Chapter 1: Overview
1. Scotland has always punched above its weight in the development and deployment of renewable energy, and, as the figures above demonstrate, remains one of the World's renewable powerhouses. This reputation was established through the construction of our hydro power generating stations during, predominantly, the second half of the 20th Century, and this continues with our current focus on both wind energy and marine renewables. Our 12,000 miles of coastline, 462,000km2 of Scotland's Exclusive Economic Zone, attractive wind regime and extensive potential resources, allied to world class research and innovation, all combine to mean that few can rival Scotland in terms of what it is possible to achieve.
2. Our draft Offshore Wind Policy Statement (OWPS), published in December 2019, demonstrated that the Scottish Government has supported and promoted a positive policy landscape for renewables, balanced by a rigorous environmental impact assessment regime. These supportive policies, coupled with the efforts of investors, innovators and communities across Scotland, have seen our renewable capacity grow to 11.9 GW, according to the most recent statistics – with the equivalent of 90.1% of gross Scottish electricity consumption in 2019 met by renewable sources.
3. This is why the Scottish Government plans to ensure that Scotland's long and positive association with renewables continues to go from strength to strength and is central to our green recovery. Scotland's people will be key to this, which will mean ensuring local communities can participate in, and benefit from Scotland's transition to net zero emissions. This is consistent with our response to the report in summer 2020 by the Advisory Group on Economic Recovery, which underlined the Scottish Government's commitment to invest in local and regional economies, and to support into work young people and those facing unemployment or redundancy.
4. This commitment was at the heart of our 2020/21 Programme for Government, and its promise of "a new national mission to create new jobs, good jobs and green jobs." This will be delivered through a number of initiatives, backed by significant new programmes – including £100 million over the next five years to deliver a Green Jobs Fund. This will support new and increased opportunities for green job creation across Scotland. Our £25 million National Transition Training Fund supports those oil and gas workers needing to retrain as they transition from high carbon occupations to roles consistent with the energy transition. The £62 million pound Energy Transition Fund announced by the Scottish Government in June 2020 will further support our energy sector and help us make significant progress on energy transition.
5. Current statistics, as of September 2020, demonstrate the current and expected offshore wind deployment picture within Scotland ahead of the Draft Sectoral Marine Plan and ScotWind leasing round.
Current Development Pipeline
|Total Consented (MW)||Total of Installed Operational Capacity (MW)|
|Offshore Wind (fixed)||5532.9||862.2|
|Offshore Wind (floating)||92||32|
6. Scotland's expertise in wind energy planning and environmental impact assessment, supplemented by the transferable skills and experience gained across our highly efficient oil and gas sector, has resulted to date in the deployment of over 150 offshore turbines. These range from innovative test and demonstration sites, such as the 30 MW Hywind Scotland, to commercial scale, including the recently commissioned, ground-breaking 588 MW Beatrice offshore wind farm. However, there is a strong development pipeline to come.
7. Our consultation asked if Scotland's current pipeline and level of offshore wind activity (see annex A) provides a sufficient platform upon which to build the greater contribution required to achieve our climate change goals. Many of the responses we received highlighted the importance of the offshore wind sector in delivering climate change targets, however, the consultation also prompted several calls for the Scottish Government to consider a higher level of ambition for 2030 than the 8 GW which that document had proposed.
8. Our consultation had suggested adopting SOWEC's vision of 8 GW by 2030 as a reasonable starting point. Now, having listened carefully to our stakeholders, we have revisited what might be possible within the coming decade. The Scottish Government continues to believe that any ambition for offshore wind deployment in Scotland – rather than a target – should be realistic and based as far as possible on expectations driven by evidence.
9. On that basis, we have reviewed the latest evidence, and worked with a combination of the scenarios developed and included within Scottish transmission network companies' business plans, information available through the TEC register, and the platform provided by our Sectoral Marine Plan. Taking these together, we now believe that 8 GW represents the lower end of a range that might be achieved by 2030, and that as much as 11 GW of installed offshore capacity is possible. Our Sectoral Marine Plan (SMP), now, and through its future updates, will set the course for this delivery, maximising deployment in Scottish waters whilst protecting marine users and our environment.
10. Looking beyond 2030, we know that huge increases in renewable capacity and generation are likely to be needed in order to decarbonise our energy use, and to meet the potential for much greater demand for clean electricity – as well as for green hydrogen – to reduce emissions associated with heat, transport and industrial energy demand as we move towards 2045 and net zero. The 2020 Future Energy Scenarios, published by National Grid ESO, includes the potential requirement for 24 GW of offshore wind capacity dedicated solely to hydrogen production.
