Written evidence submitted by RWE (RES0012)
Commons Scottish Affairs Select Committee – ‘Renewable Energy in Scotland’ Inquiry
Submission from RWE
About RWE
RWE is a leading global energy player and one of the world’s largest renewable developers. We produce around 12% of the UK’s electricity, employing 2,600 people and generating enough power for 10 million homes, with a diverse portfolio of onshore and offshore wind, hydro, biomass and gas across England, Scotland, Wales. For a broad illustration of our footprint, please see our UK infographic here.
In Scotland, RWE owns / operates around 480MW of installed renewable capacity across 26 hydro and onshore wind sites, as well as Scotland’s first commercial-scale offshore wind farm: Robin Rigg in the Solway Firth. For more information on our footprint in Scotland, please see our RWE in Scotland webpage here, including our RWE in Scotland infographic also attached to this letter.
The company currently directly employs around 100 people in Scotland, either at our generation sites or at our offices in Perth and Inverness.
RWE also operates a 55MW biomass combined heat and power district heating plant at Markinch, Fife. Our renewable biomass plant at Markinch provides heat to the Glenrothes Energy Network, a renewable district heating network which officially opened in April 2019.
Since first generation, renewable energy projects operated by RWE Renewables have invested more than £4.6 million into Scottish communities neighbouring our sites, through their community benefit funds. Over their lifetime, renewable energy projects operated by RWE renewables will invest more than £15.2 million into Scottish communities neighbouring our sites, through their community benefit funds.
The UK, including Scotland, remains a core strategic market in which RWE is committed to expanding its renewable portfolio. Taking into account our projects already in operation, construction, and planning, we have the second largest offshore wind pipeline in the UK (7.54GW pro-rata) , and as such we see ourselves as a key partner in helping the UK Government achieve its target to quadruple its offshore wind capacity to 40GW by 2030.
More specifically, Scotland is a key market for RWE. With our strong pipeline of development projects, we are fully committed to helping Scotland achieve its ambitious climate change targets. As well as developing a number of onshore wind projects, we have been a leading player from the start of the offshore wind industry.
We are identifying opportunities that will capitalise on our vast experience in fixed offshore wind and involvement in a number of floating wind demonstration projects around the world, with a view to being a long-term partner for Scotland.
Submission Overview and List of Recommendations
RWE’s submission focuses on the strong potential for continued renewable energy deployment in Scotland, with a particular emphasis on wind.
As well as taking steps to ensure the continued development and deployment of onshore, fixed offshore and new floating offshore wind in Scotland, RWE notes that success of the UK and Scottish wind power sector provides an excellent model to follow for the facilitation of wider emerging renewable technologies.
Our submission makes 16 recommendations in support of maximising the potential of renewable technologies in Scotland:
We hope you find this submission helpful to the Committee’s inquiry. We would be more than happy to discuss or submission further and answer any further questions or queries.
Yours sincerely,
Alice Barrs, Head UK Political Affairs, RWE
Response to Inquiry Questions
1) Scotland’s renewable energy targets
The setting of targets is an important signal of ambition and intent from Government and helps to provide the long-term certainty and policy direction required by private companies in order to make significant, long-term investment decisions on projects that help meet these targets.
RWE welcomes and supports both the UK Government’s 2050 Net Zero target and the Scottish Government’s 2045 target. Whilst such targets are helpful in signalling the longer term destination and objective, more immediate short and medium term targets are also beneficial in helping to sustain focus and ambition in the more immediate term. To that end, RWE fully supports targets such as the UK Government’s recent Nationally Determined Contribution to reduce UK emissions by 68% by 2030, and the recent Sixth Carbon Budget ambition of a 78% reduction in emissions by 2035. RWE also supports the UK Government’s ambition to deploy 40GW of offshore wind by 2030, which provides the industry with the impetus to invest and the government with a strong interest in the early removal of barriers to deployment.
However, the act of setting targets, whilst a useful signal, is symbolic without the necessary action to deliver progress towards these. Working to meet such targets requires a close and collaborative response from industry and government. It requires government to be an active participant, particularly early-on through establishing appropriate policy, regulatory and financial support frameworks to support nascent renewable technologies and the wider green transition, rather than simply setting expectations. Such frameworks are key to supporting private sector innovation and investments, which help to drive technologies towards commercialisation over the medium to long term.
