Aberdeen Energy Transition Zone: 'We now have a short window to get this right' - Why Scotland must move at warp speed to harness offshore wind

They are a roll-call of the city’s heritage as a global hub for oil and gas: Subsea7, a Norwegian company in underwater pipelaying, Weatherford, a US oil well drilling specialist, and Wood Group, probably Scotland’s best-known North Sea business.

Yet on the estate’s eastern edge a new narrative is slowly emerging. In one new building, thick cabling used to carry power from offshore wind farms is being stress-tested by a giant purpose-built machine at the Floating Offshore Wind Innovation Centre (FLOWIC), the only facility of its kind in the world.

Upstairs is HonuWorx, a Scottish company that develops uncrewed, electric submarines designed to replace the polluting, diesel-powered surface vessels that are currently used in subsea inspection and maintenance in offshore oil and gas and offshore wind. 

Aberdeen’s hopes for managing a transition from a declining North Sea hydrocarbon basin to the opportunities in renewable energy rest partly on efforts like this. The two organisations are tenants at the “Wind Campus” of the Energy Transition Zone (ETZ), an initiative set up in 2021 to turn 40 hectares of brownfield sites across Altens into “Scotland’s largest dedicated energy transition complex”.

The idea is to capture the supply chain opportunities that its backers, including Sir Ian Wood, believe will come from ScotWind, a plan under which 20 private consortia aim to build vast wind farms off the Aberdeenshire coast. If built, they will deliver just over half the UK’s planned offshore wind pipeline. In addition, a £420 million redevelopment of Port of Aberdeen’s South Harbour, on the northern tip of the ETZ, is seen as an ideal location for partial assembly of the kit needed.

“We need to make sure we’re able to support the supply chain that’s already here on the back of oil and gas to make the transition, so that this region remains a global leader,” explains Maggie McGinlay, ETZ chief executive.

Some encouraging news came this week. Aberdeen-based North Star, an investee company of Scottish National Investment Bank, won a contract from RWE of Germany to supply four hybrid diesel-electric service vessels to support wind farms off the UK and German coasts, creating 100 jobs over the next decade.

Yet the reality is that work in offshore wind is coming too slowly to generate business for supply chain businesses with long-established pedigrees in subsea engineering to make the transition to renewables. Many of them are family-owned businesses representing the backbone of the North-east’s economy.

Last month the UK government indicated it would sweeten incentives for developers to enter the next auction of subsidy contracts for fixed-bottom wind farms. But the outlook for floating wind farms, which operate in deeper waters and make up the bulk of ScotWind, is uncertain. The technology has yet to be developed at scale in a way that’s commercially viable.

This means work is scarce for businesses such as Acteon, owner of a US moorings and anchors unit called InterMoor, whose UK head office is in Aberdeen. “As a supply chain company, we’re ready to step up but it’s challenging for everyone in the industry without a clear pipeline of projects,” says Matthew Heyman, Acteon’s business development executive.

The UK government’s windfall tax has also had a chilling effect on North Sea hydrocarbon exploration. Bob Drummond, chief executive of D2Zero, another Wind Campus tenant, recently warned of a “cliff edge” of job losses in precisely the subsea engineering skills needed for offshore wind.

Still, work is progressing at the ETZ, which has £53m in grant funding from the UK and Scottish governments, plus £5m in funding from the Wood Foundation through Opportunity Northeast. A recent programme to help local supply chain companies understand how to take advantage of the shift to offshore wind involved 40 businesses.

The building hosting FLOWIC was the first to be built, with further “transformational anchor projects” planned. One is an Energy Transition Skills Hub that opens next month on a disused dairy next to the Altens campus of North East Scotland College, the project’s partner.

Funding has come from the Scottish government’s Just Transition Fund and £1.8m from Shell. Further money from the Engineering Construction Industry Training Board, the UK skills body for the engineering construction sector, will pay for the equipping of a modern welding academy. “It’s a facility that can be responsive to industry demand,” McGinlay says.

Next, in November, comes ETZ Energy Works, a manufacturing workshop to help startups grow with support from the National Manufacturing Institute of Scotland and funding from Scottish Enterprise and the UK government.

The ETZ shows the value of public sector support where the private sector is not yet able to commit. It’s now crucial that Great British Energy, the new publicly-owned energy company, moves at warp speed to deploy £300m just allocated by the UK government to spur development of floating wind.

And notwithstanding Rachel Reeves’ dismissal this week of calls to scrap the oil and gas windfall tax, the Chancellor must now at least consider re-introducing the investment allowances that previously made North Sea exploration viable for many of the companies now exiting.

“Businesses will locate elsewhere in the world where projects are happening, and we’re starting to see that already,” warns McGinlay. “We now have a short window to get this right.”