Manufacturing - Scottish hubs will cut build costs

UK: Scotland is laying out plans designed to help it become the global home of the offshore renewables industry.

These include development of three offshore manufacturing hubs in Scotland, which could create more than 5,000 jobs, according to the country's two key investment agencies.

Scottish Enterprise, along with Highland and Islands Enterprise, published the second phase of the country's National Renewables Infrastructure Plan (N-Rip) in July.

Scotland's first minister, Alex Salmond of the centre-left pro-independence Scottish National Party, points to Scotland's vast potential for offshore renewables. The country is estimated to have as much as a quarter of Europe's potential for offshore wind and tidal energy. "In the current economic climate it is important that we capitalise on these natural assets to secure new opportunities that support economic recovery and growth," Salmond says.

The first phase report, published in February, identifies 11 sites for manufacturing: Leith, Methil (Energy Park Fife), Dundee, Aberdeen, Peterhead, Ardersier, Nigg, Arnish, Kishorn, Hunterston and Machrihanish/Campbeltown. The second phase report recommends that the sites are developed into three regional manufacturing clusters (see map).

Project developers have already shown interest in the sites, with those in the Forth/Tay cluster and Moray Firth being the most popular. A fourth subsea cluster exists in Aberdeen and Peterhead, where some companies involved in offshore renewables are already based.

The agencies suggest that one location could act as a staging or logistics port, while manufacturing is sourced from other locations and storage located in a third. Using clusters of sites in this way can be cheaper because it is more attractive than investing in one single site at significant cost. Sea connections make it easy to move elements between sites.

The cluster approach is already used in other locations, such as Germany, where ports at Bremerhaven, Cuxhaven and Emden have added different elements to the offshore wind supply chain located next to the ports.

The sites will need to be ready by 2014 at the latest, as installation of the UK's Round 3 turbines is expected to begin in 2014.

More than ú220 million is needed to create the clusters. The report suggests that public money may be available to catalyse development, but no figure has been pledged.

Both public and private sector money will be needed to unlock these sites, according to Salmond. He called on the UK Treasury to release Scotland's ú185 million Fossil Fuel Levy (FFL) surplus to further develop the renewables industry. This surplus represents the difference between the prices at which some contracts for renewable generation were let and current prices paid.

Current Treasury rules on departmental expenditure limits mean that FFL surplus resources, if released to Scotland now, would not be additional to Scotland's block grant. This means that effectively, under current legislation, the FFL would fail to increase the size of Scotland's total budget.

Talks between Salmond and the UK government suggested that Scotland may be able to take the surplus back and add it to its budget to spend on renewables. However, there was no clarification in the government's June budget, which merely contained a pledge to review the existing policy.