This week Crown Estate Scotland updated its documentation for the live Scotwind leasing process, following last week’s finalisation of the Sectoral Marine Plan (SMP). The final SMP saw two leasing areas removed, and minor changes to other areas. For those investigating the two removed areas there was disappointment, but on the whole industry breathed a sigh of relief, able to move forward. The comprehensive SMP process will save time later on for projects thanks to areas now being Habitat Regulations Directive compliant.
Would-be bidders now have a clear timescale so can plan effectively for bid submission. CES has also published further information on health and safety, and rules on eligibility for finance.
CES will publish its post-adoption addendum on 15 January 2021. This document will confirm final arrangements for bidding (but expect more detail to follow today's announcement). The closing date for applications to Scotwind will be 31 March 2021. That puts the timetable approx 2 months behind what was seen as the worst-case scenario, but is realistic given the time taken for the publication of the SMP. It also means that CES is giving itself and industry enough time to get the process right. My view is that a firm date rather than another range is what is needed at this stage so we all know where we stand.
For me, most interesting is today's update to bidders on the supply chain development statements. The draft came out earlier this year for consultation. I need to declare an interest as in that consultation I supported Scottish Renewables in working with its members to develop an industry position and submit a response. Subsequently I’ve kept in touch and involved with the Scottish Renewables team as it has followed up with CES.
The SCDS is an important document, setting a framework for how offshore wind supports Scottish supply chain companies learn about and then compete for supply chain contracts from these projects. It became clear from SR’s discussions with members there was strong support from potential bidders for the aspiration but also concerns over aspects of the SCDS structure. In particular, there was a worry that the strict rules would lock in low aspiration, with companies managing reputational risk by playing safe rather than setting out more ambitious plans.
Thankfully, that’s a message that CES has taken on board, and it has responded with a significant reboot of the SCDS better able to turn supply chain engagement into greater ambition. Here is my take on the main changes and what they mean for Scotwind bidders.
First, there remains a reporting requirement, but the measure has changed. The primary metric has shifted from FTEs (jobs) to expenditure. This is very welcome. It means that developers can report with confidence and can focus in on what they best understand – levels of investment that come from projects. While it is always useful to understand sector job numbers counting at a project level carries significant risks. Reporting would be on projects due to be built in approximately 10 years’ time, so developers would have managed the reporting requirement using estimates and different methodologies. This would have meant it would have been impossible to compare figures and get clarity on overall impact in job growth in Scotland.
Second, as well as setting out a “Commitment” figures showing expected expenditure in Scotland, rest of UK, rest of Europe and rest of world, CES is asking developers to also report using an “Ambition Table”, setting out what higher figures might be possible, using the accompanying text in the Narrative and Outlook to explain steps needed. Importantly it could be the work of Government or wider industry coordination that supports such wider ambition. This change is very welcome. It places emphasis on what steps could be taken to grow Scotland’s supply chain and creates space for a long-term positive conversation about best options to support successful supply chain growth.
Finally, the requirement for reporting as part of the bidding process has changed. At this stage, bidders will only need to set out an intial view of what can be delivered by a supply chain split across Scottish, rest of UK, rest of Europe and rest of World. Successful bidders will then have 12 months to report back with evidence on this breakdown. Again, this change is very welcome. Feedback from the supply chain shows that these companies are struggling to deal with a deluge of enquiries from potential bidders. This is obviously perverse. The SCDS is meant to support Scottish supply companies, not create extra work for them in contrast with non-Scottish competitors. Now, companies can set out an opening reasonable position, and if successful in their bids they can go back and work with the supply chain to assess this in more detail.
Now the SCDS process is finalised, companies can work towards effective bid submission. There is a high level of interest in the bidding round. Those who have already worked up detailed supply chain plans will be able to bank these for after a hoped-for successful bid. The wider Scottish supply chain will hopefully breathe a sigh of relief that the volume of enquiries about numbers of jobs they may create will subside.
What will be interesting will be how the Scottish Government, its agencies, and SOWEC – the industry council – respond, particularly to what bidders set out in their ambitious scenarios. Growing Scotland’s supply chain will need public sector support and industry coordination; not just individual action from bidding developers. There are sites in the west and north of Scotland far away from any existing offshore development, and in need of infrastructure investment. There is now time for meaningful conversations later in 2021 for what action Government can take, and how enterprise agencies can support developers in coordination activity.
So, in summary, there is a lot to welcome here. CES has listened to industry concerns and made improvements to a scheme to ensure it has widespread support and buy-in and a greater chance of delivering a positive outcome. That means effort can now be put into supply chain engagement, and we all have time to do this properly, and focus effort into successful bids that come out in 2021.