RWE’s recommendations to help achieve these.
Recommendation 1: Provide greater certainty to industry by setting more frequent deployment targets, covering a range of renewable technologies and ensuring appropriate levels of ambition.
RWE supports more frequent targets for the rollout of wind power (and wider renewable energy technologies) across Scotland and the UK as part of defining the path to net zero. Such targets should be established covering five year intervals from 2030 up to 2050, which would help industry understand and plan for associated projects with a greater degree of certainty. Targets should cover offshore, onshore and floating offshore wind. This must also be accompanied by the necessary support from government to achieve this (for example through Contract for Difference (CfD) support).
It is also important that targets set the necessary level of ambition. RWE fully supported the UK Government increasing the offshore wind 2030 deployment ambition from 30GW to 40GW and would support appropriately ambitious targets for later years.
We also support setting targets for the continued contribution of onshore wind to the UK’s net zero ambitions, which can help restart the pipeline of onshore wind projects, which has stalled in recent years due to a lack of political support from the UK Government.
Recommendation 2: Increased ambition and support for floating offshore wind.
Floating Wind could play an important part in the growth of Scottish offshore wind market. RWE, as one of the world’s leading renewable companies, is progressing innovation in this growing sector.
Scotland has a disproportionately large spatial area of UK waters when compared with its population and the rest of the UK and therefore has considerable future potential for offshore development relative to England. Full exploitation of the potential for offshore wind in Scotland is therefore likely to require deployment of floating offshore turbines at costs competitive with other forms of generation.
Given the potential for the technology, a significantly increased ambition could be established for FOW deployment by 2030, helping Scotland and the UK make faster progress towards net zero targets via increased renewables deployment.
At present, the current available CfD of 1GW by 2030 for FOW is at odds with the technology’s deployment potential, as outlined above. There is expected to be intense competition for this, with viable schemes potentially losing out. RWE recommends that the current 1GW 2030 target for Floating Offshore Wind (FOW) is also increased, given the potential additional scale of deployment that is achievable by this date.
This limit should therefore be increased to better reflect the scale at which industry can deliver.
Recommendation 3: Increase clarity on the current Scotwind leasing process.
The current Scotwind leasing process has the potential to facilitate a significant deployment in offshore wind power capacity. At present, industry does not have clarity on timescales for this process beyond the 16 July 2021 deadline, which can make subsequent planning difficult. Clarity on associated next steps would be helpful in ensuring industry can plan and prepare appropriately.
Over the longer term, offshore wind will have a key role to play in achieving Scotland’s ambitious but necessary climate targets. Scotland currently has a consented pipeline of 7.5 GW of potential offshore wind capacity (with 3.5 GW confirmed for construction). Meeting net-zero emissions will require a substantial increase in renewable power generation with the UK Committee on Climate Change (CCC) recommending that at least 75GW of offshore wind capacity will be needed across the UK by 2050.[1] Targeting a 20% - 30% share of this in Scotland would require deployment of between 15GW to 23GW, requiring an additional pipeline beyond the current consented projects.
RWE therefore urges a commitment to additional leasing rounds, to be promoted by the Crown Estate Scotland. As outlined above, longer-term certainty through a commitment to future leasing rounds will help companies plan to invest and mobilise the UK and Scottish-based supply chains to support project development.
2) Renewable energy sources
Wind power represents a major source of clean, reliable and affordable energy for the UK, and Scotland in particular. A number of factors have contributed to the positive role wind power plays as the leading renewable energy source on the Scottish and UK energy grid.
The first factor is geography. With approximately a third of Europe’s wind resource located in the UK and its territorial waters, the country has significant potential for generating wind power. This is even more the case for Scotland, which is estimated to have over a fifth of total European wind resource within its onshore and offshore boundaries. This puts Scotland and the UK in a globally leading position regarding the development and deployment of wind power in a way that is not the case for other technologies, such as solar.
Secondly, the proven, established nature of both onshore and fixed offshore wind technology means wind power has a clear technical and operational advantage over other more nascent renewable technologies, making it a readily available source of large-scale, clean, reliable and affordable power.
