Scottish energy jobs and billions of investment 'in jeopardy' over Labour renewables pivot

The UK government has been accused of “putting billions of pounds of investment and thousands of Scottish jobs in jeopardy” by drawing up a new renewable energy strategy that could hamper the country’s already-stuttering floating wind ambitions. As previously revealed by The Scotsman, ScotWind developers are poised to hand back some of their contracts to Crown Estate Scotland in the coming months after scaling up floating wind projects has not happened at the pace first envisioned.

Unlike traditional fixed-bottom offshore wind, floating projects can operate in waters deeper than 60m - with the potential to open up huge parts of the North Sea for renewable energy projects. If floating wind can be scaled up, it could harness strong winds that are not able to be captured with fixed bottom developments. The industry is also seen as a key part of the energy transition opportunity for the oil and gas sector. Amid concerns within the industry over costs remaining high and a lack of domestic supply chains, Scotland’s renewables sector had hoped that the UK government’s crucial contract for difference auctions could have given confidence for investors to support the emerging technology.

But in the wake of Chancellor John Healey’s Budget last week, concerns have been raised that a change of tack could scupper Scotland’s floating wind ambitions. Speaking to journalists in Glasgow on Friday, Mr Healey boasted that his Budget contained “big decisions that will change our energy markets system and our energy system for the long-term”. He added: “From now, this government’s policy will be to pursue cheaper energy with cleaner energy as a way of doing that.

“But first and foremost, we will not give the go-ahead to energy generation projects in the future unless they will bring cheaper energy and they can connect to the grid.” Treasury minister Dan Tomlinson has explicitly warned that at the next auction round, AR8, “we will only produce clear power if we are confident it will lower bills”. “We will reform the contract for difference by AR9 to support building the lowest cost system, fixing market distortions and siting assets in the right places”.

Those comments have sparked fears that prioritising Scottish renewables projects, where the energy demand is not close-by and obtaining grid connections has been much more difficult and expensive than English developments, could now be penalised under the Labour government’s new strategy. Crown Estate Scotland has estimated that ScotWind and the subsequent so-called INTOG projects could unlock £96.1billion of investment and support more than 21,000 jobs annually - with the majority of these floating wind.

Russell Borthwick, chief executive of Aberdeen and Grampian Chamber of Commerce, said: "The Chancellor is putting billions of pounds of investment and thousands of Scottish jobs in jeopardy with an approach that could stop some of the country's most important offshore wind projects from ever reaching construction. "Nearly five years after the first ScotWind awards, developers are making real progress towards delivering these enormous projects.

“Investment decisions are approaching, businesses are preparing to compete for contracts and communities are looking to offshore wind for their next generation of skilled jobs. A narrow focus on cost risks leaving projects stranded before they have the chance to deliver."