Chapter 5: Economic Opportunities
5.1. Supply Chain
5.1.1. Scotland has a well-established energy supply chain, with thousands of skilled workers in manufacturing, operations and maintenance (O&M), environmental assessment and planning, and project management. Figures from 2019 show that onshore wind developments alone directly support over 1,900 FTE Scottish jobs (of an overall 4,600 renewables jobs). Additionally, according to the Office of National Statistics, each direct job created, supports 1.24 indirect jobs, increasing the overall impact substantially.
5.1.2. Research, including that conducted on behalf of Scottish Power Renewables for its "Power of Onshore Wind" report, has estimated the potential benefits in terms of construction jobs and long-term and skilled jobs from an increase in onshore wind deployment in the UK, as well as the opportunities this could present to local supply chains.
5.1.3. The recent Onshore Wind Prospectus goes on to suggest that approximately 17,000 jobs and the equivalent of £27.8bn in GVA could be achieved in Scotland if we are able to deploy an additional 12GW by 2030.
5.1.4. The Scottish Government is determined to see significant increases in local content attributable to Scottish energy developments, to steadily increase our skilled workforce, to see greater gender and BAME diversity and for our energy sector to continue to boost our local economies. To further inform our position on what is achievable and deliverable, we intend to undertake a data gathering exercise to enable a decision to be taken on local content levels and targets.
5.2. Consultation on Contracts for Difference (CfD) and Supply Chain Plans
5.2.1. The CfD mechanism has helped drive down the cost of renewable electricity support for consumers in recent years. However, the dramatic reductions in support achieved at recent CfD rounds have also increased the pressure to slash the capital costs of renewable electricity projects.
5.2.2. This pressure has caused a race to the bottom for the domestic supply chain, with suppliers greatly reducing margins or losing contracts altogether. The Scottish Government maintains that the supply chain pressure and squeeze resulting from the CfD scheme's effectiveness at reducing developer bids and technology costs has been detrimental to the domestic supply chain and investor confidence.
5.2.3. The Supply Chain Plans element of the CfD mechanism provides an opportunity for applicants seeking to construct projects of 300 MW and over to provide key information around their project's scope and associated packages of work. We believe that this information should be shared with the domestic supply chain at the earliest opportunity so that companies can prepare their bids for upcoming contracts.
5.2.4. Moreover, it is absolutely crucial that developers make every reasonable effort to meet their supply chain plan commitments, which is why we support BEIS' proposal to introduce a termination right for the most egregious breaches in supply chain plan commitments.
5.2.5. The Scottish Government supports our agencies in identifying opportunities to work with supply chain companies to ensure suppliers are competitive. We expect developers to make every effort to support the domestic supply chain, and support the UK Government's decision to ask developers to provide UK content estimates for their projects as part of the Supply Chain Plan questionnaire.
5.3. Benefits to Scotland
5.3.1. Scotland has a wealth of expertise in large scale manufacturing for oil and gas projects. However, as the Just Transition Commission's A national mission for a fairer, greener Scotland sets out, "we need to be considering how to help and support people currently working in the sector to adapt to a new future and enable them to put the skills they have developed in oil and gas towards driving our net-zero transition."
5.3.2. The rapid expansion of Scotland's onshore wind capacity, and associated manufacturing opportunities, will play a key role in this new future. Scotland's Enterprise Agencies as well as Scottish Development International will continue to work with domestic suppliers in the Scottish oil and gas sector to better understand capability and capacity gaps. The Scottish Government is keen to ensure that companies are in a position to target key manufacturing contracts throughout this decade and beyond.
5.3.3. The Scottish Government expects onshore wind developers to engage with domestic manufacturers and ports to ensure that the Scottish supply chain has visibility of a pipeline of contracts. We want developers to seek out opportunities throughout the development of their project to build the competitiveness capability and capacity of the Scottish supply chain which in turn will keep costs down for consumers, as well as creating and growing competitive business, increasing local jobs, reduce emissions and boost our opportunities for exports. Developers should seek to engage Scottish companies early in procurement and open tendering processes and provide support to help them navigate forward.
5.3.4. We expect to see Scottish based suppliers being given a realistic opportunity to compete for manufacturing contracts. Developers, and those at the top of the supply chain, should work collaboratively to establish and develop manufacturing facilities and key infrastructure that can be utilised throughout the construction of multiple projects in Scotland. The Scottish Government and its Enterprise Agencies will continue to work closely with the sector to identify and progress opportunities for inward investment in the domestic supply chain.
