Chapter 3: Future Position
64. Scotland's natural resources, which include a strong and consistent wind resource along with our established expertise in offshore oil and gas, skilled offshore workforce, excellent port structure and strong innovation hub, make Scotland one of the best places in the world to develop offshore wind and its supply chain. Offshore wind offers large-scale, low carbon electricity at a low cost to consumers, and, although environmental considerations need to be given due regard, it is not restricted by factors such as land availability that affect other low cost renewable sources.
65. The Sectoral Marine Plan makes clear the near-term, practical ambitions of the Scottish Government and our agencies to grow this sector, with due respect and regard for and awareness of other marine users and environmental implications.
66. In our draft Offshore Wind Policy Statement, published in December 2019, we referenced the potential of this sector and noted our considerations around quantifying a level of ambition. We also posed a series of specific questions on the future of this sector in Scotland and how success or achievement could be measured.
67. Consultation responses focussed around specific areas of policy and development, which are each considered in greater detail in further chapters. These remain a focus of attention for policy makers, regulators and industry and it is clear that their resolution will continue to have profound effect on future build and capacity scenarios.
68. In order to meet our net zero ambitions we expect a significant increase in demand over the coming years, including the electrification of heat and transportation, which between them account for more than three quarters of Scotland's energy consumption. This will require a significant increase in the deployment of renewable electricity to facilitate electrification of both sectors or, indirectly, for production of hydrogen via electrolysis. The intermittency of sources such as offshore wind will create a need for greater flexibility in our energy system, the need to consider black start capabilities and a greater requirement balancing and ancillary services, which renewables can provide.
69. There are also considerations around transmission charging and how net zero is influencing future charging regimes. One of the key regulatory issues which our consultation drew out was the impact of transmission charging on the financial viability of offshore wind projects in Scotland. These issues are considered in more detail in the 'Barriers to Deployment' chapter of this Statement.
70. The Scottish Government recognises the need for a modern energy system which protects the interests of consumers and reflects the urgency of the climate emergency. We work closely with industry and academia on these issues, through our Scottish Energy Advisory Board and its leadership groups – aiming to consider, protect and promote Scotland's interests. This work also informs ministers' frequent engagement with Ofgem, and the Scottish Government's continuing efforts to ensure that the regulator takes Scotland's energy ambitions and policies fully into account in its decision making.
Hydrogen and Storage
71. Another strong theme that came through our consultation was the future role of hydrogen, and the technological and economic opportunities that this, and energy storage, offers. 'Offshore Wind and Hydrogen' – commissioned by the Offshore Wind Industry Council (OWIC) as part of the Offshore Wind Sector Deal, concludes that offshore wind with green hydrogen is a major opportunity for the offshore wind industry. If offshore wind costs continue to fall, this opens up the potential for the offshore wind industry to move beyond electricity requirements and produce green hydrogen for export, which could generate significant economic impact.
72. The use of surplus renewable electricity for the production of green hydrogen via electrolysis offers potential solutions to grid constraint and we also expect future demand for off-grid electricity solely for dedicated hydrogen production. The Scottish Government has an established, supportive policy position for hydrogen, and considers hydrogen to be a key part of our future energy system. Our position on hydrogen and its future deployment in Scotland will be set out in our Hydrogen Policy Statement and Action Plan, which will be completed before the end of 2020.
73. Another dominant theme through the consultation responses around what a "successful offshore wind industry in Scotland in the future" looks like, was the delivery of national and local benefits, through the development of indigenous supply chain.
74. The Scottish Government is committed to maximising the economic benefit to Scotland of development on Scotland's land and seas, and this is considered in more detail in the "Supply Chain" chapter.
75. In terms of future supply chain and economic opportunities, the re-use and re-cycling of offshore wind farm components, as decommissioning begins to come into play, will offer further opportunities. The Scottish Government has strong commitments to the circular and zero-waste economy and decommissioning must be taken forward in alignment with those commitments and whilst protecting our natural environment.
Skills and Training
76. Scottish Government recognises that in order to ensure we maximise the economic benefit to Scotland from offshore wind, we must ensure that our skills landscape continues to develop and reflect the needs of industry. Covid-19 has had a massive impact on the Scottish economy, in line with impacts in the UK and other advanced economies. Given the parallel need to address the climate emergency through delivery of a just transition, it is imperative that our economic recovery is a green recovery. That is why, as part of our Programme for Government 2020, we have committed to creating a £100 million Green Jobs Fund over the next five years, investing alongside businesses and organisations to support new and increased opportunities for green job creation across Scotland. In addition, we have announced a £25 million National Transition Training Fund to provide targeted support to those individuals being made redundant or facing the threat of redundancy, to help them transition into new opportunities arising from the green recovery.
