Written evidence submission by Statera Energy (NRG0036)
Statera Energy Response – Scottish Affairs Committee Inquiry: GB Energy and the net zero transition
About Statera Energy
Statera develops, owns, and operates flexible generation and storage technologies that work to balance the grid in a renewables-led energy system, at the lowest cost to consumers. These technologies include grid-scale batteries, green hydrogen, pumped storage hydro and flexible generation. Today, Statera is a market leader in storage and flexibility with over 1GW of UK projects operational or in construction, and over 16GW in development or consented. Statera is developing two nationally significant projects in Scotland. Loch Kemp Storage is a 600MW pumped storage hydro project in the Highlands. Kintore Hydrogen is currently Europe’s largest green hydrogen production facility. It is a 3GW plant in Aberdeenshire that will provide up to 3500 jobs a year during construction, and up to 200 permanent operational jobs. In total, it could bring up to £1bn to the UK economy by 2035.
GB Energy and the net zero transition
Recent changes to tax arrangements for Oil and Gas operators have had a detrimental impact on CAPEX investments. Projects have been halted and there is a risk of redundancies, particularly in the service sector. There is a risk of reduction in technical capability to deliver large-scale projects in Scotland. The UK Government’s approach needs to be supported by suitable transition and re-skilling measures to offer sufficient opportunities for transfer of skilled resources to sustainable careers in the renewables sectors.
- What state of readiness is the oil and gas sector in for the net zero transition?
There is an excellent skills base in Scotland that could transition towards net zero. However, timing of projects is crucial. Resources will move away to other energy hubs (Houston, Calgary, Perth, KL, Singapore, or Middle East) unless positive policy actions are taken to unlock the potential project pipeline.
A transparent pipeline of projects is essential to offer those with the critical skills to build sustainable careers and stay in Scotland (and UK more broadly).
Clarity from Government on policy support for projects, and prioritisation of large scale projects that can provide significant employment opportunities, is needed.
Green hydrogen is a new industry that is particularly well suited to those looking to transition from the Oil and Gas industries as it is fundamentally a process industry, so required many of the same skills as are currently needed in Oil and Gas.
- Is the scaling up of the clean energy sector keeping pace with the decline of jobs and investment in the oil and gas sector, or does the UK Government need to do more to close this gap?
The scaling up of the clean energy sector is definitely not keeping pace with the decline of jobs and investment in the oil and gas sector. The capability within the service sector is rapidly reducing and urgent action from Government is required to unlock new projects in the clean energy sector.
A hugely significant step that the UK Government could take would be to make a positive decision on hydrogen blending into the NG transmission system. This would unlock significant investment (£bns) in the Scottish green hydrogen sector. Scotland is very well placed to be a world-leader in the green hydrogen sector due to its wind capability. However, the is currently limited offtake opportunities in Scotland. To stimulate the industry and allow projects to reach Final Investment Decisions, hydrogen blending is required as a stepping to dedicated networks and industrial demand.
Confidence in project pipelines offering sustainable rewarding careers which Gov can enable through policy, and planning and funding commitments via Great British Energy. Suitable transition and re-skilling measures that provide comparable long-term careers in the renewables sectors are needed. Competitive remuneration packages need balancing with local/regional sustainable career opportunities.
3. Are Scotland’s energy industry and associated supply chains well-placed to transition to clean energy generation, or is more support needed?
Scotland has a low profile in the key developing technologies (electrolysis and carbon capture etc) but has excellent engineering and consulting capabilities and a sophisticated and capable fabrication and manufacturing sector. More support is needed – Government should encourage the start-up of manufacturing and R&D effort in the key technologies.
Scale and predictability of projects in renewables (such as Pumped Storage Hydro) is challenging, followed then by relatively low-resource levels and longevity of operational roles. Strong Government support through policy & effective (swift) decision-making on planning and under-pinning commercial commitments through mechanisms such as the Cap and Floor and Hydrogen Production Business Model are necessary.
What actions should the UK and Scottish Governments take to ensure the necessary generation and transmission infrastructure to support the development of Scotland’s renewables sector?
UK and Scottish Governments should make a clear decision to repurpose gas pipeline infrastructure to enable hydrogen manufactured in the North of Scotland to be transported to Grangemouth. This could kick off a major greens fuels industry (e.g. Ammonia, SAF and Methanol).
Locational pricing (such as zonal pricing currently being considered by DESNZ) could also unlock huge investment in green hydrogen in Scotland, as Scotland would have some of the lowest electricity prices in Europe.
Recent reforms to grid connections policies and procedures also need to be effectively implemented to support renewable energy projects.
5. How can GB Energy, and other ways of backing industry (including funding), most effectively support employment, economic growth and the development of clean energy supply chains in Scotland?
GB Energy, and Government more broadly provide certainty to industry on policy, make a positive decision on transmission blending and dedicated hydrogen networks in Scotland, and take a balanced approach to policy support. By this we mean not overburdening industry with potentially onerous and excessive conditions that make delivering complex projects very challenging, but rather provide cornerstone funding to de-risk projects, particularly large scale projects that are newer technologies (green hydrogen) or haven’t been delivered in decades (pumped hydro storage)
6. How should GB Energy work with the Scottish Government and other Scottish bodies to identify appropriate funding and other mechanisms?
The most effective thing GB Energy can do is to enable industry to take on risk.
Strong alignment between Government planning, regional planning, and Government commercial commitments (cap & floor or hydrogen production business model) is required, and supported through GBE by policy background. GBE needs to be seen as private sector friendly and not a public sector entity. GBE should work with National Wealth Fund but also more regionally in Scotland with Scottish Futures Trust if this continues to exist.
7. What does a just transition look like for workers and communities across Scotland’s highland and island communities, and what role might community energy and community benefits play in this?
As above, clarity of opportunities, confidence in pipeline and sustainable career paths, suitable rewards/remuneration, re-skilling and training opportunities.
8. Can the UK learn lessons from international examples about how to effectively manage Scotland’s energy sector transition?
A sharing of experience is sensible. Other countries also undergoing energy sector transition at same time. Should be a means to share & compare.
January 2025