5.3.5. While large scale manufacturing and component construction remain the priority, there is also substantial economic activity in other areas associated with onshore wind development. Scotland excels in areas such as pre-application planning and environmental consultancy, software development, onsite environmental monitoring, legal and financial services and onsite operations and maintenance. There is an opportunity to capitalise on this expertise and experience as onshore wind is deployed at greater volume over the coming decade. We expect that these opportunities, and the economic value attached, will exist predominantly within Scotland, but this expertise will extend across the UK.
5.4. Refurbishment and Recycling
5.4.1. The Scottish Government is committed to building a circular economy and recognise it is a vital part of our journey to net zero. Increasing use of renewable technologies is resulting in a greater demand on the associated manufacturing materials, however we are already taking action to maximise recovery of materials from decommissioned infrastructure.
5.4.2. Adopting a circular approach to sourcing materials for renewable energy developments both safeguards against potential future resource shortages, and reduces the greenhouse gas emissions involved in manufacturing and transportation.
5.4.3. At present, most component parts of onshore wind turbines are recyclable, except blades, which are made from composite resins and fibres that are difficult to recycle fully. The Scottish Government supports the use of recycled and refurbished turbines, recognising the enormous potential to strengthen the Scottish supply chain, reduce waste, utilise more of our local skills and capabilities and improve costs for the onshore wind sector.
5.4.4. Zero Waste Scotland (ZWS) is working to improve the circularity of the sector and SEPA has published guidance on extending life and decommissioning of onshore windfarms, encouraging the reuse and recycling of turbines. ZWS also provides support and advice to businesses looking to develop more circular business models, including the renewable industry.
5.4.5. Renewable Parts, based in Scotland, has become the first SME in the wind industry to received funding from the Circular Economy Investment Fund, focussing its efforts on reducing waste associated with wind turbines by creating a refurbishment programme that aims to decrease the carbon footprint of recycled parts by up to 80%. reducing waste associated with wind turbines by creating a refurbishment programme that aims to decrease the carbon footprint of recycled parts by up to 80%.
5.4.6. The Scottish Government encourages the onshore wind industry, among others, to consider the refurbishment and recycling of their wind farms, and have plans to introduce a Circular Economy Bill to advance Scotland's ambitions for the circular economy through measures which will encourage reuse of products and reduce waste.
5.4.7. We are aware that National Grid has adopted the principles of the circular economy, committing to sending zero waste to landfill, where possible, in their main offices. It is also looking to expand the scope of its landfill diversion targets in the UK, increase recycling targets and continue its year-on-year reduction in waste intensity from construction projects. We would be interested to hear the thoughts of renewables industry and others on how such targets could apply to the onshore wind sector.
5.5.1. The Climate Change Plan Update, published in December 2020, stated "The green recovery and transition to net zero present considerable economic opportunities for Scotland. By capitalising on Scotland's strengths in energy, natural capital, innovation and our skilled workforce and universities, we can set Scotland at the forefront of growing global markets."
5.5.2. We are committed to an economic recovery from Covid-19 that is both green and fair – where we capture the opportunities of our transition to net-zero including in green jobs, innovation and competitiveness. The need for a skilled workforce is more important than ever to enable us to meet these unprecedented challenges. Fair Work is vital to, and supports the delivery of, a just transition. We must make sure that new jobs are good jobs – underpinned by Fair Work principles, with high workplace standards and paying fair wages.
5.5.3. A history of oil and gas expertise in Scotland, and building on our existing supply chains, means that Scotland is comparatively very well placed to build on these existing skills, and provide skilled professionals to meet the increasing demands of the onshore wind sector as we transition to net zero. Opportunities for skilled jobs will be available throughout the lifecycle of developments, from planning through to development, through operations and maintenance (O&M) to decommissioning and recycling.
5.5.4. Our 2020 Programme for Government set out the key elements of a green recovery, and the next step in delivering Scotland's Green New Deal. This included commitments on the part of the Scottish Government to:
- work with employers and individuals to build the necessary skills and infrastructure to support the industries of the future.
- ensure every young person has access to a job, education, training or development programme, though our Youth Guarantee.
- deliver our new £25 million National Transition Training Programme, with a focus on the provision of green skills, to support workers at risk of redundancy move into sectors with the greatest potential for future growth and job opportunities.
5.5.5. Over the period 2017 to 2020 the Scottish Government provided grant funding of over £320,000 to the Energy Skills Partnership to support their Wind Turbine Technician training courses. Over 600 technicians and 100 apprentices have received this training since its inception, adding to our skilled and experienced workforce and building the workforce of the future.
5.5.6. We have also created a £62 million Energy Transition Fund targeted at projects, identified by the sector and regional partners, which will accelerate energy transition and respond to the dual challenges of commodity downturn and COVID. Taking a place-based approach, we are working to ensure this investment supports and creates local jobs and benefits wider supply chains across Scotland.
