Orkney is poised to play a key role in offshore wind and drive innovation, however, industry-wide challenges must be overcome to meet net zero targets.
Orkney’s Role in the Energy Transition
As the UK races to meet its net zero targets, the transition to offshore wind energy presents both an urgent necessity and a significant economic opportunity. Orkney, with its strategic location and long history of energy innovation, is poised to play a critical role in this shift. However, achieving these ambitious goals for offshore wind requires overcoming substantial challenges including securing investment in infrastructure and streamlining the supply chain. There are many potential rewards for capitalising on this economic opportunity, including new jobs, regional growth, and a transformative impact on the UK’s energy landscape. Orkney is ready to harness its unique assets and drive the UK's next energy revolution.
Realising the Economic Potential
The need for rapid growth of the offshore wind industry presents a major opportunity for the UK’s local, regional and national economies. RenewableUK’s 2024 Industrial Growth Plan estimates that over the next 10 years, the UK economy could benefit from an additional £25bn GVA (Gross Value Added) and up to 10,000 new jobs.
The UK is in a relatively strong position with 15GW of installed offshore wind capacity (by the end of 2024), outproduced only by China at a global level. This is in large part due to the North Sea and its existing infrastructure, in addition to expertise in subsea engineering and technology.
Overcoming Structural Barriers
Despite the economic incentives, as well as the UK's current offshore wind capacity, the sector faces significant challenges to meet ambitious net zero targets and satisfy the demand for a just energy transition. Progress requires an injection of capital from both public and private sources, in addition to collaboration between various sector stakeholders, including developers, regulatory bodies, and government agencies.
One of the most significant obstacles facing the sector in the short to medium term is the need for investment in infrastructure. There are dozens of offshore wind developments across the UK at various stages of planning with relatively few reaching Final Investment Decisions (FID). This can, in part, be attributed to uncertainty in the supply chain. Investors are wary of indecision on manufacturing, technology and logistics.
The scale and complexity of turbine storage, maintenance and assembly places an incredible demand on UK ports. The UK's ports, in their current state, lack the space and infrastructure needed to support the logistical demands of future offshore wind projects. With the growing number of projects and accelerating demand for wind farms, ports are finding it increasingly challenging to keep up.
Driving Collaborative Solutions
Cooperation between public and private sector stakeholders is essential to secure funding for the supply chain, including improvements to port infrastructure, which could encourage new projects to emerge and act as a catalyst for those awaiting Final Investment Decisions (FIDs). GB Energy, the new government-owned energy company, will look to address such issues.
The UK government has committed £160m of funding, through the Floating Offshore Wind Manufacturing Investment Scheme (FLOWMIS), to two ports in the UK. Orkney Future Ports’ Scapa Deep Water (SDWQ) project was placed on the reserve list for this funding. Any investment is a positive step in the right direction. However, the FLOWMIS funding represents only a fraction of what is needed to build momentum across the UK for the years ahead.
The Contracts for Difference (CfD) scheme is a similar key government fund used to accelerate growth in renewables. Although a welcome move, earlier in the year 68 organisations representing 20,000 jobs, including Scottish Renewables, called on the government to increase funding for CfD.
Preparing for the Energy Transition
The UK’s starting position is favourable. Yet, without significant intervention, it is possible that this once-in-a-generation economic opportunity may pass us by. The role ports will play in the transition is undeniable. However, the extent to which they are receiving the investment required to support the offshore wind industry is still in question.
Orkney Future Ports encompasses a series of projects which position Orkney as a key player in the UK's energy transition and leader in the renewables sector.
Leveraging the natural assets of Scapa Flow and the islands' strategic location between the North Sea and the Atlantic Ocean, along with a strong history of energy infrastructure and engineering, Orkney Future Ports is the ideal partner to support offshore wind farm development in the North Sea.