Thirdly, the development of wind power across the UK and Scotland reinforces the need for enduring, long-term regulatory and financial support for emerging technologies, helping them move towards full-scale commercialisation. Approximately three decades of regulatory support, firstly through the Non Fossil Fuel Obligation (NFFO), then the Renewables Obligation (RO) and at present via the CfD framework, have ensured a ‘route to market’ for wind power. The development of the wind sector in the UK is an example to follow for the facilitation of currently emerging technologies, and RWE is supportive of current government efforts to emulate this framework for hydrogen and carbon, capture, usage and storage technologies, for example.
Wider political support is also a key factor, with initiatives such as the Offshore Wind Industry Council (OWIC) and the collaborative relationship and shared objectives established through the Offshore Wind Sector Deal important in helping provide political impetus to harness the full potential of the UK and Scotland’s wind resource.
Finally, wind power represents excellent value for money against almost all other sources of energy, helping to keep the cost of energy affordable as well as being increasingly likely to contribute directly to the decline in wholesale energy costs. CfD Allocation Round three in 2019 saw a number of offshore wind projects, including RWE’s Sofia offshore project, achieve strike prices of under £40/MWh – below the anticipated wholesale rate of electricity. It has therefore been estimated that if the market follows the auction reference price such projects will pay money back to towards consumer bills, rather than receiving financial support through the CfD system.[2] Other technologies are not yet as cost effective.
For these reasons wind power, and its continued efficient expansion, remains of critical importance if the UK and Scotland are to meet their respective decarbonisation targets. RWE acknowledges however that this should not be a zero-sum game, with the scale of the climate challenge meaning there is a role to play for a wide range of renewable sources that can provide reliable and affordable energy to UK and Scottish consumers. For this reason we supported the creation of a dedicated CfD ‘Pot 3’ for offshore wind, to allow continued support for the deployment of this vital energy source whilst allowing emerging technologies to bid separately under ‘Pot 2’.
Whilst the deployment of wind power represents a major success story for Scotland and the wider UK, there however remain a number of barriers to the more efficient deployment of wind projects. Both the UK and Scottish Governments should take active steps to address to ensure wind technology can make the most significant contribution it can to decarbonisation objectives. RWE has a number of recommendations for both the UK and Scottish Governments to ensure the facilitation of future wind power can continue smoothy and efficiently.
Recommendation 4: Commit to annual CfD auctions
The two-way pay as clear CfD is a leading example of energy policy best practice and a scheme RWE advocates for globally. The CfD will continue to develop and leverage private sector investment in clean technologies to keep driving the UK’s decarbonisation progress, providing knock-on, positive economic stimulus as well as secure the UK’s attractiveness as a destination for continued green investment.
RWE strongly urges increasing all CfD pot auction frequency to annual cycles, with visibility of timing and volumes for at least the next two auctions, preferably further.
We believe the benefits of a series of annual auctions include:
There is sufficient liquidity in the market to enable annual auctions, and, if necessary the Government can use low(er) capacity caps to retain competitive tension.
Recommendation 5: Commit to future ‘Pot 1’ CfD auctions and set a minimum 4GW cap for Pot 1 technologies.
Onshore wind, representing one of the cheapest low carbon, large scale energy generation technologies, continues to have a fundamental role to play as part of the energy mix. RWE strongly believes in the need to increase onshore wind development in Scotland as part of the renewables mix, and its continued role in making a key contribution to achieving Net Zero targets.
The Committee on Climate Change’s (CCC) ‘net-zero’ technical report to government recommends up to 35GW of onshore wind by 2035. This would require the deployment of 1.4GW of onshore wind annually, a significant increase from the modest 0.6GW deployed in 2018.[3] Following a six year moratorium, we warmly welcome the Government’s recent decision to allow ‘Pot 1’[4] technologies to participate in CfD Auction Round 4 (AR4) later this year. However there is concern that a single Pot 1 auction would result in irrational bidding and a ‘last throw of the dice’ approach, resulting in unrealistic clearing prices that would damage investment attractiveness and project realisation. We therefore urge that the UK Government commit to holding future Pot 1 auctions, beyond AR4 (which will take place later this year).
In addition, for the auction to have maximum benefits for green growth in Scotland, the auction requires near-term delivery dates and sufficient volume to bring forward significant investments. We estimate there is over 5GW of onshore wind capacity across the UK which is ‘shovel ready’, and the majority of this is in Scotland. Onshore wind will be competing with other technologies in Pot 1 – including solar - therefore, to be effective and to maximise onshore wind deployment in Scotland, the next Pot 1 CfD auction should have a minimum 4GW capacity cap for Pot 1.