5.5.7. As such, grants within the Energy Transition fund will apply the Fair Work First criteria, which asks employers to commit to:
- appropriate channels for effective voice, such as trade union recognition
- action to tackle the gender pay gap and create more diverse and inclusive workplaces
- payment of the real Living Wage
- no in-appropriate use of zero hours contracts, and
- investment in workforce development.
5.6. Promoting a Diverse, Inclusive Industry: Equality and Onshore Wind
5.6.1. The Scottish Government believes that Scotland's onshore wind industry needs to do more to reflect the diverse nature of the UK's population. We believe a strong industry is a diverse and inclusive industry. This means maximising available skills of the workforce, ensuring the right people are in the right jobs; regardless of background.
5.6.2. The Scottish Government already promotes an increasingly diverse and inclusive workforce. Everyone should have equality of opportunity and work in an environment free from unfair discrimination and harassment, irrespective of irrelevant differences (some of which are protected by legislation). We strongly encourage members of industry to reflect this in their working practises.
5.6.3. As an example of the significant work still to be done, in 2015, Powerful Women presented a challenging target to the UK energy sector for "40% of middle management and 30% of executive board positions to be held by women by 2030." However, their recent report highlighted that only 14% of executive director roles across the UK energy sector were held by women in 2021.
5.6.4. We are also aware that the UK Offshore Sector Deal challenges the offshore wind sector to achieve a workforce that is 33% female by 2030 (with a stretch target of 40%) and improves representation from minority ethnic groups to 9% (with a stretch target of 12%). The Scottish Government would like to see the onshore wind sector similarly challenge themselves to achieve greater diversity and inclusivity in the workforce.
5.7. Tourism and Cultural Economics
5.7.1. Tourism has a significant role in delivering Scotland's wider economic strategy, especially as we recover from COVID-19. Tourism has a key role to play in sustaining many of Scotland's local economies; creating jobs, adding vibrancy and enhancing our places, and helping to improve our health and wellbeing.
5.7.2. The Scotland Outlook 2030, published in March 2020, sets out a bold new approach that will see tourism act positively in the common interest of Scotland's communities, businesses and visitors. It recognises that the role of tourism has changed as a result of our climate crisis, advances in technology, EU exit and changes in consumer behaviour which is reflected in the demands of today's traveller.
5.7.3. The tourism sector represents a significant consumer of energy, and the Scotland Outlook 2030 recognises and acknowledges the part it has to play in reducing its environmental impact and contributing to net zero targets.
5.7.4. Public support for onshore wind has grown significantly across the UK, reaching a new record of 79% in 2019, with opposition decreasing from 12% in 2015, to 5% in 2020. However, we recognise that some of Scotland's citizens remain concerned about the impact of large scale onshore wind developments on local and national tourism.
5.7.5. The Scottish Government recognises the immediate and continuing support required by the sector to ensure its recovery beyond Covid-19 and developed a set of recommendations in 2020: Scotland's Tourism Recovery Recommendations - Covid19. A National Action Plan has also been created and priorities agreed by government, agencies and industry to support the tourism sector's recovery in both the short and long term.
5.7.6. The Scottish Government is encouraged to see onshore wind developments, such as Whitelee Wind Farm on the outskirts of Glasgow, providing additional outdoor recreational activities alongside their windfarms. We consider the effect that onshore windfarms can have on local and national tourism as a significant opportunity to cultivate a 'people and place' mentality and would be encouraged to see more developments in Scotland with similar provisions.
Economic Opportunities - Consultation Questions:
18. What support do Scottish companies need from Scottish Government and agencies in order to successfully bid for and win contracts?
19. Should government consider options for introducing a sector deal similar to that of the Offshore Wind sector and if not, why is that your view?
20. How can individual organisations (including onshore wind developers, tier 1 suppliers, and the domestic supply chain) work collaboratively to ensure that key manufacturing projects for Scottish onshore wind stays in Scotland?
21. Circular economy and zero-waste are core principles that the Scottish Government are promoting. Where do you see the economic opportunities in relation to these policy issues lying with onshore wind? And are there any practical issues you think need to be addressed in order to maximise the benefits?
22. How can the Scottish Government best support skills for the future of the onshore wind sector? Specifically we would be interested in oil and gas transition, apprenticeships and entry-level positions for young people, as well as any other experiences you can share.
23. Do you have any views on the impact of wind farms on tourism?
24. What is your organisation doing specifically to promote diversity and inclusion in the onshore wind sector?
25. Given the significant contribution onshore wind is expected to make to our net-zero ambitions, and the structure of the ScotWind process for offshore development, should Supply Chain Development Plans be introduced for onshore wind developments in Scotland?
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