Energy experts discuss what needs to be done to reach the Scottish Government's ambitious generation targets
editor, Insider – chair
Keith Anderson, chief corporate officer, ScottishPower. ScottishPower is involved in generation, the network and the retail sector. Anderson is also chief executive of ScottishPower Renewables and is responsible for all the renewables business in the UK.
Adrian Gillespie, senior director, energy and low carbon, Scottish Enterprise. Gillespie has headed SE’s energy team for three years. His main responsibilities are oil and gas, carbon capture and storage, and renewables.
Judith Hackitt, chair, Health and
Safety Executive. As well as chairing Great Britain’s health and safety regulator Hackitt is also a board member of the Energy Saving Trust.
Steve Hornsby, network and asset management leader, IBM Global Business Services.
Hornsby looks after IBM’s networks and generation business within energy and utilities and is also the professional leader for asset management within IBM. He leads IBM’s thinking about how it can help the renewables sector.
Martin McAdam, chief executive, Aquamarine Power.
Aquamarine – which is developing a wave energy technology called Oyster – last year installed its second generation 800kw machine and this year got the first power from it.
Sir Jim McDonald, principal and vice chancellor, University of Strathclyde. Sir Jim is co-chair of the Scottish Government’s Energy Advisory Board , chairs the Energy Technology Partnership and is a member of the bid team which won the new Offshore Renewable Energy Catapult Centre for Glasgow.
Q Scotland’s got a target of 100 per cent renewable energy by 2020. What’s the biggest challenge to this being met?
Anderson: Time and money are two challenges. The time one is how quickly do you want to hit that target? The faster you want to hit it the more we need to change in the way the energy sector works in terms of the consenting process for grid and the consenting process for projects. Because that tends to be the biggest factor in terms of slow down really.
A challenge in terms of money,
the incomes and money and timeline comes on what mix of renewables you want to feed into that 100 per cent target, and how much money you’re willing to spend investing in doing that. And again, over what period of time do you think that’s feasible?
You could chase after 100 per cent and do it all onshore if you want. Doing it all with onshore wind is perfectly feasible. But is that the right answer? If you want to do it with some offshore wind, the timeline will go out slightly and the cost will go up. If you want to do it with a reasonable chunk of marine energy the timeline probably gets pushed out a little bit further and the costs right now will probably go up a little bit more as well. But it’s perfectly achievable.McDonald: We really do not have the luxury of time and the 100 per cent target as stated is effectively a rallying call for Scottish industry and British industry to rise to this challenge.
However, we have to be realistic – there are public and private funding constraints. There are challenges
in terms of investment and technical risks, insurance, the availability of capital and the need for pace and action. This is an international race. Scotland is not the only country chasing this prize.
I don’t think there’s any middle ground here. It will really make a major impact if we get industry building projects of scale to capitalise on our unparalleled offshore renewable energy sources.
But I would hate for us to lose what is, I think, a genuine leadership opportunity – be that political, industrial or academic. Nonetheless, our current advantages will diminish in their impacts if we don’t attract investment, if we don’t achieve early deployment and we don’t accelerate project approvals.
We’ve been talking for a number of years now about the excitement and the opportunity. Unless we accelerate deployment and get the reality of the investment we will lose out to international competitors. And if we lose out it’s going to be very hard for us to recover our positioning, maybe nigh on impossible.
So, I think it’s still all to play for. We need to keep the cohesion of political commitment and make sure we de-risk investment and make sure innovation, technology and product manufacture are, as far as possible, driven out across Scotland and the UK at large for the benefit of our economy.
Gillespie: For me the route to achieving the 2020 targets is that we’ve got to keep the momentum going on onshore wind and we’ve got to develop the offshore wind sites. The offshore wind pace is all about maintaining confidence and building on the significant lead we have. There are technical challenges of course and we are seeing these being tackled successfully. There are also logistical challenges.
All of them, I think, build on the unrivalled experience we’ve amassed in offshore energy, and other sectors. What we can’t do is allow uncertainties to emerge, which only pushes investment timelines back.
