A Trading Nation – framework to grow Scotland's renewables exports

2. Opportunities to increase Scotland's renewables exports

Our ability to grow Scotland's renewables exports will be based on a number of enablers. But at its core, it will require our approach to renewables energy and the energy transition to be translated into international competitive advantages, which can be promoted and traded with the world.

2.1 Domestic development of sub-sectors and supply chains

The just transition to a net zero economy is a key priority for the Scottish Government and Scotland's enterprise agencies. All agencies are fully aligned to deliver the Scottish Government's net zero ambitions and to help businesses across the country grasp emerging low-carbon economic opportunities, which include exporting their products and services to overseas markets. Specific agency activities and priorities are:

Scottish Enterprise's Net Zero Framework is committed to supporting Scotland's economic transformation to net zero. Specific sections of the framework that can assist companies to trade internationally include:

• Supporting net zero innovation in existing and start-up businesses and organisations to help Scotland become a leading location for net zero, supporting businesses to access new market opportunities to improve their competitiveness and resilience.
• Delivering projects and programmes to help shift Scotland's economy to invest and innovate in a just, net zero future, building on Scotland's distinctive climate-related strengths and opportunities.

Highlands and Islands Enterprise is focussed on the Highlands and Islands' unique assets to ensure they make a significant contribution to our net zero targets, while also enabling businesses and communities to benefit from the renewable energy they require, in terms of both generation and use. Strategic opportunities include:

• Offshore and onshore wind supply chain development, wave and tidal demonstration, green hydrogen production, distribution and use, and green heat.

The early engagement in leading technology development and deployment at the European Marine Energy Centre in Orkney and Wave Energy Scotland is enabling businesses in the supply chain to gain experience and expertise that is now sought internationally. The region is also well placed to support offshore wind and green hydrogen component manufacture and project delivery. Moreover, increased domestic capability will be predicated on securing both inward investment and international trade opportunities.

South of Scotland Enterprise (SOSE) is committed to green growth alongside promotion of fairness and wellbeing and to delivery against opportunities arising from the United Nations COP26 summit in 2021. Through the Regional Economic Strategy for the South of Scotland, SOSE seeks to deliver a fairer, greener, and flourishing South of Scotland and is geared to support businesses to deliver new market opportunities and the wider NSET.

Through co-funding development of the HeatSource cluster builder, SOSE seeks opportunities for the region to capitalise upon the growing renewable heat market across Scotland, and to use this as a platform to secure opportunities outside Scotland.

As the specialist trade and investment arm of the enterprise agencies, Scottish Development International (SDI) will continue to build on existing mechanisms, such as the Business Support Partnership, to support businesses to access new international markets in these priority areas.

2.2 Supporting companies to transition to renewables exports

The key driver of this framework is the growing commitment of Scottish companies not only to transition to new energy renewables, but also to drive the net zero journey from within their existing oil and gas activity, and the opportunity this presents to support the growth of renewables exports within Scotland's mix of energy exports.

Evidence also shows that the large majority of existing oil and gas businesses in Scotland have active internal Enviromental, Social and Governance (ESG) policies and programmes.

On 25 November 2022 the Scottish Enterprise – Low Carbon & Renewable Energy Report 2022 was published. This offers a broad view of current levels of activity in the renewables sector. It encompasses and goes beyond the sub-sectors in these plans, but it clearly demonstrates the current global footprint of Scottish companies operating in the low carbon and renewable energy sector (see Figures 2 and 3).

Figure 2: Scottish Enterprises Global Profiles of Businesses in Sector Survey

Global Profiles of Businesses in Sector Survey

Where do you conduct your business?

• 54% Other Scotland
• 96% North east Scotland
• 43% Other Europe
• 59% Other UK
• 57% Europe
• 48% Americas
• 38% Africa
• 43% Middle East
• 52% Asia

As mentioned above, the report confirms that three in four of the energy businesses surveyed were currently involved in low carbon and renewable energy. Of the 23% of businesses that said they were not currently involved in the low carbon and renewable energy sector, 58% plan to become more involved in the low carbon and renewable energy sector within the next year/three years/five years. This is a demonstration of Scottish companies, early commitment to the transition and a process which these plans seek to enhance and support.

Figure 3: Scottish Enterprises, Energy Businesses

1.1 Current focus of energy businesses.

We asked energy business what their current focus was with a range of answer options from 'sole focus is low carbon & renewables energy sectors' to 'sole focus is oil & gas'.