11. We believe that this expected surge in demand will require and create a major demand for new offshore wind capacity and deployment in the years following 2030, with an associated pipeline of development and supply chain opportunities. We will be exploring these issues and potential requirements in more detail as part of imminent work to update Scotland's Energy Strategy, following the update to the Scottish Government's Climate Change Plan. We will also ensure that this process involves and informs clear links to future iterations of strategic planning and leasing being led by Marine Scotland and Crown Estate Scotland.
12. For now, we know that hitting the upper level of our range for 2030 would represent a remarkable achievement, and one which we know will require a huge amount of effort and investment. It will also require the right levels of support, from the right design of market mechanisms and innovation support, skills and knowledge building, and the successful removal of barriers to development. The rest of this document looks at these areas and discusses potential ways forward.
Contracts for Difference (CfD) / Routes to Market
13. Many of our OWPS consultation responses highlighted planned amendments to the UK CfD mechanism, especially in the context of floating wind. There is no question that, as a less-established technology, floating offshore wind will require further demonstration projects to drive down costs.
14. The Scottish Government does not have powers to provide revenue support for the commercialisation of less established technologies. Scottish Ministers have consistently, over many years, pressed the UK Government to ensure that the CfD mechanism and auction process is used as effectively as possible in pursuit of the new capacity. This capacity will be essential for our net zero and decarbonisation ambitions and presents significant supply chain development opportunities. While offshore wind costs have been dramatically reduced through successive auctions, this has happened in the shadow of other technologies' exclusion or marginalisation. It has been clear for some time that further change was essential.
15. The UK Government's recent CfD consultation proposed a reversal of some of the previous changes which had stifled renewables development and investment. While welcoming those proposals, in our own response, we also confirmed the Scottish Government's belief that the proposed introduction of a separate technology pot for floating offshore wind was an overdue change. This could help ensure that a high capacity of offshore wind can continue to secure a CfD at an affordable cost, while providing a potential route to market for higher cost floating technologies. These technologies offer a very significant route to decarbonisation while also constituting a particular supply chain opportunity for Scotland.
16. However, we also believe that the effectiveness of the CfD mechanism risks being blunted in the event that its design for forthcoming auctions includes unnecessary financial or capacity "caps". The National Infrastructure Commission (NIC) has recently increased its recommended UK renewables deployment target from 50% to 65% by 2030. The Scottish Government not only welcomes this increase in ambition, but also agrees strongly with the NIC's view on the importance of a refreshed and effective CfD auction plan and pipeline to delivering the capacity and investment necessary.
Community Benefits / Engagement
17. Our response to the CfD consultation also highlighted the importance of more and meaningful engagement with communities about the effects and benefits of increased renewables development. The proposal to share best practice is one that we welcome, and is – as we pointed out, and the UK Government has acknowledged – an area where the Scottish Government has been working in effective collaboration with communities and the energy sector for many years.
18. We published our Good Practice Principles for Community Benefits from Offshore Renewable Energy developments, in 2018, in collaboration with the renewables sector. This was done following consultation, and set out national standards on community benefits, which we encourage renewable energy businesses and communities to use.
19. This document acknowledges the success of community benefits to date, recognises the value of a more flexible and holistic approach to community benefits discussions in the future, and places a greater focus on achieving a lasting legacy for local communities, underpinned by a well-developed community action plan.
20. Some examples of these community benefits include:
- The Robin Rigg Community Fund (RWE), extended from its initial 10 year period for a further two years from 2020 to 2022, benefitting local communities along the Solway coast. In 2020, over £120,000 was awarded to 19 organisations in Dumfries and Galloway and Cumbria. Several of these were green infrastructure and community hall projects.
- The Beatrice Fund (SSE Renewables), which has included a £40,000 grant towards an educational heritage centre.
- The Unlock our Future Fund (Vattenfall), supporting charitable activity that focuses on environmental sustainability and encourages innovative projects which ensure a lasting legacy and impact. Over £124,000 of funding has been announced in 2020. An example of this funding in Central Aberdeenshire, is the Alford District Men's Shed which was awarded £15,000 to further develop their existing renewable energy system, including solar and thermal battery storage, increasing capacity and optimising the use of renewable energy they already use on site.
21. The Scottish Government clearly seeks to encourage the establishment of community benefit funds, but also encourages renewable energy developers to offer local communities the opportunity to take a stake in schemes. Shared ownership can help promote stronger relationships between local communities and the renewable sector, and deliver lasting economic and social benefits to communities. We believe that successful renewable energy projects are those which treat communities as active and positive partners, and are encouraged that most developers are offering shared ownership as standard.