RWE supports RenewableUK’s call for government to take a supportive policy towards onshore wind development, including Pot 1 auctions, improved timescales for grid connection and support for repowering projects. RWE supports the recent calls and recommendations from bodies such as the National Infrastructure Commission and EnergyUK, both of whom recommend building a strong future pipeline of CfD auctions, so as to provide clarity and certainty for private sector investment.
Recommendation 6: Address Scottish grid infrastructure and locational transmission charging issues
In the future, renewable generation will form the backbone of the energy system. It is essential that the network charging regime is a facilitator, not a barrier, to delivering this future efficiently. Appropriate locational network charges can form part of an economically efficient investment framework.
Ofgem’s economic principles for network charging mean that locational network charges are highest for generators located furthest from centres of demand. In practice, this means that, despite having some of the UK’s best renewables resources, Scottish generators face the highest locational transmission charges in Great Britain. It is not clear if the current charging regime is the right one to deliver an economically efficient transition to net-zero – RWE would welcome a meaningful, strategic, and forward-looking review of charging in pursuit of this objective, to be delivered as soon as feasibly possible. RWE urges engagement between the Scottish Government; Ofgem; grid operators Scottish Power Transmission Limited and Scottish Hydro Electric Transmission plc; and Westminster on the appropriate regulatory approach that ensures delivery of economically efficient decarbonisation..
The Transmission Network Use of System (TNUoS) regime is currently volatile, unpredictable, and cannot be hedged. This places undue risk on asset developers and operators. Once an asset has passed FID, there is little a developer can do to respond to changes in locational signals. Long-term price stability, particularly for projects with low-carbon support mechanisms, would deliver significant consumer benefits.
Significant new and upgraded grid infrastructure is required to enable the growth in renewables. With the anticipated expansion of renewable energy, including offshore, Scotland urgently requires a coherent and costed plan to be put in place to upgrade its grid infrastructure, to enable full decarbonisation of its energy generation. A resultant investment in grid upgrades would help drive the economy, and act as an enabler to broader investments in renewables. Opening up the grid infrastructure is also required to enable the wider electrification of heat and transport, which are key sectors in Scotland and the UK’s decarbonisation challenge.
Recommendation 7: Ensure renewables-friendly land management and planning regimes
The planning system represents a key facilitator of onshore renewable energy projects. Planning policies should put in place a positive and ambitious planning framework that will facilitate the continued expansion of renewable energy projects in Scotland. With the announcement that the Scottish Government’s National Planning Framework 4 (NPF4) will not be adopted until 2022, interim measures to reiterate the intent that the planning system will work to facilitate the net zero target (and the necessary renewables deployment) is essential.
To do so, Scottish Government Ministers should consider issuing a Ministerial Statement or Chief Planner’s Letter explicitly stating that the climate emergency and Scotland’s 2045 net zero target are material considerations to be afforded significant weight in planning decisions. To provide consenting certainty, we advise that the starting point in NPF4 should be a ‘presumption in favour of granting consent’ for all renewable energy projects and associated grid infrastructure, which is vital to achieving decarbonisation. The length it takes for planning decisions to be made under the current system is very long, to the extent that wind turbine technology can develop whilst projects are still in the planning process, with a need to re-start if a newer, more developed turbine is available for use.
We also urge that NPF4 should make explicit reference to the acceptability of taller, more efficient wind turbines, with larger rotor diameters, which will form a key pillar in meeting Scotland’s decarbonisation targets. Finally, 5GW of existing Scottish wind power capacity is likely to be decommissioned by 2040. To ensure the capacity lost from decommissioned sites is replaced, the current use of the site as a wind farm should be a material planning consideration and given significant weight in the decision-making process for site ‘repowering’ applications.
RWE also welcomes support for the restoration of valuable lands and habitats as part of onshore renewables development, for example around peatlands in Scotland. Environmental enhancements and management come hand in hand with onshore wind development, and it is standard practice for developers to enter into habitat management plans on wind farm sites, which can include the restoration of degraded peatlands.
