Scotwind Supply Chain Summit: First Minister's speech - 22 August 2022

I want to thank the Energy Transition Zone for hosting this summit, and all of you for coming.  

And I also want to thank Sir Ian for his introduction – his insight and expertise on this subject is hugely appreciated.  

For many of us, myself included, Aberdeen has been a major energy centre for as long as we can remember. But it’s always worth remembering that 50 years ago, Aberdeen didn’t really have an oil and gas supply chain to speak of. For example the Wood Group was originally a fishing firm – JW Holdings – which diversified into oil and gas in the early 1970s.  

In the years and decades since then – thanks to the efforts of Sir Ian, and many others – our oil and gas sector has earned a reputation for excellence around the world.   

That should inspire us now. Our offshore wind supply chain isn’t currently as big as it could or maybe should be. But all of us can play a part in developing a new industry – not simply to service projects here in Scotland, but also, I hope, to compete for business around the world.  

Importance of Scotwind 

My hope and expectation and I’m sure that is shared with everyone in this room right now, is that when people look back at the development of Scotland’s offshore wind sector, the Scotwind auction results will be seen as a turning point.  

That’s partly because of the sheer scale of the projects that are proposed.  

The 17 successful bids that were announced in January, could conceivably generate as much as 25GW of electricity. 

Today, we are announcing a further 3 successful bids, for the NE1 site, which is east of Shetland. I want to take the opportunity to congratulate the three lead applicants – Mainstream Renewable Power, Moray Offshore Renewable Power, and ESB Asset Management. 

These 3 applications which have succeeded through the Scotwind clearing round, have a combined generating capacity of almost 3GW. That means that the total maximum possible capacity of all Scotwind bids is more than 28GW.  

To put that into context, Scotland currently generates approximately 13GW of energy from renewable sources. So it is clear that – even if the Scotwind bids don’t reach their maximum capacity – they will still make a enormous contribution to Scotland’s overall energy mix. 

By doing so, they will also make a major difference to our long-term energy security. Right now- as households and businesses are facing up to huge increases in their energy bills - the value of large-scale cost-effective sources of energy is more obvious, than it has been at any time in the last generation.  

It’s also worth noting that the 3 successful applications that are being announced today, are all linked their bids to the production of hydrogen at Sullom Voe in Shetland. That’s an important reminder that the Scotwind project will also help us to build a new hydrogen industry in Scotland. 

But offshore wind supply chain opportunities are – quite rightly – the main focus of this event today.  

When you include today’s announcement, the total value to Scotland, of the supply chain commitments included in the Scotwind projects, is now more than £28 billion. That’s an average of more than £1.4 billion for each project. 

And of course, in addition to Scotwind, several other offshore wind projects are currently in development. For example the Moray West and Inch Cape offshore wind farms secured Contracts for Difference investment earlier in the summer. And we have also recently opened what is sometimes called the INTOG round. That’s a leasing round for targeted projects – primarily floating wind projects – which can help with oil and gas decarbonisation.  

All of these projects put together should create a large number of jobs. The Offshore Wind Industry Council published figures in June suggesting that by 2030, the offshore wind sector could directly or indirectly employ around 100,000 people in the UK.   

Scotland currently accounts for around 30% of the UK’s offshore wind jobs. And so if we simply maintain that share, the sector in Scotland could grow in 8 years from around 10,000 jobs to around 30,000 jobs.  

And the potential benefits go further than that. After all, Scottish supply chain companies will gain valuable experience in a growing worldwide market. They will also be among the first companies in the world to acquire expertise in the construction and maintenance of floating wind farms. In the longer term, therefore, we should be aiming to emulate our oil and gas supply chain – by developing companies which don’t simply supply the domestic market, but which gain business right around the world.  

That’s why Scotwind features prominently in the National Strategy for Economic Transformation which the Scottish Government published earlier this year.  

We see offshore wind – and the hydrogen production which we hope will be enabled by offshore wind – as one of the most important economic and environmental opportunities we have.  

It can reduce our carbon emissions, improve our energy security, and create tens of thousands of high-quality jobs. It will bring benefits for all of Scotland – but it will be especially important here in the north east of our country. In fact, it will be a crucial part of how the north east makes the transition, the just transition, from being the oil and gas capital of Europe, to being one of the net zero capitals of Europe.  

And so the main message I want to convey to you today is a very simple one. Scotwind is hugely important to the Scottish Government. And we know that we will only realise these benefits, if we work closely with developers, with supply chain companies, and with the wider public sector. And so today’s summit is an important early step in securing and cementing that spirit of collaboration as we move forward.  

