to get sight of the video that was used to open the conference. There is one part of the video that animates the grid potential around Scotland and which shows Scotland connected to the rest of the UK, to Ireland and to Norway—where the First Minister went last month to progress the issue—by a North Sea supergrid. It is heart warming to watch that animated production, which pulses with climate change capability, renewables capability, security of supply and the potential to export electricity to Europe. I do not want to be too heavy about this, but it almost takes you into the land of goose bumps; you can really begin to see things happening.
It is entirely credible that Scotland is standing on the verge of a low-carbon energy revolution, and what has happened this week at the PILOT meeting and at the low-carbon finance conference has very much consolidated that. Even before that, the consolidation process was under way with companies such as Quayle Munro, PricewaterhouseCoopers, McGrigors Energy and Morton Fraser bringing people—including people from furth of Scotland—together to be involved in the debate, and it was a palpable phenomenon at this week’s conference.
Things are beginning to happen. The figure of 206GW that David MacKay came up with is a salivating prospect. Even if we were to produce only about a third of that, we would generate some £14 billion of revenue by 2050, with the employment potential estimated at 145,000 jobs. That is in essence what drives our enthusiasm for the offshore wind route map and the prospects of the revenues that will come from it. The route map has been developed through a process of open engagement with communities throughout Scotland. The recent offshore wind strategic environmental assessment consultation has produced material responses from people throughout Scotland, with more than 500 responses received to date. Now the feedback process will take place. That process allows us to move forward with increased confidence.
Does the minister agree that it is key to realising the tremendous opportunities for employment that we pay serious attention to the sector’s skills needs?
I agree with that absolutely. The steps are in place to achieve that. We are having conversations with the relevant people and people are beginning to see the opportunities for that. I recently spoke to Ian Marchant, who is investing heavily in the University of Strathclyde campus on that. There are other examples of people moving in that direction, as we heard about recently at First Minister’s question time.
The marine renewables sector is important, because we have the prospect of generating 1GW from it by 2020. We have delivered grant funding of £13 million for the wave and tidal energy: research, development and demonstration support—WATERS—fund. The saltire prize is garnering continuous attention. We are sometimes criticised for the timing of the saltire prize, but I believe that it is wonderful Scottish cash flow management. We have gained enormous advantage through the publicity from the prize and we have leveraged that even further this week.
We are considering the practicalities of skills and infrastructure, but I will concentrate on infrastructure for a moment. In a debate last week, our Liberal Democrat friends told us that they would make their best efforts on the release of the fossil fuel levy. We made a big issue of that this week and reinforced the point with Charles Hendry, because it is critical in these difficult times to make that release happen. The message must be continually reinforced. We welcome the review that is under way, but it must take us to a point at which money hits bank accounts and decisions can be made.
Nobody could fail to acknowledge the environmental, economic and social opportunity in Scotland of the offshore renewables sector. We are not complacent; we are cracking on. We recognise that a great deal of work needs to be done and that we need to translate that into practical steps. Having 500 practical people in a room for two days is a great way to make progress on that. I should say that a hallmark of that conference was the buzz of conversation in the coffee breaks. I did not linger for a coffee break, but I passed through one and saw people networking furiously. We have identified all the key stakeholders and we are bringing them together. We will work with communities. I welcome the valuation report, which I am sure is the start of something of which the current generation can be really proud.
Meeting closed at 17:37.