RWE has a strong track record of successful peat restoration on onshore wind farm projects. For example, Bad á Cheò Wind Farm, a 13-turbine site located in Caithness (built and fully operational from May 2019) is located in peat. Here, RWE implemented a successful programme restoring approximately 39 ha of degraded peatland, working closely with the Scottish Environment Protection Agency (SEPA) and Scottish Natural Heritage (SNH). Similar activity is taking place to restore 53 ha of ‘moderately’ degraded peatland at Glen Kyllachy, a 20 turbine site south of Inverness. As these projects demonstrate, onshore wind and peatland can co-exist and therefore, we would urge flexible approach to the siting of onshore projects in peatland areas, albeit on condition of restoration activity.
Finally, as with all developments requiring planning permission, the impact on wild land areas and any other features is assessed through the development process and weighed in the planning balance. Much of wild land is protected from development by virtue of designations such as National Parks, National Scenic Areas and other statutory designations. In a climate emergency and to enable a fourfold increase in renewable energy capacity, policy and planning rules should take a balanced view and allow some development in less sensitive areas of wild land, so as to maximise Scotland’s renewable energy potential.
Recommendation 8: Establish an enduring solution to radar/aviation issues
Almost half of all wind farm sites in Scotland and Scottish waters are subject to aviation radar objections. With the balance within the planning system requiring the wind farm developer to resolve these issues, the current process of solutions require piecemeal retrofit of technologies, at great time and expense.
Wind farms, both onshore and offshore are now a permanent feature of the built environment and should have equal consideration as other sectors. Indeed, with wind energy now a key contributor to the UK energy mix and Scottish Government aspirations to increase deployment, aviation stakeholders should be required to ensure that as they replace radar and surveillance infrastructure, they include technological solutions that accommodates for the presence of turbines. The prohibitive cost of NAT’s radar mitigation across Scotland is currently a barrier to deployment, with better transparency required. We support the current work by OWIC to find a long term Air Defence radar solution in order to release the majority of Scotwind zones and urge relevant stakeholders, including the Scottish and UK Governments, the MOD and NATs, to ensure an enduring solution that does not block the facilitation of offshore wind through the Scotwind process and more widely.
By signalling a shift in planning requirements from wind farm “mitigation” to “management”, the Scottish Government could signal a transition of responsibility, with effect from a future date such as 2030, giving aviation stakeholders sufficient notice to accommodate the requirement in their surveillance replacement cycles. This would require that after 2030, there are no grounds to object to wind developments if aviation surveillance systems are not windfarm tolerant.
Recommendation 9: Establish enduring support frameworks for both Carbon Capture, Usage and Storage (CCUS) and Hydrogen technologies
The successful experience of deploying wind power across the UK and Scotland, and associated regulatory support frameworks, provide a model to follow for supporting new decarbonisation technologies, such as CCUS and hydrogen.
RWE support CCUS as a technology and believe that it has a role to play as part of Scotland’s energy mix in the future. RWE is part of the NECCUS Alliance, an alliance of industry, government and experts to drive change and support programmes needed to reduce carbon emissions from industrial sources in Scotland and beyond. At the heart of this is project ‘Acorn’ which aims to deliver a CCS programme for Scotland by 2024. The project will also enable hydrogen to be used more widely as a source of clean energy.
Similarly, low carbon hydrogen is an essential component in the pathway to Net Zero, particularly where electrification is not possible (e.g. heavy load transport, industrial processes). Given the abundance of natural wind resources, we believe green hydrogen has the potential to play a key role in Scotland. As a major renewables developer and potential producer of green hydrogen, RWE can play a crucial role in facilitating this.
However, before major players such as RWE can facilitate development of a UK hydrogen industry and associated supply chain, a stable and supportive policy framework that both encourages the production of low carbon hydrogen and stimulates demand must be in place. This will need to recognise and address the commercial, technical and regulatory risks involved. We welcome the work of the UK Government in seeing to develop appropriate business model support frameworks for both CCUS and hydrogen technology, as well the work of the Scottish Government in establishing ambitions for these technologies. The two-way ‘contract for difference’ (CfD) has been hugely successful in supporting renewables and is a good starting point, but will need to be adapted to reflect the different technical, operational and commercial characteristics of these technologies.
Recommendation 10: Maximise Scotland’s hydropower potential
RWE has 14 operational hydro schemes in Scotland (totalling just over 30MW), one under construction (2MW) and some operational site enhancement projects in development. Hydropower is a valuable contributor to the UK’s renewables mix and to achieving the UK’s Net Zero carbon targets. Information from the British Hydro Association states there is currently an installed capacity of 1,676MW generating over 5,000GW/year in the UK, the majority of which is based in Scotland. There is in addition a further 2,860 MW capacity of existing pumped storage, with two of the UK’s four operational pumped storage sites located in Scotland.
