Why The Energy Sector Is An Exciting Place To Be

22nd July 2020

Audrey McIver HIE's director of energy and low carbon reflects on the benefits to the Highlands and Islands of recent announcements for the sector.

This is a very difficult time for virtually all industries, and energy is no exception. Even before the lockdown we saw a dramatic drop in oil and gas prices.

The Scottish and UK Governments' ambitions for net-zero economies will have further significant implications. Support for the sector is essential to achieving both economic recovery in Scotland, and the net-zero ambitions.

These considerations have been taken into account in recent major announcements for Scotland's energy sector; announcements that will have far reaching benefits for the Highlands and Islands.

ScotWind leasing round

Over the next ten to 15 years up to 10GW of new projects are set to emerge, following Crown Estate Scotland's ScotWind offshore wind leasing round.

Water depths across many of the sites are likely to mean that projects will need different technologies such as floating structures.

Skills and expertise honed by the Highlands and Islands business base, through decades of experience in oil and gas, gives supply chain companies a head start in being able to meet these needs.

This means we can expect many large-scale offshore energy opportunities reaching across every part of the Highlands and Islands.

Our role is to work with the supply chain across the North of Scotland and support the development of the DeepWind offshore wind cluster.

Encouragingly, the companies planning to bid into ScotWind are engaging early and in detail.

This engagement is about finding new ways to connect industry, academia and government agencies in preparing to scale up in activity and opportunity offered by the leasing round. It is vital if the industry is to embed 60% UK content into projects in line with the Offshore Wind Sector Deal commitments.

Crown Estate Scotland's Supply Chain Development Statements will be a key factor. We expect these to help instil further confidence in supporting the growth of the Highlands and Islands supply chain to meet the demands of the offshore wind industry.

This will create inclusive, sustainable employment opportunities through to the middle of this century and beyond.

From offshore to onshore, we also welcomed SSE Renewables recent positive final investment decision on Viking Windfarm in Shetland.

This will be a £580m investment, and with 103 turbines and generating 443MW it will become the UK's largest onshore wind farm in terms of output.

North East Transition Fund

The £62m North East Transition Fund is a multi-year support package to help the sector's recovery. It will support inclusive and sustainable economic growth across the country.

The North East will be able to realise its ambition to become an ‘Energy Transition Innovation Region’ and provide support for the key oil and gas sector.

This means progressing some major infrastructure projects such as a Net Zero Solution Centre, a Hydrogen Hub and an Energy Transition Zone.

Our region’s existing infrastructure assets will complement these ambitions very well. Due to the degree of interdependency in the supply chain, many businesses across the Highlands and Islands will benefit from this increased investment in the energy transition.

New opportunities

While we are very much focussed on the immediate economic crisis, we are also looking ahead to new opportunities for our region.

New opportunities will, as outlined by the recently published Advisory Group on Economic Recovery report, ensure a transition to a greener, net-zero and wellbeing economy.

The group, led by Benny Higgins, highlights the central role of the Highlands and Islands and other rural areas in delivering economic recovery.

Recommendations include the prioritisation and delivery of green investments.

These investments in physical infrastructure related to the energy sector, be they grid upgrades, enhanced port and harbour facilities or new manufacturing hubs, will all support the continued rapid growth of the renewable energy sector.

This has a pivotal role in achieving net-zero and climate change ambitions, as well as in the green recovery in the shorter term.

Supply chain support

Alongside these investments, we must ensure our supply chain is well-supported and our businesses ready to seize the significant opportunities that are undoubtedly coming.

As we emerge from the harsh realities of the past few months, we can see an increased focus on local supply and delivery.

The re-shoring of activity presents a window for our supply chain to highlight what they do best and to ensure that buying local remains both the right thing to do and the smart thing to do.

Innovation in products and processes will be key, as will clever promotion of services, capabilities and experience. We have all been forced to do things differently of late and perhaps some new practices are here to stay.

Whatever the future holds, HIE is here to support sustainable growth across the business base and the energy sector is undeniably an exciting place to be.