Working offshore

Could island wind spark a £2.5 billion investment boom?

Connecting Scotland’s islands to the GB electricity grid could spark a £2.5 billion British investment boom, and after years of waiting it could finally happen – no matter what party ends up in power in June.

Scotland’s island groups – the Western Isles, Orkney and Shetland – are some of the windiest places not just in Europe, but in the world.

Together they are host to nearly a gigawatt of fully consented but as yet unbuilt wind farms, owned by the local community and generators including SSE and EDF.

With capacity factors up to 50 per cent, these farms could be up and running by the early 2020s, delivering green energy cheaper, faster and with a lot more certainty than the proposed Cardiff Bay lagoon or the mega-expensive Hinkley Point C – forecast to be online by 2025 (if of course it can be built on budget or on time).

These wind schemes could significantly soften the UK’s looming capacity crunch, and deliver a shovel-ready £2.5 billion order book in some of the most remote and economically fragile areas of the UK. Together they could support up to 2,000 UK jobs in the period 2018-2022 and bring up to £725 million (gross value added) in economic benefit for the island economies.

In the longer term, the islands are home to some of the world’s best wave and tidal resources and offer the opportunity to build on Britain’s global lead in this sector.

The missing link

What is holding these islands back is a lack of grid infrastructure – namely the long radial links to connect them to the GB mainland, who pays for them and how. Unlike other bits of strategic national infrastructure, such as railway lines and roads which are paid for by everyone, the cost of these grid links – over £1.3 billion – falls wholly on the wind farm operators.

There are very complex cost and regulatory mechanisms at play (shorthand for ‘Ofgem and others’), but as all the main players agree, unlock the ‘who pays’ conundrum and you open the doors to a £multi-billion order book with over 50 percent UK content – just the kind of thing to include in the UK’s emerging industrial strategy.

Which is why UK business secretary Greg Clark last week visited Stornoway in the Western Isles to meet a coalition of interests – including generators, local councils and the Scottish Government to hear their views.

Last year his department of Business Energy and Industrial Strategy (BEIS) launched a consultation on what they term ‘non-mainland GB onshore wind’ and despite a ‘minded not to’ position, the mood music remains positive.

In Stornoway, Mr Clark heard that after more than a decade of close co-operation and joint working between UK and Scottish governments, developers, islands councils, Ofgem and SSE, a workable solution has been identified – the categorisation of remote island wind as a separate technology, and the ability to compete for a Contract for Difference (CfD) in a forthcoming electricity auction round.

It’s a tricky one for the Tories – they stood on a manifesto commitment of no new onshore wind – but as many respondents (and the EU) agree, island wind is a special case.

This is nothing new. As long ago as 2013 the UK Government asserted that wind projects on the Scottish islands “…constitutes a separate class of renewable generation that warrants separate treatment and potentially a different level of support from other onshore projects”.

And as Theresa May has just amply demonstrated, government ‘minded to’ positions can and do change, and now every party’s manifesto is (we hope) open to fresh ideas.

Remote island wind presents a compelling case.

A straightforward solution

All of the main players agree the early establishment of a remote island wind CfD is a straightforward solution in the gift of the UK Government – and has been agreed by all stakeholders (including the UK Government) as the final piece in the jigsaw to enable these projects to happen.

The establishment of renewable energy projects on remote islands would:

• Spark UK supply chain activity – a shovel-ready £2.5 billion order book to be delivered 2018-2022
• Bring high UK content – with a minimum 55 percent guaranteed by anchor projects led by SSE and EDF
• Deliver around 800MW high yield island wind in 2021/22 or 2022/23 periods
• Bring significant UK supply chain investment, acting as a bridge between onshore and offshore supply chains and supporting the UK’s nascent industrial strategy
• Improve UK security of supply through remote generation with low relative correlation to mainland onshore wind
• Offer pioneering new HVDC grid solutions and open possibilities for next generation pathfinder projects, including wave and tidal energy and floating / deep water offshore wind

Of course a lot of things are going to change in the UK in the years ahead, but one thing that will not change is a requirement for electricity – home grown, reliable and at a reasonable cost.

As Britain’s old coal fired and nuclear plant gets switched off, GB’s capacity margins get slimmer and slimmer and there is a compelling need for significant new reliable power in the medium term.

Together island wind projects can bring cost-competitive low carbon energy to the GB consumer and support the UK economy in core areas of upgrading our infrastructure, delivering affordable energy and green growth across the whole country, all in a geographic area with high local and political support for renewable energy.

No matter the result of June’s general election, a swift and positive decision on island wind would be good news for Britain, for Scotland and for the Scottish island communities.