Offshore wind policy statement: consultation analysis

Executive Summary

The Scottish Government conducted a consultation on the Offshore Wind Policy Statement (OWPS) from December 2019 to April 2020. The responses received will play a vital role in supporting the Scottish Government (SG) to understand a range of views on the ways in which both fixed and floating offshore wind technologies can contribute to net zero by 2045, and the economic benefits to Scotland of commercialising offshore wind.

A total of 48 respondents took part in the consultation. Most (42) came from organisations; 6 were submitted by individuals. This report presents the range of views expressed and trends amongst responses. Respondents' responses to the consultation, where permission for publication was granted, can be found on the Scottish Government's website.

Q1: Does the current pipeline and level of activity in the offshore wind sector in Scotland provide a sufficient platform upon which to build the greater contribution required to achieve our climate change goals?

A major theme was recognition of the importance of the OWPS in delivering climate change goals. Most respondents welcomed the policy statement, believing it would contribute to national targets. An equally prevalent theme was further actions or issues for the SG to address to achieve Scotland's climate change goals. Key concerns were around infrastructure and planning, including grid capacity.

Q2: Do you believe that the 2030 visions and aspirations described above are sufficiently ambitious?

Calls for more ambitious targets for offshore wind were most prevalent, specifically increasing them above 8GW by 2030. Second most prevalent was a call for the SG to go further and create a more ambitious vision to realise the targets set out in the OWPS.

Q3: What actions do you believe should be taken by the Scottish Government, UK Government and agencies in order to realise the full potential of Scotland's offshore wind sector?

Discussion of the Contracts for Difference (CfD) mechanism were most common, with many calling for a move to annual CfD auctions. Many also discussed floating wind in relation to amending the CfD mechanism. Another major theme centred on supporting local supply chains, urging the SG to ensure work is not exported overseas, arguing this would maximise the benefits to the Scottish economy.

Q4: What are the key regulatory and cost challenges facing the offshore wind sector?

Transmission Network Charging was the most frequently mentioned challenge facing offshore wind. Under the CfD framework, sites Scotland are seen to be penalised due to being furthest from the centres of demand, putting them at a competitive disadvantage and deterring investment. The second most common theme was the need to update or reform the existing regulatory regime. Some also highlighted the need for improved grid infrastructure to enable energy from offshore wind to be integrated into the network.

Q5: What more can the sector and other key stakeholders do to tackle these?

Most common was a request to review the cost implications of regulatory commitments and policy mechanisms to create a level playing field for the industry. The second most common theme was a variety of suggested improvements to grid infrastructure. Knowledge sharing, collaboration and co-ordination of advance planning between sectors and different marine users was encouraged.

Q6: What should the key Scottish priorities be in relation to Air Defence Radar, and towards radar mitigation more generally?

Discussion of the need for an overall strategy for air radar was most prevalent. Most respondents argued the existing case-by-case approach to resolve site specific issues is not sustainable, highlighting the need for a long-term solution and an overall strategy.

Q7: What more can the Scottish Government do, working with industry and other stakeholders, to address 'knowledge gaps' in environmental assessments for potential offshore wind developments?

A key focus of responses was the two-yearly Iterative Plan Review of the Sectoral Marine Plan and the Advisory Group which forms part of the review. A few made general comments in support of the Advisory Group, some queried the composition of the group and a small number asked for clarity on the role of the group in identifying knowledge gaps, and on its powers. The second common theme was the need for a collaborative approach with industry to address knowledge gaps and environmental concerns.

Q8: What steps can be taken to improve interactions between offshore wind and other marine sectors?

Responses most commonly focussed on the importance of dialogue between all users of the marine environment. Some highlighted this was essential for targets to be delivered. Some commented on existing bodies and approaches, explaining how these have been effective in establishing connections and encouraging discussions among stakeholders.

Q9: How could a competitive market framework that promotes the development of floating wind be developed whilst still retaining value for money for the consumer?

The dominant theme was the need for reforms to CfD to allow floating wind to flourish - there were calls for the creation of a separate 'pot' for floating wind to separate it from fixed-bottom projects, for a floating CfD, or to allow floating wind to compete in the innovation / developing technologies class. General comments in support of floating wind were the second most prevalent theme. Respondents commented that they would expect floating offshore wind to become cost competitive over time.

Q10: Considering the currently available literature and analysis, what do you consider a successful offshore wind industry in Scotland in the future would look like?

Comments that highlighted the local and national benefits of a successful offshore wind industry were most common. Much of this discussion focused on employment and economic benefits, often in relation to the local supply chain. Other positive impacts included diversification of Scotland's economy, less reliance on outsourcing and imports, and enhancement of domestic skills and expertise. Many argued that success meant achievement of net zero emissions targets in Scotland and the UK.

Q11: What scale of deployment would you estimate or believe to represent a successful outcome, and why?

Across responses there was general discussion of the opportunities and challenges facing industry, and many did not make reference to a specific preferred scale of deployment. Beyond general discussion of scenarios, the second most common theme in responses was for Scotland to aim for a greater rate of deployment than 8GW by 2030.

Q12: What actions should industry and government take to address the issues described in this section and ensure the most positive future position for offshore wind in Scotland?

Calls for the SG to show ambition, develop a clear vision and develop an effective policy framework dominated responses to this question. Investment was the second most common theme in comments on action for government and industry. Areas highlighted for investment included workforce development, research and development and infrastructure, including port facilities. Another theme was the role of the SG in assessing the strengths, weaknesses, opportunities and threats facing the offshore wind sector.

Q13: What areas of the Scottish supply chain do we excel at, and what could we do better?