So I think the current deliberations on electricity market reform need to quickly result in clarity over the continuing important role of renewables and the support mechanisms to encourage this when so much investment and tens of thousands of jobs depend on a clear direction and support regime. We’ve built up huge investment momentum and we need to build on this.
Where I’m most involved is in the supply chain investment. There is a huge amount of investment and thousands of skilled jobs lined up in the pipeline, both from Scottish companies and from inward investors.
The big challenge is coordinating all of the policy, all the research and development, the infrastructure investment and the developer investment decisions into an overall framework that investors can invest in rapidly.
And as I say, I think the message is that in Scotland this is going very well at the moment. 2020 is achievable, it’s just about keeping that focus and momentum going to bring all of these strands together.McAdam: The principal barrier for me is grid. How are we going to have an infrastructure which is going
to support the 100 per cent renewable target?
For me the target is absolutely achievable. It’s about what technologies are going to be in the mix in terms of achieving that.
In terms of this industry it’s a very, very short timeframe. So to take advantage of that there are lots of knock-on things that we need to be considering in terms of how best to attract inward investment, what industries we want to be in here, what about training and skilling and all of those other things which are necessary.
Hackitt: I am surprised that there is so much confidence in the room that it can be achieved in such a short period of time. Notwithstanding the progress that’s already been made, eight years is not very long and it’s going to take an awful lot of focus and effort to achieve that target within eight years.
It will be important to consider what could happen which might throw the plan off course and have an idea of how to deal with those challenges if delays are to be avoided.Hornsby: I think it’s a great window of opportunity. I would pull out five themes, all of which I think we’ve touched on. I think those are: the market to facilitate investment; the grid – control and connection; planning; the right energy mix and portfolio; and the supply chain. You can drill down in each of these themes to what needs to be achieved in order to move towards the target.
QHow will the renewables workforce need to evolve by 2020?
McDonald: I think it’s important to note that there’s been a great deal of concerted effort to address skills requirements and delivery over the past three years in particular. The Scottish Government’s Energy Advisory Board has been acting as a catalyst for this activity.
What has been fascinating for me in the past three years is the real convergence of policy and political ambition, industrial ambition, our national plans for Scotland alongside what our corporate leaders are trying to achieve for themselves and their shareholders.
There is also a new-found co-ordination and partnership in the academic base, be that schools, colleges or universities.
The industry is demonstrating its willingness to go beyond just demanding outcomes. Companies are now partnering with government and, indeed, with each other.
For example, you may be aware of the grid development – £10bn of network investment in Scotland alone. This will require a significantly higher number of engineering and technical staff to create the new infrastructure.
Interestingly, there’s been coordination between ScottishPower, SSE and National Grid to address this and, consequently, we’re getting a coherent industry requirement statement. The range here is everything from modern apprenticeships through to high-end research skills. We can imagine an effective pyramidal structure where the majority of jobs will be at the technical skills and modern apprenticeship levels.
However, because we seek to keep the innovation, the design and the manufacturing capability in Scotland, this indicates a critical need for degree level staff as well as at the postgraduate and postdoctoral levels. We are now seeing growing demand from the companies for PhDs, master’s degree, bachelor’s degrees. So if we’re going to have this high value engineering in Scotland, they realise it’s absolutely fundamental to have a core capability coming out of our colleges and universities.
For me, the energy skills action plan, the cohesion between the public and private sectors and the alignment between our colleges and universities is at an unprecedented level and that’s terrific, but we’ll only really realise the value if this is converted into more jobs. There are already around 11,000 jobs or so in the renewable sector. Scottish Enterprise and Scottish Renewables have identified the potential for around 27,000 jobs in offshore renewables alone, and they’re achievable.
Anderson: I think things have massively improved over the last 12 to 18 months in terms of pulling all the strands together. Most people now understand the potential opportunity in terms of jobs and job creation. Even just looking at the wind sector, you’ve got people building projects and we’ve got 1,000 megawatts of onshore wind farms. Each one of those projects is going to be around for 20 to 25 years. We will look to replant and repower them for another 20, 25 years. You’ve got offshore wind farms being built that will be in existence for a further 25 years.