Transmission, skills and infrastructure 

Part of that involves working together to try to overcome potential barriers to the Scotwind projects.  

For example, and Ian made reference to this in his opening remarks, the Scottish Government is already in close contact with the National Grid’s Electricity System Operator about their Holistic Network Design process. At the moment, that process hasn’t provided certainty that all of the Scotwind projects will get the grid connections they need. The Scottish government – like many of you - sees it as being vital that this certainty is provided as soon as possible. 

We are also making representations to Ofgem and the UK Government - not just about delivering the right grid connections, but about the transmission charging system. This is of course a long-standing issue, but it is increasingly important to change the system so that transmission charges encourage rather than penalise renewable projects – such as Scotwind - which are located far from major population centres.  

And alongside that work to overcome barriers, we are also seeking to seize the opportunities of Scotwind, by ensuring that the right investments are made at the right time, in a co-ordinated way.  

A good example of that is skills. Scotland already has a highly skilled energy workforce. But there is still a lot of work to do, to ensure that we train, retrain and upskill enough people to meet the specific requirements of our offshore wind sector. And we do that in a very tight and constrained labour market, not just here in Scotland and across the UK but a tight labour market globally.  

That’s why we set up the Green Jobs Workforce Academy last year, to help people understand and prepare for new green job opportunities. And Skills Development Scotland and the Scottish Funding Council are working together to ensure that their investments – in work-based learning, further education and higher education – match our ambition to create a net zero economy.   

The sector has a crucial role to play here. 12 of the 17 original successful bids included commitments to increase and improve renewable energy education. That’s something I warmly welcome. And so skills is an obvious area for continuing collaboration between the public sector and developers. Indeed, we are currently planning an event next month which will focus on offshore energy skills. 

In addition – and this is one of the most substantive issues we will be discussing today - we also need to work together to secure the key infrastructure improvements that Scotwind will require. 

Investing in ports and harbours was identified as a major priority in last year’s Strategic Investment Assessment. That’s because we predict that a high proportion of our supply chain opportunities will be linked to manufacturing and fabrication. So we are already working with a number of ports to see what assistance - they require to lengthen quaysides, to strengthen lay-down areas, and to house new manufacturing facilities. 

We will work with – and let me stress this - the UK Government on this when we can – we hope and expect that their investment scheme for floating offshore wind will benefit port facilities in Scotland.  

However much of our work will be taken forward through the Scottish Offshore Wind Energy Council, which launched its collaborative framework charter in May. It is now working with all of you to develop a Strategic Investment Model to help deliver on the commitments included in that charter.  

The infrastructure improvements we need to see won’t happen instantly. But they do need to happen rapidly. And the Strategic Investment Model – by helping us to make investment decisions quickly – should help to enable those rapid improvements.  

So I very much hope that we will all be able to work together to develop the model at pace. It is an important way in which we can seize the full benefits of the Scotwind projects. 

Achieving those benefits won’t be straightforward. It is really important that we come at this open eyed to the challenges.

I started this speech by looking back 50 years, to the origins of our oil and gas supply chain. 

We now need to develop another large-scale energy supply chain – and to do so at speed. But in many ways – partly because we have the experience and expertise of our oil and gas sector – we are starting from a better position than our counterparts 50 years ago.  

We also have an even greater imperative for action. In particular, the climate crisis means that offshore wind is likely to be essential – not just to decarbonising Scotland’s economy, but to decarbonising many other nations’ economies. And Scotland is placed to be a pioneer in technologies – such as floating wind – which will be in demand around the world. 

For that reason, we have everything to gain by making the right investments now in the skills and infrastructure we need.  

We can produce secure, cost-efficient energy; we can cut our carbon emissions; and achieve lasting economic benefits for our own country and in particular, the north east. 

We have a genuine chance, not simply to change Scotland for the better, but to play a significant part, in changing the world for the better. 

Everyone in this room and every company and organisation represented in this room, has a role to play in that endeavour. It’s a role I hope we can approach with enthusiasm, ambition, and a genuine desire to collaborate.  

If we do, I believe we can look forward - not just to a productive day of discussions - but to a successful working relationship in the months and years ahead. This is an amazing opportunity.  

So thank you again for coming, these discussions are vital. I look forward to working with you, as we build a sector, and a supply chain, which creates jobs for generations to come.