VIEWPOINT: Scottish global energy firms face challenges at home
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Weekly we feel the impact of remote decisions on renewables developments in Scotland. These cannot be understated.
Some examples include the fallout from bankrupt Greensill Capital; the concerted moves by oil majors into renewables investment here; international consortia bids for Scotwind slots in offshore wind bidding.
Rapid international moves into renewables is a fact of life in response to rampant climate change. Intergovernmental agreements such as the looming Cop26 scheduled for Glasgow in November seek to end fossil fuels extraction while offering new vistas for petroleum engineers through just transition.
Uncertain and ambiguous regulation is our lot thanks to the cogs of government in Westminster, crunching reluctantly into gear, wanting free markets for ‘global Britain’ but placing hurdles on extra charges, especially on this part of their United Kingdom – the Highlands and Islands – for accessing the ‘national’ UK grid. Granting oil exploration licence extension to the Cambo block west of Shetland mixes signals for rules to end oil extraction.
Sanjeev Gupta’s GFG group, one of the biggest borrowers from Greensill, took a key stake in Simec Atlantis Energy (SAE) the owners of MeyGen back in 2017. Now SAE, our pioneering tidal developer in the Pentland Firth, is in talks with the receivers of GFG to extricate itself. Hopefully the Serious Fraud Office enquiry will not damage SAE’s plans to scale up the successful phase one of their tidal turbines between Gills Bay and Stroma.
SAE’s proven Scottish tidal technology is partnering in Normandy, installing a turbine in Japan and scoping tidal resources in India. Supply chains stretch internationally too. To build and install Phase 1A, their second turbine design, in the Pentland Firth required components from the UK, Europe and North America. The firm noted that 43 per cent of the project’s expenditure is in Scotland and involves companies based in Caithness, and Ross and Cromarty. Success here is hardwired to success across the globe. Scottish waters are a magnet for Norwegian and German investment as with recent news of a Danish, Spanish and Italian consortium bidding for an offshore wind slot. How vital it is to control the rate and style of development. Yet Scotland’s interests are a low priority of the Westminster energy policies.
Edinburgh-based Nova Innovation has spread its success from Shetland to Canada, and recently partnered French firm, Sabella which pioneered tidal turbines off Ouessant (Ushant) on the Brittany coast. Sharing technological know-how will extend the reach of this leading Scottish firm.
Late last month, Michael Matheson, Cabinet Secretary for Net Zero and Energy in the Scottish Government, commented: “Nova Innovation is a pioneer in tidal energy technology and the Scottish Government is proud to have played a supporting role in its achievements to date. I welcome this agreement between Nova and Sabella and I look forward to it delivering further opportunities for both companies – along with the wider sector – to grow, develop, and realise the potential that tidal energy has in our journey to net-zero.”
This trend for trail blazing renewables firms to seek favourable governmental support and willing partners shows that Scotland’s clout is international but constraints on developments at home may be a push factor.
In a House of Commons debate earlier this month Alan Brown SNP MP for Kilmarnock highlighted Scotland has 25 per cent of Europe’s offshore wind capacity, but grid charges make Scottish windfarms, onshore and offshore, 20 per cent more expensive than farms in the south of England.
From April 2009, UK energy regulator Ofgem’s transmission charges imposed £21 per kW for high voltage network access on north of Scotland operators, three times the £7 levied on wind farms in southern England. The MP warned that Scotland will not be able to scale up wind farms to meet climate targets without a change in the charging regime. Currently, he argued, Scotland is planning or has installed around 740 MW of energy from offshore wind farms, with the Scottish Government hoping to scale up the infrastructure to between 8GW and 11GW by 2030, when a pledge to reduce carbon emissions by 75 per cent of 1990 levels will need to be met.
Scottish Renewables has called on the UK government to reform “the commercial rules of the electricity system” or risk “excessive costs for consumers or a failure to reduce emissions in line with our net zero target.”
You can’t ignore the North Sea interconnectors that suck power produced from Norway and France into south-east England while UK producers in the north are penalised. Clearly Ofgem rules favour clean power production as close to south-east England as possible except where it arrives by interconnector.
Mr Brown concluded that the ignorance in London to the disparity on electricity grid charges is staggering. “Scotland has been shafted by Westminster mismanagement for decades”, he concluded.
As I write this column, concerns are being voiced about the failure of UK ministers to address green ports, the Scottish Government version of free ports.
Around the Cromarty Firth offshore development of wind power and its potential to feed hydrogen production are affected. Meanwhile proposals to import green hydrogen through an interconnector from Norway would seem at odds with making hydrogen for local use in a new industrial plant planned for Firth.
Just transition is clearly not plain sailing.
robgibson273@btinternet.com
