Edinburgh tidal energy firm wins EU funds for Orkney project

As the debate about solutions to the climate challenge became increasingly heated during this month’s COP28, hopes that Scotland could play a part in the solution were rekindled when pioneers in the country won official recognition.

Three firms working on tidal energy projects in Scotland won endorsement from the UK Government in the latest support round.

Another, Nova Innovation, bagged €20 million (£17m) EU funding with partners for a “trailblazing project” off Orkney. Nova said the 16-turbine Seastar project will be the biggest of its kind in the world and “marks a crucial step in unlocking a new global source of renewable energy in the battle against climate change”.

Edinburgh-based Nova has held out the prospect that it could develop significant manufacturing operations in Scotland.

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First minister Humza Yousaf highlighted the significance of the award as he tried to big up the role the Scottish Government has played in Nova’s success.

“Scotland is a world leader in marine renewable energy as a result of consistent and committed support from the Scottish Government,” declared Mr Yousaf.

“Nova’s project … will accelerate the development of a new industry and helps to show how Scottish ingenuity is helping us to capture the immense potential of renewable energy from our seas and oceans.”

The excitement reflects hopes Scotland could play a leading role in the development of a technology that may help to address one of the biggest challenges facing renewables. The output from wind and hydro generators depends on the weather and is intermittent.

The tides rise and fall every day, although the force of the flows involved varies with the lunar cycle.

Mr Yousaf’s glee may also reflect a measure of desperation. The renewables revolution has failed to deliver anywhere near as much benefit for the Scottish economy as expected.

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Former first minister Alex Salmond boasted that Scotland could become the Saudi Arabia of marine energy only to see wave power firms on which Scottish hopes focused flounder.

Pelamis Wave Power and Aquamarine went into administration in 2014 and 2015 amid doubts about the commercial viability of products.

The offshore wind sector has seen more activity but overseas firms have hogged much of the supply chain benefit.

The fact that Mr Yousaf decided in October that he should launch a £500m offshore wind supply chain fund spoke volumes.

Because things went wrong for wave energy firms it doesn’t mean they will for tidal specialists. However, it would be wise to be cautious.

Nova has been working on tidal technology for years. With a capacity of four megawatts, Seastar could be expected to generate enough power for a few thousand homes.

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The firm leading work on the flagship Meygen tidal development in the Pentland Firth, SAE, said this month that delivery of the project “remains hugely challenging”.

Meygen and other Scottish tidal projects will be big beneficiaries of the support provided for firms under the latest Contracts for Difference (CfD) awards, announced by the UK Government in September.

The scheme guarantees firms a minimum price for their output. The costs are added to the energy bills paid by householders. These are set to increase again next year under the regulator’s plan to have customers cover the bills of those who can’t pay their debts.

The UK Government has put householders on the hook for potentially big charges to cover the costs of tidal generation, which remain much higher than those for other power sources.

Some 11 tidal projects won support in the latest CfD round out of a total of 95. Seven of the 11 are in Scotland.

The firms concerned will get a minimum £198 per megawatt hour for their output.  Onshore wind developers will get £52.29/MWh.

Offshore wind developers boycotted the latest round after claiming the Government was not offering them enough support. Rishi Sunak then agreed that they should get paid more in the next CfD round.  Tidal firms will also get more.

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The official generosity may not do much to tackle the climate crisis. Scottish tidal projects covered by CfD round five have a total capacity of 30.64 megawatts.

To put that into perspective, SSES’s Strathy South onshore windfarm will have 231 MW.

Some may wonder how much economic benefit tidal projects on the scale concerned will bring.

One project off Orkney is being led by a Spanish firm, Magallanes Renovables, which has developed what it reckons is a cost-effective floating turbine. It is working with a Spanish shipyard.

Ironically, SNP politicians highlighted the fact that tidal projects may have limited impact on jobs as they pressed the case for UK Government support for the sector in Westminster.

In a House of Commons debate in November 2021, former SNP Westminster leader Ian Blackford welcomed the UK Government’s decision to ring fence £20m CfD support for tidal.

His colleague Alan Brown told the house: “£20 million is clearly welcome compared with where we were, but would a bigger pot of money not unlock greater investment and create a better jobs return?”

Claiming a £70m pot could unlock £140 million of private investment and create 400 jobs, he said £20m would only create 100 jobs.

Oil and gas developments support many more jobs.

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After approving plans for the 300 million barrel Rosebank oil field development off Shetland in September, Equinor said the project is expected to support up to around 1,600 jobs in the construction phase and around 450 UK-based jobs during the lifetime of the field.

First oil is expected within four years. Rosebank could be in production for decades.

Campaigners are determined to block the development on environmental grounds. They claim it could benefit from tax breaks work billions under the investment allowance that was introduced alongside the windfall tax.

Greenpeace UK and Uplift yesterday launched legal actions against the UK Government’s decision to approve Rosebank at the Court of Session in Edinburgh.

Tax payments over the life of Rosebank may allow the Government to recoup the costs of any support provided for the development.

Renewables firms will benefit from a new investment allowance, which was announced in the chancellor’s Autumn Statement.

Mr Yousaf’s fulsome comments about Nova highlighted the fact that renewables firms have enjoyed lots of state support, although some are backed by wealthy corporations or big name executives.

Nova Innovation’s shareholders include former SSE boss Ian Marchant. Seastar project partners include oil services giant Wood and law firm DLA Piper.

French oil giant TotalEnergies recently joined a project led by Scotland’s Mocean Energy that aims to use wave energy to power subsea facilities.

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Despite Mr Yousaf’s smugness, the Scottish Government has faced big challenges while preparing to announce its Budget today, amid signs the SNP’s pact with the Greens is unravelling.

The Government faced flak last week after the latest report from the Just Transition Commission it established found “significant further action” was required in Scotland.

Friends of the Earth Scotland claimed the administration’s approach of relying on the market won’t work. Just transition campaigner Rosie Hampton said ministers must move fast to deliver the decisive, transformative change needed to get Scotland off fossil fuels. 

She insisted; “This should mean public ownership of renewable energy generation to ensure that the benefits of the transition are kept in communities.”