THE landmark ScotWind leasing round has provided political capital for a Scottish Government which has given no indication that it can ensure the renewables revolution delivers benefits for the country on the scale hoped for.
When Crown Estate Scotland announced the results of the round on Monday it said ScotWind projects could deliver huge environmental benefits and a matching boost to the economy.
Some 17 projects were chosen out of a total 74 applications following an exercise that generated interest from energy giants and financiers around the world.
The winners include projects off north, east and west Scotland. With some featuring pioneering floating windfarms, renewables champions reckon the round could help make Scotland a world leader in the emerging industry.
READ MORE: Oil giants hail ScotWind success amid claims huge boost to supply chain in prospect
If all the projects are delivered to plan it is thought Scotland could gain enough additional capacity to power 40 million homes while work on the projects concerned could generate £25 billion for the supply chain and thousands of jobs.
The benefits could be enjoyed by communities across Scotland. One of the successful bidders, BP, has held out the prospect that it could commission support vessels from shipyards on the Clyde or the Forth.
Hopes that the giant disused oil rig yard at Ardersier on the Moray Firth could become a pioneering “fully circular energy transition facility” were boosted after a consortium that plans to build foundations for floating windfarms there was successful with its ScotWind bid.
The Scottish Government is in line to get £700 million option fees from the successful bidders, with the prospect of significant amounts of income in future from projects that are developed.
First Minister Nicola Sturgeon hailed what a Scottish Government press release described as the “truly historic” opportunity of ScotWind.
Noting the potential for oil and gas sector expertise to support related developments she said: “Because Scotland’s workers are superbly placed with transferable skills to capitalise on the transition to new energy sources, we have every reason to be optimistic about the number of jobs that can be created.
“That means, for example, that people working right now in the oil and gas sector in the North East of Scotland can be confident of opportunities for their future.”
That kind of talk could provide useful cover for Ms Sturgeon as she tries to limit the political damage caused by moves that have undermined the North Sea oil and gas industry, which the SNP used to boast could power an independent Scotland.
Her recent decision to call on the UK Government to oppose the planned Cambo development off Shetland suggested she was more interested in courting Scottish Green Party supporters than securing valuable oil industry jobs for northern Scotland.
We await details of how the Scottish Government will use the £500m Just Transition Fund to support the north east and Moray that it announced in December.
Any people who are excited by the prospect of a ScotWind bounty may be wise to sit tight for a bit.
On Monday Crown Estate Scotland cautioned that the result announcement was just the first stage of the long process successful projects will have to go through before turbines go into the water. It noted the process includes the consenting, financing, and planning stages.
READ MORE: SSE wins backing for £3bn windfarm from international banks
The Scottish Government will have a big role to play in ensuring the planning system responds appropriately and that potential supply chain benefits are
maximised.
Critics might feel there is little reason to feel confident the Scottish Government will get things right, not least because the hefty investment made already by firms in Scottish windfarms has failed to generate the economic benefits expected.
Businesses that employed hundreds of people in Fife and Argyll between them went into administration after hopes they would boom on the back of wind turbine manufacturing work went unfulfilled.
The Scottish Government has found it easier to dream up grand plans than to deliver them. In September Auditor General Stephen Boyle highlighted a “major implementation gap between policy ambitions and delivery on the ground”.
The day after the ScotWind results were announced energy secretary Michael Matheson told MSPs: “I accept that we have not achieved the level and scale of inward investment and supply chain development in the renewable sector that we would have wanted to.”
READ MORE: Unforeseen complications confound Scottish Government on emissions front
It is worth noting that after being accused of not providing enough help for the Burntisland Fabrications business in Fife, the Scottish Government said, before Brexit, that its hands were tied by rules on state aid set by the EU.
While the Scottish Government wants Scotland to leave the UK partly so that it can rejoin the EU, it should use whatever flexibility results from Brexit to try to ensure the right renewable energy supply chain infrastructure is in place.
The omens don’t look good however. By deciding to develop its own green port model rather than join the UK freeport programme, the Scottish Government appears to have put Scotland at a disadvantage.
After it was announced last year that Teesside would enjoy freeport status US giant GE unveiled plans to develop a turbine blade manufacturing plant that is expected to employ around 750 people in the area.
The plant may have capacity to produce blades for windfarms off Scotland, which has lost oil and gas decommissioning work to Teesside.
The response to the ScotWind round does suggest that oil and gas firms are prepared to invest heavily in renewables, with the right encouragement.
The UK Government must ensure that whatever support is provided through the subsidy regime is not too generous.
The energy crisis is set to cause real financial pain for millions of people in the UK from April, when it is thought the regulator may raise the price cap by around £700 annually. This will allow firms to recoup the cost of gas price increases on wholesale markets that have driven many out of business.
The Brent crude price has risen to a seven year high of around $90 per barrel amid expectations that demand will remain strong for years.
Against that backdrop it makes no sense for Scotland to limit domestic production of oil and gas in a way that will increase reliance on imports, which could entail higher emissions.
Following the end of generation at the Hunterston nuclear plant in Ayrshire earlier this month, there will be an even bigger gap to fill on the days when weather conditions mean windfarm output is low.
READ MORE: ScottishPower feels gas price rise impact as windfarm output drops
Ms Sturgeon’s posturing on Cambo has done nothing to encourage oil and gas firms to make the investment required in the North Sea.
However, Norwegian giant Equinor said last week that it is still working on plans to develop the Massive Rosebank find off Shetland.
Experts say the UK Government could encourage firms to invest by tailoring the regulatory regime and the criteria applied to projects so the North Sea can be viewed as a clear world leader in terms of environmental standards. Industry leaders welcomed a boost to morale this week when environmentalists failed in a bid to get the High Court to rule the support provided by the Government for firms unlawful.
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