THE ScotWind auction will deliver cheaper energy bills for households and gives the opportunity to revitalise Scotland’s manufacturing sector, according to experts.
Vast swathes of the Scottish seabed, owned by the Crown Estate, were leased to energy companies in January – resulting in £700 million being directed into the public purse.
More will come over the years in rent, estimated to be around £5m.
READ MORE: We're making a mistake with ScotWind – this is what we should do instead
But the sale was controversial because many of the companies were based outside Scotland. Fears have been raised Scottish taxpayers may have been short-changed.
Professor David Toke, a reader in energy policy at the University of Aberdeen, described the sale as a “brilliant thing to do”.
%image('13440449', type="article-full", alt="Professor David Toke of the University of Aberdeen")
But he added both the Scottish and UK governments “have got to think of ways of encouraging developers to source more jobs from the UK.”
He said: “We must make a lot of effort to improve human capital not just give handouts to companies to install [windfarms] but improve education and training and allow small businesses to equip themselves for new challenges ahead.”
READ MORE: Where will profits from the 17 new Scottish windfarm sites go?
He said while “there are always better ways of doing things” the ScotWind sale would deliver better value for consumers versus staying with oil and gas.
He explained how the type of contracts used for renewable projects – known as a contract for difference – protected households from price fluctuations in the energy market.
“Wind power developers get a fixed price, so when you have an oil and gas price crisis, the generators don’t get an inflated price according to world market forces, they get the same price,” said Prof Toke.
“It is a much better deal for the consumer to issue fixed-price contracts for renewable energy because the consumer is only going to have to pay a set price for renewable energy.
“The contracts for difference being issued for offshore wind are greatly reducing consumer bills compared to the rest of energy supplies.”
Professor Graeme Roy of the University of Glasgow’s Adam Smith Business School said the sale could lay the foundations for revitalising the Scottish manufacturing industry.
%image('10897381', type="article-full", alt="Prof Graeme Roy of the University of Glasgow's Adam Smith Business School ")
“We would all love Scotland to be in a position that it’s got a huge manufacturing base when these licensed were being offered, that it was all globally competitive companies that could compete for these contracts,” he said.
“Sadly because of the economic policies of the last 30-40 years we have lost our manufacturing base.”
READ MORE: Scottish Power boss says nation can become a world leader in floating turbines
But Scotland will not “reap the full benefits” of the development of huge offshore wind farms, according to Prof Roy, unless the government invests in the manufacturing sector now.
“But you can’t just magically wish that we had these sectors,” he said.
The most important thing for Prof Roy is that the Scottish Government capitalises on the resulting investment from the ScotWind sale and puts the money into rebuilding the country’s manufacturing base.
He said: “Part of it how you use opportunities like this to grow and build sectors – there are opportunities in it.
“This is just the first round [of leasing], there will be more in the future. So we need to be prepared to take advantage of those in the future.
“I’d be critical if we didn’t use this as an opportunity to start to think about how we can develop the economic infrastructure, skills, innovation of a manufacturing base so that the next time something like this comes around we’re able to secure much more of the benefit.”
Common Weal’s head of policy and research Dr Craig Dalzell has raised concerns that the price for bids was fixed “too low”, and the annual rent the Crown Estate will charge is “paltry”.
%image('12400128', type="article-full", alt="Dr Craig Dalzell, head of policy and research at Common Weal ")
And the investment hoped for in Scotland’s manufacturing sector could never materialise, according to Dr Dalzell, because “it is cheaper for companies to import materials and pay the fines than it is to build manufacturing capacity”.
Failing to comply with a clause requiring firms to invest in the local economy will result in a fine of £250,000 – an “accounting error” to companies the size of Shell.
He added: “It's difficult to see the ScotWind auction as anything other than political failure.
“That Scotland has vast wind energy potential shouldn't have been a surprise to anyone and yet for years, decades, not enough was done to prepare to capture that for the common interest of Scotland.
READ MORE: Huge ScotWind renewables sale 'could bring oil-style' boom to Scotland
“Simply put, Scotland failed to prepare to harness its own assets, undervalued what it has and is likely to lose most of the 'supply chain benefits' whenever it is cheaper for companies to import materials and pay the fines than it is to build manufacturing capacity.”
Alba MP Kenny MacAskill last month accused the Government of “selling the family silver cheap” – calling for a “public stake in every field”.
%image('11568381', type="article-full", alt="Kenny MacAskill MP ")
The latest leasing round saw 17 projects bid upon by energy giants such as EDF, Shell and SSE. The total potential energy generation of the wind farms is estimated at 25 gigawatts per year.
The Government hopes at least £1 billion will go into the Scottish supply chain for every gigawatt of capacity proposed.
%image('13388770', type="article-full", alt="First Minister Nicola Sturgeon announcing the ScotWind sale/PA")
When the sale was announced on January 17, Nicola Sturgeon hailed it as a “truly historic” opportunity for Scotland.
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