On average, 70% of the cost of a new UK hydropower scheme is in civil construction which is procured locally. The majority of new sub-5MW schemes built with support from the Feed in Tariff (FiT) are in remote rural areas, providing valuable energy and rural income in a way which is environmentally sensitive, and has strong community support and involvement. The closure of the FiT to new schemes has already resulted in ending new hydro planning applications. There is unlikely to be many, if any, new hydro planning applications unless a new support mechanism is proposed. If smaller-scale hydro power is to play a part in Scotland’s energy future, a route to market should be re-established for new hydro developments. Without this, future investment in hydro is likely to only focus on operational site enhancements and potentially development of pumped storage hydro, which could play a useful role in energy storage and balancing measures, as more renewables come on line.
3) Employment in renewable energy sector
RWE shares the ambitions held by both the UK and Scottish Governments regarding the potential for renewable energy technologies to deliver highly-skilled employment and supply chain opportunities across both Scotland and the UK, in support of the Offshore Wind Sector Deal’s 60% local content target. Renewable energy projects in Scotland also represent a significant opportunity for stimulating the Scottish economy in the aftermath of the COVID-19 crisis. For an immediate ‘kick start’ to the economy and jobs, we would reiterate that the large volume of ‘shovel ready’ onshore wind in Scotland presents an excellent opportunity for the economy and we urge the UK Government to unlock this by setting an appropriate minimum cap for the forthcoming Pot 1 AR4 auction – we recommend at least 4GW.
We have supported work in the Scottish supply chain through our Bad á Cheò onshore wind farm, on which £7 million was spent on civil works, with approximately 47% of this total spent within 30 kilometres of the site and the remaining 53% spent in the rest of the UK. RWE also previously spent over £14 million at the Bi-Fab facility in Fife to provide turbine jackets for our Gwynt y Môr offshore wind farm in Wales.
Recommendation 11: Continued collaboration between Government and industry on the facilitation and development of domestic supply chains
We recognise the collaboration taking place between the UK Government and OWIC on project supply chain plans. RWE is actively engaged in these discussions.
It is worth noting that industry has to work within the parameters set by Government, with the Contracts for Difference model working on a lowest-cost basis, which incentivises the delivery of bids that are of the lowest cost to the consumer. This requires developers to find supply chain options at lowest cost, or risk not being successful in the CfD auction process and the prospective project not going ahead. This requires action to ensure UK supply chain options are cost competitive in global markets.
From an energy sector perspective, ensuring that UK-based supply chain companies, often comprising of SME’s, can access contracts created from new low carbon investments will be essential in ensuring the UK economy maximises the benefits from a post-pandemic green recovery strategy. Both Government and industry have a key role to play – Government with targeted strategic interventions and industry with per project developments, as required.
As part of the Offshore Wind Sector Deal, the industry is investing up to £250 million to develop the UK supply chain, working with local enterprise partnerships, councils and development agencies, increasing productivity and fostering innovation. Government support for the UK supply chain should provide additionality and not duplication of structures already in place, for example the industry’s £100 million investment in a new industry programme - the Offshore Wind Growth Partnership (OWGP), which seeks to provide direct support to strengthen supply chain company’s capacity through a combination of strategic capability assessments, advisory services and grant funding. We support calls for the £100 million OWGP fund to be match-funded by Government to accelerate the impact & meet forthcoming allocation rounds. Government should also look to apply the models already in place to support both the automotive and aerospace industries, such as development grants, to the offshore wind sector.
We would also welcome further engagement from the Scottish Government on efforts to understand the current barriers in place to wider domestic supply chain involvement. Further steps that could help industry include greater clarity ahead of time on decision-making processes and timescales in the Scotwind process and an earlier understanding and communication regarding local content requirements.
Recommendation 12: Greater engagement with Tier 1 and Tier 2 suppliers
The UK and Scottish Governments should seek to work with Tier 1 and 2 suppliers to help understand and facilitate domestic supply chains. As developers, RWE can build in requirements to consider/maximise UK content within our procurement processes, but this is not incentive enough. Ultimately, Tier 1 suppliers decide on what manufacturing and other lower tier suppliers get contracted for projects. Focusing public policy interventions on Tier 1 suppliers, alongside developer procurement practices, we believe, will drive Scottish and UK supply chain development.
