Scottish Government ministers, in late-January, predicted that renewable energy projects would create at least 20,000 jobs in Scotland over the next few years.
Comparisons were made with the peak number of jobs created by the North Sea oil&gas industry.
The 20,000 jobs forecast is very unrealistic, in my opinion. The actual figure could well be a 10th of that figure.
There is certainly a lot of activity in the renewable-energy sector in Scotland at the present time – and elsewhere in the UK. The Scottish Government has set a target of 50% of electricity being generated from renewable by 2020, compared with about 22% at the present time.
Most of the latter comes from hydro projects, but the big growth will undoubtedly come from wind energy, both on and offshore. There are also hopes for a significant contribution from marine energy, but that is a longer-term possibility.
I believe the 20,000 jobs forecast is unrealistic for two main reasons. Firstly, the overall forecasts of activity, expenditure and employment are far too high. Secondly, many of the jobs will not be created in Scotland.
The offshore fabrication yards employed about 15,000 at their peak in Scotland and many thousands for more than 20 years. They were undoubtedly a great success story for the Scottish economy.
However, most are history: Ardersier, Ardyne Point, Clydebank, Hunterston, Kishorn and others. The only significant remaining fabricator in Scotland is now Burntisland. That surprises me because there remains quite a lot of fabrication work for the UKCS, but it is now largely done in foreign yards.
Regular Energy readers will know that Burntisland Fabrications (BiFab) has diversified successfully into renewables work and recently won a major contract for 30 jackets for wind turbines for the Ormonde offshore windfarm in the Irish Sea, which the company is manufacturing at nearby Methil, on the Fife Energy Park – which is the former RGC/Kvaerner oil yard. BiFab needed further capacity beyond Burntisland and Methil and so also has a lease on the Arnish fabrication yard in the Western Isles, which is owned by Highlands and Islands Enterprise (HIE).
Arnish is an excellent example of my case. It is also a former oil fab yard. HIE invested millions to convert it into a renewables facility, but the previous operators struggled to win sufficient work. BiFab will, hopefully, be more successful.
Another example is the facility at Macrihanish, in Argyll, which is also owned by HIE. The development body attracted Vestas, the leading Danish windfarm company, there a few years ago at considerable expense to the taxpayer, but even Vestas could not make a success of the project and pulled out last year. I should also mention that Vestas also recently closed down another wind-related plant on the Isle of Wight, with the loss of about 600 jobs.
Granted, HIE has another tenant at the Kintyre facility, namely Skykon, another Danish company. Its Welcon subsidiary recently won a major order for the Clyde windfarm, in South Lanarkshire, which could create about 200 jobs at the yard for about two years.
German steel company EEW Group, which manufactures steel tubes for wind turbines, has announced plans to invest up to £27million in a Scottish plant, which could create about 150 jobs. A location for the plant has not been named, but it is very likely to be the Fife Energy Park. I should also mention the plans to use the former Nigg oil yard for renewables manufacturing. This could, again, be a very important facility, but the plans have been held up by a dispute between the owners and current tenant KBR. Highland Council has threatened compulsory purchase if no resolution is reached soon.
There are other firms involved in renewables manufacturing, research and development, but on a much smaller scale at present. If you add up all the jobs, the current total is less than 1,500 for Scotland.
That figure would be higher but for the fact that most of the work for the recent and ongoing windfarm projects in Scotland has been, and is being, done overseas, notably in Denmark and China. The developments mentioned above will obviously help in that regard, but may only double the employment total to 3,000. What hope is there of creating 20,000 jobs? Virtually none.
There has been a lot of hype about offshore windfarms, including the recently approved projects in the Moray Firth and Firth of Forth. However, they may take longer than currently hoped to come to fruition. That is also the case with anything resembling large-scale wave and tidal deployment.
What jobs there may be will mostly be construction-related because operating windfarms and hydro plants requires very few permanent people.
Electricity consumption in Scotland, and the UK as a whole, is actually declining. Once the new capacity is installed to reach the 50% target by 2020, there will be relatively little new construction work.
In reality, there is more chance of my local football team, Inverness, being promoted this season than 20,000 renewable jobs being created in Scotland. Look at the latest football league table and you will know what that means.
Tony Mackay is MD of economists Mackay Consultants