For Enterprise Minister Jim Mather and the Scottish Government, events of the past week have left a big hole in plans to turn the country into a global leader in the renewable energy industry.
On Friday Mather flew to Kintyre hoping to rescue Scotlands only wind tower factory near Campbeltown following a decision by Danish firm Vestas to halt production at the plant.
Vestas, the world’s biggest wind power solutions company with a market share of 23%, is struggling to make the Scottish factory profitable due to a lack of orders and is now in consultation with the 92 employees.
Mather held talks with the staff, unions and management in a bid to salvage the operation but is already talking about life after the plant shuts.
A Scottish Government spokesman insisted Vestas’ decision would not derail the renewables policy, claiming the “announcement will not impact on Scotland’s clear, competitive advantage in developing clean, green energy sources such as wind, wave and tidal power”.
However, Mather’s trip to Campbeltown came on the day he was forced to react to a Westminster decision to shelve a planned subsidy for renewable energy schemes in Orkney and Shetland. The UK Government is no longer willing to cap transmission charges, a move Mather described as “deeply, deeply disappointing”.
Jason Ormiston, chief executive of trade body Scottish Renewables, warned that transmission charges can be a major component in the cost of running a wind farm and could affect the viability of projects.
Following this double whammy, Mather has to ensure the Scottish Government keeps its energy strategy on track. It has a target of providing 31% of the country’s electricity from renewables by 2011 and 50% by 2020.
Commentators believe this can still be achieved. Ormiston said while the closure of Vestas is a “blow to confidence”, its employees only represent a small part of the nation’s growing green energy sector.
There is speculation that while profitability may be the published reason for Vestas pulling out, some companies are concerned about the inability to secure planning permission for wind farms. Ormiston said there is a reluctance by both the Scottish Government and local authorities to give the go-ahead to projects that muster vocal opposition.
Ormiston warned that foreign companies may be put off by the British approach to planning.
And while Dr Martin Sales, partner with Biggart Baillie law firm, described the Scottish Government’s achievements in promoting renewables as “excellent, almost beyond belief”, he agreed planning permission is proving to be a stumbling block. He said this problem could get worse as more wind farms will have a greater visual impact on the environment. ScottishPower owner Iberdrola has expressed similar concerns.
But Ormiston says attitudes are changing as a result of the previous administration’s Planning Act and National Planning Policy Review and the SNP Government’s commitment to quicker decision making.
A Scottish Government spokesman confirmed it is working to speed up the planning process and referred to the recent announcement that the Clyde windfarm – Europe’s largest single consented onshore windfarm – had been given the go-ahead. “This makes it virtually certain that the 2011 target will be met early. It is another step towards making Scotland the green energy capital of Europe.”
There are signs that this is an achievable milestone. ScottishPower Renewables has established itself as the biggest generator and developer of on-shore wind energy in the UK and while it is estimated that Scotland has the potential to provide 25% of Europe’s wind power, it can also meet up to 25% of its tidal power requirements and 10% of the continent’s wave power.
Wind energy is the most advanced of these technologies and is dominated by overseas firms. But experts say Scotland’s fledgling wave and tidal power sector could become the world leader if it is nurtured correctly by Government.
Martin McAdam, who last week took up the position of chief executive of Aquamarine Power, an Edinburgh-based wave and tidal energy company, is confident that First Minister Alex Salmond can deliver on his ambitions for the industry. McAdam, who joined from wind farm company Airticity in Ireland, said: “Salmond wants Scotland to have an export-oriented renewable energy industry and I think that’s a great vision.”
As well as potential to export electricity to England and Europe, the technology developed in Scotland to power the industry can be sold to countries with tide and wave resources, according to McAdam.
“This is a unique time as we’re starting out in the renewable energy industry,” he said. “The only mature technology is wind, but we need a mixture of conventional and green technologies, including marine.”
Danish and German companies, such as Vestas and Siemens, dominate wind farming, a direct result of the support programmes their governments put in place as far back as the 1970s.
“There’s no reason why that same vision and model can’t be applied in Scotland,” said McAdam. “There is no real, mature marine renewable industry anywhere in the world yet and Scotland has the opportunity to take that leadership position.”
Aquamarine, one of the firms at the forefront of the sector, is to use the European Marine Energy Centre, established by the Scottish Government in Orkney, to test its two products, Neptune and Oyster. A full-scale prototype of Neptune, which extracts energy from tidal streams, should be in the water off Orkney next year, and in-sea testing of Oyster, which generates energy from waves, is scheduled for 2010.
Unlike some critics, McAdam does not dismiss the Government’s Saltire Prize to promote clean, green marine renewable energy as a “gimmick”. Launched this month by Mather, the £10m prize it is the largest ever innovation award offered by the Scottish Government. It is designed to encourage Scottish and international scientists to develop technologies in the sector. “Awards such as this have helped spawn industries,” said McAdam.
With the oil price continuing to increase, the unsettled political situation in Russia and other former Soviet states and spiralling energy bills, there is awareness among investors that alternatives to fossil fuels must be promoted. “Renewables are hot for investment,” McAdam said