ScotWind's promise punctured amid industry concern over floating technology
Projects look certain to be scaled back in atmosphere of uncertainty
At an annual offshore wind conference in Aberdeen this week, a Scottish company called Encomara was talking about “the Squid”.
Shaped like a gas canister and painted bright yellow, this 40-tonne piece of kit shows how Northeast engineering expertise is tackling floating offshore wind’s most persistent problem: cost.
The Squid saves developers money by gathering the cat’s cradle of mooring lines and undersea power cables at the point of installation, rather than laying them down individually.
Encomara claims this could cut the cost of floating wind farms over their lifetime by 10-15 per cent. Ian Donald, its managing director, says the Squid can “make a real difference”. But he concedes that, in the bigger picture, the industry is struggling to make the numbers work.
Others at the conference, organised by Scottish Renewables and RenewableUK, were blunter. Angela Hepworth, Scottish Renewables’ new chief executive, warned that Scotland and the UK faced “a time-limited opportunity to be at the forefront of the development of this sector globally”.
What a difference five years make. In 2021, hopes were high that the ScotWind leasing round would propel Scotland to the forefront of a new way to harness wind power: floating technology.
This envisages wind farms far out at sea, with turbines on floating platforms tethered to the seabed by chains and vast anchors the size of a Transit van. They could harness even more wind power than fixed-bottom farms, where turbines are fixed into the seabed in relatively shallow waters up to 60 metres.
Yet that promise has been punctured. ScotWind, around 60 per cent of which is earmarked for floating, now looks set to be drastically scaled back. Only the most viable projects would survive with the rest – already tagged by some in the industry as “shadow projects” – facing an uncertain future. It has not helped that Shell and bp, businesses with the most experience of getting offshore kit into the water, have quit ScotWind.
What went wrong? First, hubris. Crown Estate Scotland’s leasing round spawned 20 seabed sites on which developers worldwide bid, making non-binding supply chain investment commitments.
As a “moonshot” exercise, the ambition was laudable but did not survive contact with reality. The sector is caught in a “chicken-and-egg” bind. Developers cannot commit while there is no supply chain to produce the kit floating wind needs, especially at the scale of the largest ScotWind projects. Suppliers are wary of a developer pipeline that looks uncertain.
Ports have pumped millions into quayside infrastructure for turbines, blades and the super-sized cables, chains and anchors floating requires. Yet no orders have come.
“I think it’s fair to say the industry overpromised and we’re still recovering from that,” Hugh Kelly, chief executive of Simply Blue Energy, a shareholder in the Salamander floating project off Peterhead, told the conference.
The global backdrop has not helped. As the Global Wind Energy Council puts it in its latest annual report: “Macroeconomic headwinds (inflation, rising interest rates, supply chain constraints and policy uncertainty) have slowed deployment at precisely the moment it needs to accelerate.”
There have also been domestic constraints: slow grid upgrades after years of under-investment by previous UK governments, punitive transmission costs for Scottish projects, and no coherent plan for deploying Scotland’s ports.
This month Audit Scotland published a progress report on offshore wind, finding that Holyrood’s five-year, £500m investment programme, launched in 2023 to speed up port infrastructure and manufacturing facilities, had fallen short. So far, only £141m had been committed.
John Swinney, first minister, told the conference by video link that Scotland was “not content to follow global developments [in floating wind]; we are leading them.” Sadly, this risks very soon no longer being true.
Asia is emerging as a more promising market, with Japan, South Korea and even the Philippines progressing rapidly with government backing. France, which has the world’s second-largest installed floating wind capacity after Norway, is edging ahead of Scotland. I understand the ports of Brest and Orléans were in Aberdeen this week explaining to supply chain businesses how the French government had allocated them specific roles in the floating wind build-out.
There are pockets of progress in Scotland. Pentland offshore wind farm, in which Great British Energy has invested, has partnered with Danish foundation maker Stiesdal on a promising steel foundation solution.
Yet the biggest barrier is banks’ unwillingness to finance such projects given the uncertainty pervading the sector. Appetite is likely to fall further as rates rise amid soaring bond yields and inflationary pressures from the Middle East conflict.
This matters because financing accounts for 60 per cent of the levelised cost of energy from a floating wind farm, according to a new report by ORE Catapult, the UK’s offshore renewables innovation centre.
Meanwhile, foreign investors that signed up to be part of Scotland’s early ambitions for floating are nervous. Sumitomo Electric of Japan, which officially opens its £350m subsea cable factory in Nigg later this month, has already recalibrated what it will make there to take account of changed market conditions.
A new initiative involving Scottish Renewables and others aims to present the UK Treasury by year-end with a list of the most viable ScotWind projects, paired with suitable ports. It’s designed to get ahead of the attrition seen as inevitable in coming months, particularly if a “strategic spatial energy plan” expected from the UK government next year fails to prioritise Scottish floating wind.
Jack Norquoy, Scottish Renewables’ director of public affairs, says: “It’s about painting a clearer picture not just of immediate deployment but of how some of these front-runner floating projects link into [ports] and create a compelling offering for communities and industrial capability in Scotland - and ultimately how that delivers on the [UK] government’s agenda.”
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