We must put pragmatism before polarisation to build offshore wind industry

One of them, Ninian Central, was the largest movable object ever created when Chevron towed the vast concrete structure out to a site off Shetland. Half a century later, the US energy company is winding down Ninian and other platforms as it quits the North Sea.

Now Kishorn Port is being reinvented as a manufacturing hub for offshore wind, leveraging its status as one of the largest dry docks in Europe. Highlands and Islands Enterprise last month pledged £24 million for expansion that would allow assembly of floating offshore wind platforms.

Kishorn is emblematic of Scotland’s attempt to harness the job-creation opportunities presented by the energy transition. Ed Miliband, energy secretary, is looking to Scotland to deliver the lion’s share of the UK’s target for 50 gigawatts (GW) of offshore wind as part of a “Clean Power 2030” plan.

Back in the day, Kishorn employed 3,000 people. The hope is that if enough business can be won making concrete offshore wind foundations and other components, half that number could be working at the site eventually.

Yet the big unknown for Scotland’s energy workforce is whether such work will come in the volume needed to create enough green jobs to make up for an anticipated decline in employment as the North Sea basin comes to the end of its life. It’s a situation faced not only by other ports across Scotland – Ardesier in the Moray Firth, Nigg in the Cromarty Firth - but Scotland’s entire offshore wind industry. This includes developers in ScotWind, a mostly North Sea portfolio of 20 wind farms that are supposed to deliver 30GW of the UK’s target.

The warning lights are already flashing. Last month, Aberdeen-based Robert Gordon University (RGU)’s Energy Transition Institute forecast that depending on how three scenarios play out, the direct and indirect UK oil and gas workforce could lose about 400 jobs every fortnight for the next five years – a “Grangemouth effect”, given this is the same number being let go with the refinery’s closure. This matters because around 90 per cent of the UK oil and gas workforce is deployed in the supply chain, such as engineering and maritime services – precisely the feedstock of transferrable skills that offshore wind developers and ports need to build and maintain wind farms.

The RGU reckons that close to £210 billion would need to be spent on offshore wind to meet the UK government’s 2030 target. Yet only a fraction of this is currently approved for spending by ScotWind developers.

Arguably the main barrier to progress is lack of clarity on connections to the grid, which must urgently be upgraded. The issue was brought into stark relief this week when the UK’s National Energy System Operator said Scotland’s “constrained” network meant it had been forced to pay operators to disconnect wind farms at record levels.

So far, so discouraging. The situation is made worse by the fact that 60 per cent of ScotWind is for floating wind farms designed for waters too deep for platforms fixed to the ocean floor. This is commercially unproven technology, on which Miliband’s 2030 target heavily depends.

Moreover, banks and insurers are not yet sufficiently confident in the technology to commit to the scale of what’s envisaged. Some ScotWind projects involve more than 200 wind turbines standing almost as tall as the Eiffel Tower. Three things need to happen to fix this. First, the UK government needs to bring forward a consultation due by 2030 on replacing the Energy Profits Levy (EPL), or “windfall tax”, with a more flexible mechanism would tax operators more fairly and at a time of unusually high prices.

Gail Anderson, research director at energy consultants Wood Mackenzie, says this would incentivise companies to stay in the North Sea in the crucial next five years, preserving jobs. “There’s an upside case here but the government needs to act quickly,” she says.

Second, floating wind urgently needs a pipeline of demonstrator projects that are fast-tracked, tested and a commercial case proven for them become bankable as quickly as possible. Only one commercial scale floating wind farm so far exists in the UK: Green Volt, a 560-megawatt floating wind farm planned by Flotation Energy and Vårgrønn.

The good news is that GB Energy, the state-owned company whose £8.3bn in government funding was confirmed in this week’s Spending Review, will focus its firepower on nascent technologies such as floating offshore wind.

“We want to be a market-maker for these new technologies,” its chairman, Juergen Maier, told a Glasgow conference last month. An extra £300m handed to GB Energy in the Spending Review for offshore wind should help.

Finally, it’s time to act on a recommendation in a jobs and innovation report out last week from Gordon Brown’s think-tank, Our Scottish Future. It urges setting out a single, clearly defined Scottish industrial strategy, jointly owned by the UK and Scottish government and regional partnerships, proposing a series of “big bets on a handful of strategic clusters”, such as offshore wind.

Politically this will be unpalatable, especially as the hustings intensify ahead of next year’s Holyrood poll. But it is time to put pragmatism before polarisation if places like Kishorn have a chance of fulfilling their promise.