• 8% sole focus is low carbon and renewables energy sectors
• 2% Not involved in oil & gas or low carbon & renewables energy sectors
• 21% Sole focus is oil & gas
• 42% Main focus is oil & gas but also involved in the low carbon & renewables energy sectors, at least to some degree
• 12% Main focus is low carbon & renewable energy sectors but also involved in oil & gas, at least to some degree
• 15% Equal focus on oil & gas and low carbon and renewables energy

Three in four energy businesses said they were currently involved in low carbon & renewables energy.

1.2 Businesses not currently in the sector, plans to become involved.

We asked the 23% of business that said they were not currently involved in the low carbon & renewable energy sector, whether or not they had any plans to become involved in the future.

• 42% Have no plans to become more involved in the low carbon & renewable energy sector in the foreseeable future.
• 58% Plan to become more involved in the low carbon & renewable energy sector within the next year/three years/five years

58% of those business said yes, they do plan to become involved in the future.

2.3 Critical strengths and International Markets

The Scottish Government is drawing together a range of data sources, including information from the International Energy Agency (IEA) to allow us to assess global demand, across countries and sub-sectors, for Scottish renewables exports.

In addition, enterprise agencies are mapping the capabilities that SDI will then match to the international demand and opportunities for the Scottish supply chain. The sub- sector opportunities identified in specific international markets will be nuanced, taking account of local factors such as the strength of domestic supply chains, and geographical advantages relating to Scotland's strengths.

To align our export potential with this global demand, through this framework we will:

• Undertake a mapping exercise of our domestic supply chain, including their export potential, to provide more information on capabilities and help understand our export potential better. This would a provide an overall sense of our supply chain as well as identifying companies we can target for future export support whilst highlighting future market opportunities.
• Develop our understanding of the export opportunities presented by the growth of Scotland's renewables sub-sectors and supply chains, starting with offshore, onshore, heat and marine.
• Undertake a detailed analysis of the characteristics within international markets, such as the strength of their existing supply chains to identify distinctive competitive advantages for Scotland.

Working with our international networks and industry, we will develop detailed market intelligence on these sub-sectors to support the delivery of this export plan.

There are also existing sources of data within the industry itself, which can help to assess export opportunities for Scotland, and critical markets. The Scottish Offshore Wind Energy Council (SOWEC) produced a report on Offshore Wind International Export markets – a guide for Scottish Exporters. In that document is the Attractiveness Index, which provides a strong example of how our support for exporters can be guided by analysis with sub-sectors.

On completion of the mapping, we will implement a coordinated government, agency and industry approach to realising the sector's export growth potential, aligned with Scotland's 'A Trading Nation' strategy. The diagram below (see Figure 4) provides a framework model through which a range of partners in Scotland can realise the opportunity to grow Scotland's renewables exports. Across the framework, a partnership approach with industry leads and voices will be critical in delivery. Through this plan we will draw on existing forums, such as the Scottish Government Trade Board, and industry engagement across energy policy delivery, identifying opportunities to enhance the export growth agenda within them.

Figure 4: Framework to Increase Scotland's Renewables Export Capacity

Increase Scotland's renewables export capacity

Enablers: Increase the export potential in Renewables companies

Activity

• Support exports in companies transitioning to renewables e.g. North Sea Transition Deal
• Support companies not currently exporting renewables to begin
• Develop company level data to allow targeted export support
• Promote current renewables export successes

Key partners

• SG
• SE
• SDI
• HIE
• SOSE
• Wider ecosystem of export support in Scotland

Enablers: Increase internationalisation in the domestic growth of sub-sectors and supply chains

Activity

• Embed internationalisation into sub-sector development via Scotwind Leasing Round
• Embed internationalisation into supply chain development via SOWEC Supply Chain and Clusters Workstream
• Strengthen engagement between SDI and enterprise agencies on renewables internationalisation

Key partners

• SG
• SE
• SDI
• HIE
• SOSE

Enablers: Identify critical international markets for renewables exports

Activity

• Assess international demand for Scottish exports at a sub-sectoral level
• Identify the critical success factors to establish target markets at a sub-sectoral level
• Produce market intelligence guides on renewables subsectors

Key partners

• SE
• SDI
• HIE
• SOSE
• OCEA
• Global Networks

Data Improvement

Industry Engagement