One of the greatest challenges facing the sector is the availability of funding. The costs associated with the development and construction of an offshore wind site are in the region of £2.8 million to £3.1 million per MW (RenewableUK, 2009). Costs need to be reduced significantly to ensure the viability of projects and the industry. This was addressed by DECC’s Offshore Wind Cost Reduction Taskforce, which set out a path and action plan to reduce the costs of offshore wind to £100 MWh by 2020. The Cost Reduction Task Force reported in June 2012. The report can be downloaded here.
In addition to the development of the projects themselves, investment is also required in the physical infrastructure required to service the sector.
The National Renewables Infrastructure Fund
The £70 million National Renewables Infrastructure Fund (N-RIF) has been established to support the development of port and near-port manufacturing locations for offshore wind turbines and related developments including test and demonstration activity, with the overall aim of stimulating an offshore wind supply chain in Scotland.
Prototyping for Offshore Wind Energy Renewables Scotland (POWERS)
POWERS is a £35 million funding programme to support the development of the next generation of offshore wind turbines in Scotland. It offers funding to support the capital and operation costs associated with the full scale production (and not individual component parts) of next generation wind turbine prototypes in Scotland. The key principles for applicants are the extent to which they can demonstrate economic impact in Scotland as measured by GVA and jobs as a result of establishing Scottish manufacturing operations. Offers made under the fund will seek commitment from inward investors to establish European manufacturing operations in Scotland - following prototype development.
Other sources of funding available
Scottish Enterprise and Highlands and Islands Enterprise are using public sector funds to leverage private sector investment in the sector. They can provide help with the following sources of funding:
- Regional Selective Assistance (RSA)
- The Scottish Investment Bank
- SMART: SCOTLAND and Scottish Enterprise’s R&D grant
Visit Scottish Enterprise and Highlands and Islands Enterprise’s websites for information and assistance with regard to funding opportunities and growing your business to support the development of the offshore wind sector in Scotland.
Highlands and Islands Enterprise has invested over £30m in renewable energy projects up until May 2012 and continues to do so. The area has also seen over £80m of investment in infrastructure in the two years to November 2012, through both public and private sources of finance. Some examples of energy related projects which have received assistance and support in the past are:
- Scottish Association for Marine Science (SAMS)
- Environmental Research Institute (ERI)
- International Centre for Island Technology (ICIT)
- European Marine Energy Centre (EMEC)
- Wind Towers Scotland Ltd (WTL)
The Crown Estate
The Crown Estate is investing in offshore wind around Scotland in partnership with Round 3. This includes a range of enabling actions, and the co-investment alongside Round 3 developers as project partners.
Recent funding and investment stories
In October 2011 Global Energy Group announced the completion of the sale of the Nigg fabrication site from the American company KBR and the Wakelyn Trust. The purchase paves the way for ambitious plans to develop the 238 acre site servising the energy industry, including oil and gas and renewables. The company expects around 2,000 people to be employed on the site by 2015.
Following on from the successful purchase, subsequent funding of £1.7million from Highlands and Islands Enterprise was announced to help transform the largely dormant site into a multi-use modern energy park.
In March 2012, the First Minister opened the Nigg Skills Academy - an industry-led training initiative which expects to see 3,000 people trained by 2015 in skills including engineering and project management.
The Scottish Low Carbon Investment Conference
The conference took place in Edinburgh on October 10th and 11th 2012 and brought together financial investors, renewable energy developers and public sector organisations. Visit the conference website for more details.