Recommendation 13: Cross-sectoral engagement to support for a ‘just transition’ for the oil and gas sector
RWE also recognises the importance of delivering a ‘just transition’ towards an energy sector that is based on the fuels and systems of the future. In March, we welcomed the publication of the UK Government’s ‘North Sea Transition Deal’ which seeks to harness the experience and expertise of the Oil & Gas sector to drive the UK’s green transition. We welcome the strategy’s recognition of the potential for the renewables sector to form a basis for the delivery of this transition. As a renewables developer we stand ready to engage with the sector to develop and deliver the collaborative opportunities set out in the deal document.
Recommendation 14: Greater support for training and employment opportunities
Ensuring that the UK workforce has opportunities to take up roles created by the expansion of low carbon power and new technologies will help to build and sustain supply chains, UK content and drive the growth of the green economy across the UK. It is estimated that the offshore wind sector alone could support 27,000 jobs across the UK by 2030.
We recommend that the UK Government deliver a ‘funding boost’ when a company supports the Apprenticeship Levy Transfer (i.e. when a company transfers its unused Apprenticeship Levy to “pay” for the training of an apprentice in a non-Levy paying company, usually in the supply chain). It currently covers 100% of the training cost of an apprentice. With a government contribution more apprentices in the supply chain could be supported.
Recommendation 15: Provide support to foster a strong manufacturing base within Scotland.
To maximise the economic benefits to Scotland from renewables, in particular onshore and offshore wind, we believe investment and support for a strong manufacturing base within Scotland will be crucial, and that opportunities, resources and funding are managed strategically. To this end, RWE has warmly welcomed the UK Government’s £160m ‘Offshore wind manufacturing support scheme’ to support modern, integrated portside infrastructure. We also welcome the recent announcement of £95m from this pot to ports located in the Humber and Teeside in England[5].
We very much hope that Scotland can benefit from similar funding. Specifically, we are urging the UK Government to ensure that ports in key strategic locations spanning the full breadth of UK, including Wales and Scotland, receive funding. Furthermore, the Government should consider whether more funds will be required over and above the initial £160m. Locations that receive funding should reflect future offshore leasing rounds (including Scotwind) and including the potential for floating wind which will have quite different and specific requirements - to ensure we can maximise the fabrication and assembly opportunities in the UK and specifically Scotland.
4) Intergovernmental relations
Ensuring the UK and Scotland harness the full potential offered by renewable energy will require close collaborative working from the UK and Scottish Governments, alongside working in partnership with the energy industry. It is important for both governments to align on their respective ambitions and targets, as well as associated policy and regulatory support frameworks, helping provide the certainty to the private sector that facilitates necessary investment.
This is especially the case for renewables deployment and the wider green energy rollout. We have not experienced any major contradictions or duplication of activity between the UK and Scottish Governments, with the respective division in policy responsibilities generally well-established and clear.
Recommendation 16: Ensure close collaboration and joint-working on tackling barriers and hurdles to further renewables deployment.
RWE’s key recommendation is for close collaboration and joint working on outstanding hurdles and barriers to further renewables deployment in Scotland. Key cases in point, as outlined above, would be around investment in new grid infrastructure, or on solutions to aviation/radar issues for wind projects specifically, where solutions require collaboration between a range of relevant stakeholders.
With such issues a priority for ensuring the continued smooth rollout of renewables projects, governments and regulators must be active participants in listening to and working with industry, as well as maintaining channels of communication and collaboration across and between government bodies which can deliver on joint expectations.
May 2021
[1] CCC, ‘Net Zero – Technical Report’
[2] CarbonBrief, ‘Analysis: Record-low price for UK offshore wind cheaper than existing gas plants by 2023’
[3] CCC, ‘Net Zero – Technical Report’
[4] Pot 1 refers to ‘established’ technologies and includes onshore wind, solar PV (>5MW), Energy from Waste with CHP, Hydro (>5MW and <50MW), Landfill Gas and Sewage Gas.
[5] https://www.gov.uk/government/news/second-wind-for-the-humber-teeside-and-uk-energy-industry