Offshore wind policy statement: consultation analysis

6. Innovation and cost reduction

This chapter presents an analysis of responses to consultation questions 20-24.

Building on innovation support

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

There were 27 responses to question 20.

Funding and support

The most prevalent theme in the responses to question 20 were comments covering support, funding, or incentives.

There were a few general comments in which respondents urged the SG to consider specific innovation funding. One suggested the current commitment of £4 million is insufficient when considering the target of delivering 8GW by 2030. Another pointed out that other energy innovation programmes, like Wave Energy Scotland received £9 million in 2019, and that offshore wind should receive similar. A further response observed that by investing more in Oil and Gas than in offshore wind, the SG are allowing that sector to have innovation advantage over renewable sectors.

Flexibility when considering innovation support, to reflect the evolving nature of the offshore wind sector, was an important consideration for one respondent. Another echoed this point and suggested that flexibility would drive down the cost of offshore renewables for the public. One argued that that although innovation funding is essential, it is imperative companies in receipt of funding are part of the Fair Work First agenda.

A concern about reliance on EU innovation support, which is now under threat due to EU exit, was raised by one respondent. They urged the UK Government to consider how public funds could cover the shortfall when EU support is withdrawn. This response was detailed an offered examples of potential support models for the UK Government to consider and has been signposted to the SG for review. Further to this, another respondent suggested closer partnerships with universities and research and development (R&D) centres.

Collaboration in research

The second most prevalent theme concerned the continued support of research programmes from the SG. This included discussion of appropriate models and oversight to encourage effective knowledge sharing and to avoid duplications. These respondents discussed opportunities to improve the coordination of research development and design support. A few respondents called for the public sharing of the operational structure of bodies like the UK's Energy Innovation board, and to follow this example to create a similar body for Scotland. Another requested clarity about the SG's priority areas for innovation, and would like to see these outlined in the final OWPS.

Two respondents described detailed models for the SG to consider when building their own R&D capabilities; one also suggested that CES should consider factoring contributions to R&D into their leasing conditions. These have been signposted to the SG.

Investment in manufacturing and supply chain activities

Another prevalent theme were calls for further support in the initial stages of development for offshore wind. Most of these comments suggested that investing in and building the supply chain was crucial to the success of offshore wind. Two highlighted the importance of collaboration between the SG and industry in the early stages of development, and suggested that delivery agencies could stimulate the level of inward investment activity required to maximise Scottish innovation in the supply chain. A few observed that by supporting the supply chain the SG would be encouraging competitiveness. One of these respondents suggested a shared supply chain development plan should be developed by SOWEC.

The Offshore Renewable Energy Catapult (OREC)

OREC was described as advantageous by a few respondents. They urged the SG to continue its support of the development of the programme and suggested it will be instrumental in the success of offshore wind.

A long-term focus on innovation

A focus on the long-term success of offshore wind was important for a few respondents. They suggested any innovation support should also consider floating wind technology and the integration of renewables, to ensure sustainable growth and competitive pricing.

A technology agnostic approach

A technology agnostic approach to innovation was requested by a small number of respondents, to encourage the exploration of all potential opportunities. All these respondents left almost identical responses suggesting that future development should ensure integration with other energy value chains, such as those presented by a potential hydrogen economy. Two more respondents commented on the importance of creating a hydrogen economy and urged the SG to champion sustainable commercialisation.

Realising the potential of other energy supply chains

An alignment with other energy supply chains to bolster innovation was suggested by a few respondents. One of these left a detailed response outlining the opportunities for investment and development of green hydrogen and offered examples of how the deployment of this technology could work in practice. Another response outlined the potential for innovation in O&G for example, by offering renewable power to offshore facilities, colocation with floating wind sites, and technology sharing.

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

Nineteen respondents left comments at question 21.

Frequency of leasing rounds and CfD auctions

The most prevalent theme was in relation to increasing the frequency of leasing rounds and CfD auctions, and how this could minimise any issues that may arise. Many of these comments were brief. Specific suggestions included minimising gaps between leasing rounds, and providing necessary planning application and licenses that aligned with CfD timescales, technology, and development.

In a detailed comment one respondent asked the SG to assure a revenue stabilisation mechanism. They suggested that a system which acknowledges technological developments, and a regular and predictable auction cycle, would provide market transparency. This respondent referenced issues with the Transmission Network Use of System (TNUoS) and suggested if the situation is not resolved projects would only be allocated on the basis of geography, which could undermine the aims of a CfD mechanism.

Other comments

Near identical comments on lease milestones were left by a few respondents. They 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.

A small number of comments urging the SG to offer financial support to pre-commercial projects, including technologies that contribute to achieving climate change goals. One suggested this could be achieved by instruments like capital grants, performance guarantees and equity participation.

Prioritising innovation

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

Eighteen respondents answered question 22.

