A significant amount of Her Majesty’s seabed was leased out in the ScotWind auctions for the princely sum of around £700m.
Rights to projects which may end up with as much as 25GW of capacity (about 20 typical nuclear reactors’ worth) have been acquired.This amounts to the equivalent of almost half of the GB system’s peak electricity demand in a winter day; an inconceivably large amount of wind energy capacity.
I won’t dignify Robin McAlpine’s economic illiteracy with a comprehensive response other than to laugh at the idea a wind farm could have a repayment period of 40 days or that “two days of wind” sold at £70,000 per GWh is enough to recoup the cost of a wind farm. Selling oil at £1bn per barrel would also recoup the cost of an oil rig very quickly, but unfortunately that is not how energy markets operate.
Transmission capacity between Scotland and England is limited, typically, by electro-mechanical constraints between the systems north and south of the border to less than 3GW (though two HVDC or high-voltage direct current connections off the east and west coasts are intended to bolster this as well as wider system upgrades; work remains “in progress”). We’ve just sanctioned capacity almost 10 times that.
Who’s in? who’s out?
Investors in the region range from predictable actors such as SSE and Scottish Power to more curious investors such as BP, who have a longstanding history of exploiting resources in the North Sea. Clearly, oil companies have a significant base of expertise from their construction and maintenance of oil rigs on which to build in the development of offshore infrastructure. Long-standing polluters clearly are incentivized also to “green” their image by investing in large tracts of clean energy to offset the decades of accrued carbon emissions.
Politically, however, this presents many challenges. It is clear that many communities in the north-east of Scotland and in regions where onshore wind power has exploded in recent years have not necessarily significantly benefited from that boom. Fraser Stewart has already written about this new development and the challenges it may pose in the face of systemic inequities.
The capacity to build the turbines and necessary infrastructure at scale simply does not yet exist in Scotland and these developments are going to be heavily reliant on capital and expertise from the private sector and from outwith Scotland. There are enormous missed opportunities in recent decades to build centres of expertise in on-and-offshore component manufacturing. This is not simply a failure of ScotGov in and of itself because it largely lacks the state aid capabilities necessary to build such an industry from scratch — but it is clear both HMGov and ScotGov could be doing more.
It is a win-win situation to develop such expertise in Scotland – build a gigafactory in the Highlands and a new town to staff it, if that’s what it takes — but we do need to do something. Build a training center in Dingwall and HS3 to Inverness and Aberdeen if you must. Or just do it anyway because it would be cool to do so.
Politically, of course, inward investment is a win for the Governments north and south of the border that can sit on branches and chirrup about it. Two major issues strike me, however: what will this capital actually do on the ground? Who will benefit? Fuel poverty is endemic in the Highlands and Islands, despite it being one of the most energy-rich regions in Europe. How can we ensure that the profits accrued from these offshore facilities actually provide social benefit?
Another issue is that this is clearly an opportunity for oil companies to shore up their stakes in the north-east economy. By its very nature, oil is a high capital/low labour industry, and the oil industry will simply have to dwindle in some manner or form over the coming years.
What will this mean for the workforce? Will they be requisitioned onto renewables projects, or simply thrown onto the scrapheap as the industry hoovers up young talent and lays off older, more expensive and experienced, oil workers as projects wind down?
I attended the launch of ScotGov’s Just Transition during COP26 and it is clear that serious thought is being invested into how to manage this, from stakeholders across Scottish civic society: I remain distinctly concerned at the possibility that companies such as BP and Shell simply shutter their oil-related offices in the Northeast, open some shiny new chrome and glass “green” offices next to them, abandon their oil workers, and act like nothing has happened the second the cost line overtakes the profit line. But this doesn’t change the fact that we need to build renewable energy capacity and we need to do it now.
My overriding feeling, therefore, is that we cannot let perfection be the enemy of good in the climate fight. We need to build large amounts of basically everything. Climate change is not solved with a silver bullet but with a gatling gun.
The fight for energy equity in Scotland will have to continue but the battle to decarbonise the energy system took a huge step forward this week. Naturally, there will be significant technical challenges to be overcome in how we can transport such huge volumes of power from the sea to homes, and how we manage the peaks and troughs of generation.
We also need to ensure that communities which will be affected by these developments get jobs and financial benefits for the impacts associated with such an explosion of industry to retain young people and skills sustainably.
The answer, however, is not more gas power as GMB seem to imply — it is smart demand management, interconnections, diversification of renewables, insulation of homes, demand reduction and efficiency — it is everything. Recent months have highlighted that reliance on natural gas is not sustainable and still vulnerable to price extremes.
So while the first steps towards mass exploitation of the North Sea offshore wind power at industrial scale have been taken, the socioeconomic wrangling as to who will actually benefit from this mass infrastructure is likely only just beginning.
First published on medium.com and reproduced with the author’s permission