Sectoral Marine Plan for Offshore Wind Energy (SMP)
22. The Sectoral Marine Plan sets out a strategic spatial vision for future commercial-scale offshore wind energy development up to 2030 and beyond. It provides a spatial strategy through the identification and assessment of 15 Plan Options (PO) capable of accommodating up to 10 GW of generating capacity. The SMP informs the spatial component of the first cycle of ScotWind seabed leasing in Scottish waters. It:
- Minimises the potential adverse effects on other marine users, economic sectors and the environment resulting from further commercial-scale offshore wind development, and;
- Maximises opportunities for economic development, investment and employment in Scotland, by identifying new opportunities for commercial-scale offshore wind development, including deeper water wind technologies.
23. Significant stakeholder engagement and technical planning work has gone into developing the Plan, as we look to identify the most sustainable options for further offshore wind development. We undertook full Sustainability Appraisal (SA) (including Strategic Environmental Assessment (SEA), Habitats Regulations Appraisal (HRA) and Socio Economic Impact Assessment (SEIA)) for the 17 Draft Plan Options, with a statutory consultation taking place on the draft Plan and SA between 18 December 2019 and 25 March 2020. The responses to the consultation informed the selection of the final PO by Scottish Ministers.
24. The SMP and SA identified some key recommendations and plan-level mitigation measures to reduce, avoid or offset potential negative impacts arising from development. Because some of these potential impacts identified in the Plan and SA, discussed elsewhere in this paper, may have implications for the timing, scale and progression of future development(s), and to ensure that it remains up-to-date with the most recent scientific advice and the political climate, the SMP will be subject to iterative review. .
25. The deployment of existing planned and consented offshore wind farms will also present an opportunity to gather further data and grow our understanding of offshore wind development in Scottish waters.
26. While the Sectoral Marine Plan identifies areas of seabed considered suitable for future development, Crown Estate Scotland (CES), in its role as manager of Scotland's seabed, is responsible for administering the leasing system. CES will be able to lease areas of seabed located within the identified Plan Options (and any subsequent revised or amended SMPs).
27. A big step was taken in June 2020 when CES launched its first cycle of ScotWind leasing. ScotWind will grant property rights for seabed in Scottish waters for new commercial scale offshore wind energy projects, in a way that is fair and transparent, with future rounds and options to be guided by the SMP.
28. The leasing process will provide a pipeline of new projects from the late 2020s onwards, and provide an opportunity to introduce new companies to the UK market – boosting competition, driving innovation and unlocking new sources of investment. Since launching on 10 June 2020, the Crown Estate Scotland "ScotWind" portal has received over 800 requests for clarifications on the leasing documents and a healthy level of interest overall, confirming significant interest in offshore wind leasing in Scottish waters.
Offshore Wind Sector Deal
29. The UK Government published its Offshore Wind Sector Deal in March 2019. This document celebrated the success of offshore wind in the UK, and detailed specific actions to be undertaken by governments and industry, designed to promote and grow the sector. The Sector Deal included targets set by the industry, such as improving representation of women and BAME in the sector, building early-stage skills and knowledge accessibility, and an aim to generate 30 GW of offshore wind by 2030. Since the Offshore Wind Sector Deal was published, the UK deployment target has been increased to 40 GW of offshore wind by 2030.
30. Since launching the Sector Deal, the Scottish and UK governments have worked together with the offshore wind sector to make progress on delivering the commitments that it contains. Developments so far include the establishment of the Offshore Wind Growth Partnership, the development of regional clusters – collaboration between developers, regional supply chain, public sector and education bodies – and appointment of a Diversity Champion. (Offshore wind Sector Deal – one year on)
31. The Sector Deal also contained a commitment to collaborate with industry and other Government departments on strategic barriers to deployment such as radar, environmental issues, and transmission. The Scottish Government is represented across all main work streams, and remains determined to ensure that Scotland's interests are taken fully into account as the Sector Deal continues to progress. We are working closely with the UK Government to deliver a number of key outputs from the Sector Deal, because we know that resolving these issues will be vital to unlocking Scotland's potential. These work streams include:
- Offshore Wind Transmission Network Review
- Radar Project
- Offshore Wind Future Deployment Scenarios.
- The Offshore Wind Evidence and Change Programme (OWEC - formerly known as SEAMAP)
32. Further information on each of these work streams can be found in the Barriers to Deployment chapter which follows.
The Scottish Offshore Wind Energy Council
33. The Scottish Government believes that a flourishing offshore wind sector in the UK both implies and requires a strong and well-developed sector in Scotland. To that end, the Scottish Offshore Wind Energy Council (SOWEC) was formed in 2019, co-chaired by Paul Wheelhouse MSP, Minister for Energy, Connectivity and the Islands, and SSE's Head of Offshore Project Development, Brian McFarlane.
34. The work of SOWEC aligns to the SOWEC Vision, designed to maximise the economic benefits to Scotland of offshore wind deployment in Scottish waters. This is achieved through subject-specific groups covering, the following work streams:
- Supply Chain and Clusters
- Barriers to the Deployment of Projects and Route to Market