So there’s a massive opportunity in terms of long-term job development. Even if all the targets came to an end in 2020 that’s going to generate jobs for 30 to 40 years on its own.
I think we’ve seen a massive appetite in terms of youngsters when we open up or make opportunities. The last advert we did in terms of apprenticeship positions attracted about 2000 applications for about 100 positions in a short period of time.
I think we’ve seen far better co-ordination around universities and colleges in terms of the work they’re doing and their involvement in the energy sector. I still think there’s probably more we can do at schools in terms of actually getting school kids hooked into the idea of energy and engineering. And I think that’s something that needs a little bit more work and a little bit more engagement, because there probably aren’t enough kids coming out of school wanting to go into that as a career. I don’t think they understand how big a career opportunity there is.
Gillespie: There’s an enormous amount of planning going into quantifying the size of the opportunities in each of the renewables sectors and putting plans in place to tackle some of the big numbers that are coming our way.
At the same time individual companies are investing in their people and are putting in place excellent training programmes. It’s gone way up management’s agenda – how to create the skills needed for the future, the need to work more closely with universities and colleges, and the need to invest in new training facilities like we’ve seen at Steel Engineering in Renfrew, ScottishPower at Cumbernauld and Global Energy at Nigg, a yard that’s been dormant for more than ten years, overwhelmed with applications for their skills academy.
So as long as we’re getting all of these applications and as long as we continue to plan for the future, this is just great news at a time when youth unemployment is such a big issue.
What we’ve already seen so far as well is the build-up of a lot of R&D and project planning expertise. Keith’s company has established an offshore project planning centre, and companies like Gamesa have established their R&D facilities here. As long as we’re being stretched in this area it’s good news because it means the demand is coming through. And from that point of view I think so far we’re keeping up and all the co-ordination is there to make sure that it keeps going.
McAdam: We’re recruiting the top end from an educational perspective in terms of the engineering community. We have 50-plus employees and half of them would have a masters or a PhD within the business. We need the brightest people we can afford to get or encourage into the business. So the links to the universities for us have been really, really important.
We still need people with skills, very practical skills. The oil and gas industry has been working in the sea for a long time. But we’re in a particular area of the sea where we’re near shore, we’re in a very highly oxygenated environment, corrosion levels that we see are much greater than what have been seen elsewhere in the offshore environment. So it is a big challenge.
I don’t think there’s anything wrong, and indeed there’s a lot right, with the education engineers get in the Scottish universities in particular.
Hackitt: There is absolutely no doubt in my mind that this sector is going to be hugely attractive to the next generation. Young people are inspired by the thought of getting involved in this industry, and recruiting people into apprenticeships, going to university and seeing this as being really important and making a difference, the thing to do. It’s always going to be a huge pull, I think, for the next generation of young people. That’s great and if we rebuild that sense of pride in manufacturing and engineering out of that, that will be fantastic.
My note of caution in all of this would be let’s not forget about the small things. Take the example of the success of our cycling achievement at the Olympics. One of the things that struck me about when they were trying to analyse what makes our cycling team so good is that nothing is too small to fix. They don’t always go for the big things, there’s lots of things in there as well. And my note of caution would be remember the other end of the scale here. It’s not all about big, big projects, it’s also about small projects.
And once you get into small projects you’re talking SMEs and people who are already employed in the industry, people who are going to need to go through conversion courses. There’s a lot of construction work involved in this. How are the conversations going with the construction industry about the skills they will need to acquire to do some of this work? Just don’t forget about the low skill end and the small projects.
Hornsby: Four observations, one echoing your point about attractiveness to the sector. Certainly IBM’s Smarter Planet and Smarter Energy ambitions have been hugely attractive to young people joining us. They’ve got that message and are interested in this area with a desire to work there.
The second point is, if we’re going to grow from 11,000 people to 40,000 people by 2020 that actually feels quite an aggressive growth target. If I look at other industries and sectors and what they’ve done, we’re only going to get there if it’s actively managed.