Project development expertise in the Scottish supply chain was the strength most frequently mentioned by respondents. For example, competence and expertise in engineering, environmental and development services were praised. Legal, environmental and financial consulting services were noted as assets to the Scottish supply chain by some respondents. The prevalent theme in discussion of areas for improvement was in long term or holistic thinking in future developments. Some requested long-term thinking in the investment into infrastructure development, particularly facilities and capabilities, as well as consideration of the full life cycle of projects instead of just the initial stages.

Q14: Where are the new areas that Scotland can develop and exploit a competitive advantage?

Offshore floating wind was the most frequently mentioned area of competitive advantage for development; the need for funding and further development of offshore floating wind was described. Some outlined specific skills or expertise to maximise supply chain advantage. Some called for industrial policies which enhance competitive advantage.

Q15: What are the main challenges a company faces when tendering for a contract?

Some described difficulties in accessing existing synergies or relationships between manufacturers and suppliers. Others highlighted the complex contractual arrangements between suppliers and manufacturers and the inherent risk and financial liabilities that discourage partnership working. A few mentioned state aid for companies based abroad.

Q16: Subject to procurement law, what more should government and its agencies do to assist the supply chain secure contracts?

Many urged for the development of a clear policy and regulatory framework to provide certainty for the supply chain. A prevalent action outlined by respondents was for the SG to better promote the local supply chain's networks and capabilities by initiating partnerships, ideally from early stages of developments. Government investment was outlined by some as an action that could assist the supply chain to secure contracts.

Q17: What are the key skills issues and gaps facing the sector over the coming years, in the short and medium term?

Many responses gave specific examples of roles or skills where gaps exist; Operations and Maintenance were commonly cited. A small number mentioned skills associated with deep-water capability, ports, and harbour logistics. Also prevalent were comments encouraging the transition of workers from existing industries - in particular, oil and gas.

Q18: What more should government and the sector do to build on the progress made in recent years?

One of the three common themes was a call for stakeholders to review the skills needed now and in the future. Another was for the SG to support and encourage synergies with the oil and gas sector, especially re-training individuals transferring to offshore wind. Support for those entering the offshore wind sector was the third common theme.

Q19: What can Scotland learn from the approach taken in other countries around the world in this area? Are there examples of best practice you can share?

Given a smaller number of responses and specific examples being given, only a few themes emerged. Some described models in other countries to develop offshore wind, and a small number called for mechanisms to ensure projects set a minimum threshold for using local supply chains, guaranteeing jobs and contracts for local populations.

Q20: What can the Scottish Government most usefully and feasibly do to build on the innovation support previously and currently available?

Most prevalent were comments on support, funding, or incentives, followed by discussion of the continued support of research programmes from the SG. This included appropriate models and oversight to encourage effective knowledge sharing and avoid duplications.

Q21: How can we support technologies and developments which reach a viable stage between leasing rounds and Contract for Difference (CfD) auctions?

Increasing the frequency of leasing rounds and CfD auctions was most frequently discussed. Comments on lease milestones called for flexibility and baseline validity in Environmental Impact Assessments for projects that are not successful in CfD auctions, to apply for leases between rounds and reduce the volume of stranded assets.

Q22: Where respondents believe that scope remains for innovation in fixed offshore wind, what areas should be prioritised?

The most prevalent theme was a request for the SG to prioritise lower tier suppliers and operations and maintenance activities. A minor theme was requests for the SG to prioritise asset management and life extension for projects.

Q23: What actions should be taken to address the key challenges facing the uptake of commercial scale floating in Scotland?

Collaborating with the UK Government and industry to develop a CfD framework to enable floating wind to compete for contracts was the most common action outlined. Funding support to develop pre-commercial floating wind projects was requested by some respondents. Collaboration with designers and supply chain workers to identify innovative approaches to reducing cost on a mass production was raised by some respondents.

Q24: What can be done, on the part of government and / or others, to strengthen and benefit from the synergies with a) hydrogen and b) the oil and gas sector?

Discussion of support to develop green or blue hydrogen was the most common theme. Another was that the SG's Hydrogen Action Plan should be coordinated with its approach to offshore wind. Comments on synergies within oil and gas related to the operation phase of projects. Respondents argued that synergies would arise from wider collaboration between sectors to share best practice. Another common theme related to skills transfer; retraining individuals for the offshore wind sector, drawing on best practice standards for operations, inspection and health and safety.

Conclusions

Much of the draft offshore wind policy statement was endorsed in principle. Key themes in the discussion include recognition of the importance of the OWPS in delivering climate change goals and many encouraged the Scottish Government to be ambitious when settling on a final target. They reflected on constraints such as infrastructure, planning and grid capacity and asked for the policy statement to set out a clear roadmap to enable detailed planning. There was significant discussion of Contracts for Difference mechanism, with many calling for a move towards annual auctions.

Respondents reflected on Scotland's competitive disadvantage arising from Transmission Network Charges. They called for enhancements to supply chain statements, the development of a fit-for-purpose regulatory framework, an improved grid infrastructure and an overall strategy for air radar. Knowledge sharing, collaboration and co-ordination of advance planning between sectors and different marine users was strongly encouraged.

Significant local and national benefits to Scotland from a flourishing offshore wind sector were described, such as the achievement of net zero emissions targets and the potential for a growing export market. Scotland's capacity in engineering, environmental and professional services were noted as strengths. In reflecting on workforce expansion, the scope for skills transitions from the oil and gas sector were highlighted. There were also calls for a review of workforce gaps to support long-term development. Respondents urged the SG to provide support, including funding and incentives to drive innovation.