Prioritising operations and maintenance

The most prevalent theme in responses to question 22 was a request for the SG to prioritise lower tier suppliers and operations and maintenance (O&M) activities. For example, one described opportunities in areas such as SMART technology, robotics, and sensors, and suggested that the Scottish supply chain has the opportunity to increase its share of O&M expenditure. Another highlighted that developing new products and services in O&M may also be suitable for export to global markets. Investment in innovation at O&M stages can reduce the cost of offshore wind was also raised by one respondent.

Asset management and life extension

A minor theme was requests for the SG to prioritise asset management and life extension for projects. One went further to request that the minimisation of materials is considered when developing fixed bottom structures.

Supporting larger turbines

The prioritisation of larger turbines (15MW+) was requested by a few respondents, who said they would welcome a policy and support mechanism. One went further to suggest two avenues for turbine design that could lower costs; this detailed response has been signposted to the SG for consideration.

Actions to address key challenges

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

23 respondents left comments in response to question 23.

Developing a CfD framework that allows floating wind to compete

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 in the responses. Many comments were brief and outlined this action alone. One requested further investment in the supply chain to increase competitiveness; another argued that floating wind should be cost-competitive with other technologies by 2030 and one observed that existing expertise from the O&G sector would enable this.

Developing pre-commercial projects

Funding support to develop pre-commercial floating wind projects was requested by some respondents. A few reiterated points left at previous questions, for example explaining the role of the CfD mechanism in development.

Collaborative working to reduce costs

Collaboration with designers and supply chain workers to identify innovative approaches to reducing cost on a mass production was raised by some respondents. They also pointed out the uptake of commercial scale floating wind would be encouraged by ensuring mass production remains in Scotland.

A few suggested that collaborating with O&G industry would also raise the profile of floating wind as well as outlining the positive economic benefits. Further to this, one academic/research organisation suggested that Scotland should harness niche markets where the unique advantages of floating wind means it makes commercial sense to deploy as this could then put Scotland in a stronger position to be able to deploy utility-scale floating wind projects in deep water.

Reforms to transmission charging and access

Another common suggestion was reforming transmission charging and access. In these comments, respondents repeated points they had made at previous questions.

Clarity around grid connection access

There were a few calls for clarity around grid connection access at the appropriate point of project development.

Infrastructure development

The importance of the timely development of infrastructure to enable Scotland to compete in an international market was stressed by a few respondents. One respondent gave the example that onshore fabrication, quayside, and port facilities should be established soon. Another suggested that any facilities developed needed to be of a modern standard, as lower quality facilities could impinge on timescales and cost.

Strengthening synergies

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?

There were 26 responses to the final consultation question. Analysis responses are organised by comments that responded to 'part a' of the question, followed by 'part b'.

Hydrogen

Investment in the development green or blue hydrogen production

The most common theme in response to question 24 was discussion of support to develop green or blue hydrogen. These comments often highlighted a need for subsidy support or SG oversight and regulation so that they can compete against higher carbon incumbent fuels. A few respondents outlined that demand would be required to enable production facilities to be deployed and tested. A few suggested that without subsidies for infrastructure costs, hydrogen storage sectors would not progress over the next five years.

Comments around the Hydrogen Action Plan/Policy Statement

Another prevalent theme was that the SG's Hydrogen Action Plan should be coordinated with its approach to offshore wind. One respondent urged the SG to publish a Scottish hydrogen strategy to promote synergies between sectors, including hydrogen from CCS and electrolysis, offshore wind and CCUS.

Another asked the SG to encourage the delivery of net zero hydrocarbons. Continued support for the use of hydrogen for heat, transport and power and initiatives that help to reduce the cost of offshore wind and electrolysis was an important point for another respondent.

Calls for a Carbon Capture and Storage (CCS) policy statement

The creation of an CCS policy statement or action plan was suggested by some respondents. These suggested that storage solutions would need specific attention to ensure large scale production of offshore wind can take place. Two of these respondents observed the OWPS should not inadvertently prevent or impede the deployment of CCS. Another respondent left a detailed comment outlining the possibilities for CCS in Scotland, which has been signposted to the SG for consideration. They suggested that CCUS will offer more synergy opportunities from 2030 to 2045 than the O&G industry.

Funding for research

A few respondents said the SG should fund research into synergies with hydrogen and other Power to X (PTX) opportunities. One outlined the need for further research into hydrogen embrittlement of welds and structures, hydrogen permeation, and hydrogen compression. They highlighted that this could create additional value for offshore wind by production of hydrogen offshore and pipelining to the UK grid.

Oil and Gas

Operations and maintenance

The most common theme in comments on synergies within oil and gas relate to the operation phase of projects. Respondents argued that synergies would arise from wider collaboration between sectors to share best practice. One noted that group-based funding models are important to tackle innovation challenges shared by the sector as a whole.

Support for O&G supply chains to diversify their workforce

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. A few suggested that the industry should capitalise on the job opportunities offered by offshore wind. They suggest that the synergies lie within skills bases for operating in complex, deep-water environments. They requested that the SG provide support to the O&G supply chain.