I guess the next thing is to think about what type of skills are needed. So it’s not just “we need skills for renewables” – we need to think about the life cycle, research, design, build, operate, maintain. We need different types of people. You talked about construction and the 20 years’ operation – that needs different sorts of skills. It’s all about the skills match of what kind of people we need and when.
And I guess the last point relates to the varying levels of age, experience and technological awareness – the profile of a 20-year-old who acquires the skills today will be different to the 50-year-old who’s always been in the industry. The younger generation will have grown up with the iPad and iPhone and at the same time will generally have different ways of learning and be more susceptible to new ways of doing things.
QTo what extent is the industry using data to drive down costs and improve project viability?
McDonald: In the research, development and demonstration cycle, the data is key. Understanding the performance and testing data and recycling that into the design and the innovation cycle is critical.
The obvious challenge is for innovative device manufacturers generating the datasets on their products. This produces precious information. It’s where competitive advantage lies and, as a consequence, we should reflect on recent activities such as the DECC-sponsored taskforce that addressed cost reductions in offshore renewables. It reported on the requirement for a cohesive industry approach and data sharing, and an approach to help build supply chains as fast and as carefully as we possibly can.
So the datasets are fundamental but there’s going to be that continual tension between the proprietary nature of the data that’s generated to maintain competitive advantage.
It is essential we get industrial leadership around this, where we have the developers coordinating with large OEMs and involving SMEs. This approach will develop datasets to help break down concerns there might be from a competitive perspective. Building trust and confidence in the sector, where partners and individual players can see they have a role to play, they have market opportunity and competitive advantage to achieve.
Anderson: There’s different things going on at different ends of the industry in terms of the technology and the pace of development. But if we take onshore wind, as a group we’ve got 13,000MW of onshore wind operating across the world. That gives you access to a monumental amount of operating data, which allows us to do a huge amount of analysis around the efficiency and effectiveness of what we’re doing, a huge amount of information to feed in to the design of new sites, the layout of new sites, a huge amount in terms of feeding back, in terms of the type of generator units we want, the parts we want for the machines, how we operate the machines, how we maintain the machines. So data at that level plays a colossally important part in making the industry more efficient and more effective.
Offshore wind is still going through a huge amount of development and one of the challenges for offshore will end up being who’s going to invest in it, where does all the money come from to build all these offshore wind farms? We’ve got financial institutions and infrastructure funds out there who are probably nervous about investing in ‘a new technology’, nervous about investing in big construction projects. One of the areas where data can help is breaking down and explaining to people how these wind farms work and how these machines work.
McAdam: Data is just so important to us. In terms of what we do, it’s data and processing capability. It is a very computer-intensive activity in its own right and how do you do this? You stick down a device which measures the wave height and frequency and measure it over a period of time, and then you compute the interaction of your device with that resource, and you come up with a number.
If you think of any devices which are put into the sea, particularly wave energy devices, you have a moving fluid and you have a moving object, and this makes the computational fluid dynamics (CFD) particularly challenging. But we’ve got some good early-stage results from that as well.
There is an unending desire from companies like ours for more computing power and more data. We’re gathering operating data on a second generation machine which is on trial at the moment and it has just been tremendously important to us. We now understand the characteristics of the machine at full scale.
Hornsby: Is the industry using data? I’d say it’s starting to use the data. I don’t think it’s mature yet, I think the next few years are going to be critical. Then I think it depends, say between offshore versus onshore, and large enterprises versus mid-tier enterprises.
In IBM’s experience, large onshore enterprises are reasonably mature, the other quadrants less so, and then it splits into a number of areas across the project lifecycle.
In the design domain for the challenges you’re describing, there’s definitely work going on there in the same way IBM has helped Brawn become Formula One World Champion through, firstly, implementing product lifecycle management tools and, secondly, applying high performance computing to compute complex scenarios in real time.
In terms of wind farms, these solutions enable the capturing of all of that data in real time for all your turbines, every second. We can then use sophisticated analytics to gain new insights from the data and predict outcomes, allowing us to do different things based on the data. This is one of the main principles behind IBM’s Smarter Planet agenda and it feels like we’re at the start of that in a number of areas.