Written Question · S5W-30619 · Session 5
what the current capability is of the offshore wind supply chain market to meet the demand that will be created by the ScotWind Leasing pr…
The question
To ask the Scottish Government what the current capability is of the offshore wind supply chain market to meet the demand that will be created by the ScotWind Leasing programme.
The answer
Scotland is an ideal location for offshore wind, with 462,000 km 2 of Exclusive Economic Zone, a strong track record in delivering complex infrastructure in an often hostile offshore environment, excellent academic base and having been the location for test and demonstration of both fixed foundation and floating wind farms. However, the outturn in terms of procurement decisions taken by developers, tier 1 contractors, including original equipment manufacturers (OEMs) in regards to the most recent projects has been hugely disappointing. These projects have not delivered the significant economic benefits suggested by applicants through the consenting process and, as we have made clear, they fall well short of what we would want to see for the existing Scottish offshore wind supply chain and in terms of facilitating a just transition for the oil and gas supply chain to help fill capacity gaps and to fully utilise a highly skilled, capable and productive workforce.
We understand the position taken by developers, to effect that the UK Government’s Contract for Difference mechanism has, in driving a welcome reduction in prices paid by consumers, not given sufficient weight to the need to support innovation and development of the supply chain and that, in practice, low strike prices have led to risk and cost reduction being forced down the supply chain, resulting in contracts being placed outside the Scotland, the UK and, indeed, Europe in favour of production in low cost labour markets where there is a danger that fair work principles are not embedded. We have consistently argued for reform of the CfD mechanism and have repeated these calls in our response to UK Ministers’ consultation on the CfD process.
The ScotWind leasing round – the first to be undertaken by our newly devolved Crown Estate Scotland
- will, in developing Supply Chain development Agreements with all successful bidders, help to create a collaborative culture between developers and the supply chain to release more of those economic benefits for the Scottish economy and ensure that Scottish companies are considered when tendering for work in Scottish offshore projects. This will be a significant advance in approach since transfer from the previously fully reserved process under the Crown Estate and UK Ministers.
At the follow up to our Offshore Wind Energy Supply Chain Summit in January of this year, it was agreed that the Scottish Offshore Wind Energy Council (SOWEC), which I Co-chair, will instigate a short, focussed independent review, which will consider the current status of the offshore supply chain in Scotland and determine the barriers to growth and the opportunities that will provide longevity for the supply chain in the future.
This work expected to report by the end of 2020, and will help to inform future policy around offshore wind supply chain. This work will take into account the scale of potential development coming forward under the forthcoming ScotWind leasing round and the Scottish Government’s forthcoming Offshore Wind Policy Statement, which will set out our increased ambition for offshore wind in Scottish waters for 2030.
We understand the position taken by developers, to effect that the UK Government’s Contract for Difference mechanism has, in driving a welcome reduction in prices paid by consumers, not given sufficient weight to the need to support innovation and development of the supply chain and that, in practice, low strike prices have led to risk and cost reduction being forced down the supply chain, resulting in contracts being placed outside the Scotland, the UK and, indeed, Europe in favour of production in low cost labour markets where there is a danger that fair work principles are not embedded. We have consistently argued for reform of the CfD mechanism and have repeated these calls in our response to UK Ministers’ consultation on the CfD process.
The ScotWind leasing round – the first to be undertaken by our newly devolved Crown Estate Scotland
- will, in developing Supply Chain development Agreements with all successful bidders, help to create a collaborative culture between developers and the supply chain to release more of those economic benefits for the Scottish economy and ensure that Scottish companies are considered when tendering for work in Scottish offshore projects. This will be a significant advance in approach since transfer from the previously fully reserved process under the Crown Estate and UK Ministers.
At the follow up to our Offshore Wind Energy Supply Chain Summit in January of this year, it was agreed that the Scottish Offshore Wind Energy Council (SOWEC), which I Co-chair, will instigate a short, focussed independent review, which will consider the current status of the offshore supply chain in Scotland and determine the barriers to growth and the opportunities that will provide longevity for the supply chain in the future.
This work expected to report by the end of 2020, and will help to inform future policy around offshore wind supply chain. This work will take into account the scale of potential development coming forward under the forthcoming ScotWind leasing round and the Scottish Government’s forthcoming Offshore Wind Policy Statement, which will set out our increased ambition for offshore wind in Scottish waters for 2030.
In the Official Report
No contribution in the Official Report cites S5W-30619 by reference.