By any standards, Europe’s offshore wind sector has made impressive progress over the past decade. Capacity rose by 18% in 2018 with three Scottish developments in the North Sea representing 50 turbines connected and 15 new wind farms going online across Europe.

Equally imposing is the scale of those projects: the Beatrice 2 wind farm in the Moray Firth, the European Offshore Wind Deployment Centre off the coast of Aberdeenshire and the Kincardine Pilot have a total capacity of 368.2MW – with more major projects entering construction.

“The UK sector, which directly employs more than 7,000 people, has come on by leaps and bounds in recent years,” says Scott McCallum, a partner at Shepherd and Wedderburn LLP, who has extensive experience advising on some of the UK’s largest renewable energy schemes. One of the major factors driving the industry’s growth, he explains, has been the significant cost reductions achieved.

“Offshore wind has always had obvious green credentials but there was a perception that the consumer was paying a lot for that. There has been a focus, though, on bringing these costs down and the sector has made excellent progress as much bigger, efficient turbines have come to market and it has also managed to develop projects of scale, with the world’s largest wind farms in UK waters,” he says.

There were significant changes to the subsidy regime in 2016 and the price fixed under the contracts awarded, says Mr McCallum, has more than halved since the first competitive auction, when it was around £120 per MW hour, to £57.50.

“The developers have managed their supply chains better and they are very focused on being more competitive all the way through the process,” he says.

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“Costs have come down much more quickly than anyone expected and larger turbines now result in savings on foundation costs. If you are able to generate the same electricity with far fewer turbines and have very big projects, you benefit from important economies of scale.”

The closing of the Renewables Obligation to new generation and stations was, he concedes, a challenge. “But the industry has gained confidence from the fact that it has been able to make these cost savings and can now hold its head high in relation to coal, gas and nuclear.

“Importantly, this is a green, sustainable form of energy which is also cost effective and good value for the consumer. And there is a pipeline of projects, new Crown Estates licensing rounds coming up and the Sector Deal, which includes some very ambitious targets and aspirations to increase the wind content of power provision and create jobs.”

The UK Government believes the country can “capitalise on the technological and demographic transformations that will shape the world in the years ahead”, citing Clean Growth as one of these, with the Sector Deal a “key milestone” in maximising the advantages for UK industry from the global shift to clean growth.

The Offshore Sector Deal, published last month, is intended by the UK Government to drive the transformation of offshore wind generation, making it an integral part of a low-cost, low-carbon, flexible grid system and helping boost the productivity and competitiveness of the UK supply chain. Its focus is on building the capability of the supply chain to allow companies (including Scottish SMEs) to play a greater role in the UK’s global leadership in offshore wind generation, while enhancing their international competitiveness.

“All of this is an acknowledgement that offshore wind is a mature sector and one that is conspicuously contributing to the economy on a scale that can plug the gaps for other generation types. The Sector Deal provides a real opportunity but also lays down a challenge to the offshore wind industry,” says Mr McCallum.

Foreign investment in the UK reached a record high in 2016 and offshore wind is at the forefront of this.

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“The massive potential in the sector has made Scotland – and the UK – a true global player in the next wave of energy production,” says Mr McCallum.

It’s certainly not an arena for the faint-hearted; Mr McCallum is only too aware of the risks and the enormous capital expenditure – frequently running into billions of pounds – required to enter the marketplace.

“There’s a lot of upfront risk cost involved just in getting an option for a lease from the Crown Estate and achieving regulatory consents. And that’s where we come in to help clients overcome, among other things, complex development issues to assist the process both north and south of the Border,” he says.

“It’s useful to have that knowledge of operating in both jurisdictions and we have a track record in helping consent the largest offshore wind farms in both Scotland and England.”

All this can be a long process, often taking years and facing judicial challenges before the project can actually get to the construction stage. “But that’s a part of the job that I love: becoming part of the client team – and I’ve also gained a surprising amount of knowledge about marine mammals and birds along the way,” says Mr McCallum.

He believes that, for reasons that include upcoming Crown Estates licensing rounds and the Sector Deal targeting improvements in the UK supply chain, offshore wind is arguably the best placed of any of the renewable technologies and will fulfil its ambition of generating 30% of the UK’s electricity needs by 2030.

“The potential is huge – and with the growing improvements in storage technologies, offshore wind will be a much, much bigger part of the overall solution,” he concludes.

This article appeared in The Herald's annual review of Scotland Renewable Sector on the 30th April 2019. You can view this online by CLICKING HERE.