77. As robotics and autonomous systems become increasingly prevalent within the operation and maintenance of offshore wind projects, we are likely to experience a shift from traditional offshore technician jobs towards roles that are more focused on data and information management. Scotland should continue to build on expertise in these sectors to ensure that we remain able to react to the rapidly evolving technologies that will affect skills requirement in the future . We must ensure that any loss of economic impact in coastal communities from changes in operations and maintenance models is offset by high value employment opportunities in these emerging skill areas. This should continue alongside efforts to attract work arising from the construction process.
78. The Scottish Government will continue to work alongside, and have a strong interest in the work of bodies such as Energy Skills Partnership, the Investment in Talent Group, the Energy Skills Alliance and through our role in SOWEC. We will use these partnerships, to look at future skills demand across the energy sector and increase the employment impact and, thereby, the number of skilled people working in Scotland's offshore wind industry.
79. The Scottish Government has created a long-term and stable supportive policy environment for renewable energy which has contributed to the successful driving down of costs and tackled deployment issues. Consultation responses acknowledged this, and called for this policy support to be maintained and strengthened.
80. The Scottish Government has continued to demonstrate ambition and vision for the offshore wind sector with the Offshore Wind Policy Statement and the Sectoral Marine Plan, as well as our commitment to tackling the global climate emergency.
81. The refresh of Scotland's Energy Strategy, published in 2017, is due to get underway before the end of 2020 and will conclude in 2021. This refresh will demonstrate clear links between our renewable generation requirements and the broader context of our Energy Strategy and wider energy systems thinking. It will also emphasise the future role we expect renewable electricity generation to play in our overall strategic ambitions, with further analysis to consider the potential scale of offshore wind deployment, and that of other technologies, which may be necessary to deliver our net zero and decarbonisation goals.
82. In relation to investment, the proposed "Mission 1" for the Scottish National Investment Bank is:
Achieving a Just Transition to net zero carbon emissions by 2045
Invest in rebalancing our economy towards leadership in sustainable technology, services and industries.
83. All three proposed missions, and their corresponding grand challenges, were laid before Parliament for consultation at the end of August. The consultation period has now closed and the missions will be amended as necessary, based on the feedback received. It is expected that these missions can officially be set for the Bank in the final quarter of 2020.
84. A dominant theme in the responses to the consultation was the setting of appropriate ambition for the offshore wind sector in Scotland.
85. The Scottish Government is confident that Scotland's 2 GW of operational and under construction offshore wind capacity could grow to between 8GW to 11GW by 2030, based on current literature and estimated forecasts of growth trends. However, the most significant economic and supply chain benefits are likely to require substantially increased deployment in the future. Recognising this, and the challenge that net zero by 2045 represents, we believe that we are going to need significantly more offshore wind deployment, particularly beyond 2030. As we have stated in our Overview, we will continue to explore issues and potential requirements as we move towards 2045 and net zero as part of our work to update Scotland's Energy Strategy.
86. As referenced in the "Barriers to Deployment" chapter, there is an understanding that in order to meet these ambition the pace of deployment, the timescales from inception to deployment, will need to speed up.
87. The report "Towards a Robust, Resilient Wellbeing Economy for Scotland: Report of the Advisory Group on Economic Recovery" made specific reference, at recommendation 5.8 around Planning and Regulation. This stated that:
The Scottish Government, regulatory bodies and local authorities should review their key policy, planning and consenting frameworks, especially for key infrastructure investments such as marine renewables, to accelerate projects.
88. The report further states "One of the most critical areas for strategic focus in the context of a green recovery and climate change, however, is the marine renewables sector. Scotland has some of the most ambitious climate change targets in the world. Central to the Scottish Government's response, and a key component in the transition to a low-carbon economy in Scotland, is the development of offshore wind energy. With huge wind resources and a marine area six times the size of Scotland's land mass, offshore wind offers considerable potential for sustainable economic growth. Scotland can and should be a leader in marine renewables."
89. Our response to the report committed to "continuously review [our] consenting frameworks for marine renewables, [and] to look for opportunities for further simplification and improvements while ensuring protection for our marine environment and the ecosystem services from which current and future generations can benefit".