The myth peddled by trade bodies, economic development agencies and others is that Scotland already has a thriving energy transition supply chain.
Sadly, the reality is that what we have is some companies that have adapted what they do in the oil and gas sector to suit the demands of primarily the offshore wind industry but increasingly towards hydrogen projects as well.
Virtually all of it is services related though. It’s design and systems engineering, project management, ship-based services, inspection, subsea survey and even helicopter services. None of these activities would be unfamiliar to those in the oil and gas industry.
For example, Wood has been selected to deliver a pre-FEED study for Shell’s Blue Horizons hydrogen project in Oman.
The firm has been doing this sort of thing in oil and gas for decades. Wood understands the process perfectly.
Just because it’s hydrogen doesn’t alter it hugely. Wood isn’t alone, Apollo and others are busy in the sector and this is a good thing as far as it goes.
NorthStar Shipping is another example of a company with its roots in oil and gas transiting with ease into the renewables world. There are plenty of others.
What’s missing though is manufacturing. Scottish companies do manufacture tidal turbines, heat stores, some specialist batteries, and a few solar heat panels but these are all relatively niche areas.
The few exceptions include a hydrogen flow meter made by GM Flow Measurement Services and Balmoral’s cable protection technology both aimed at bigger global markets.
‘The fact we manufacture so little is inexplicable’
Frankly, given we have nineteen universities, the Net Zero Technology Centre and organisations such as the Offshore Renewables Catapult and even a Scottish National Investment Bank the fact we manufacture so little is inexplicable.
You’d be forgiven perhaps for thinking that the Net Zero Technology Centre would be all to do with developing technology but it’s not. In fact, the best way of describing it is as an “intermediary”.
It has no particular focus and currently seems more interested in producing studies on topics such as exporting hydrogen to Europe and electrification issues.
Set up in 2017 as core to the Aberdeen City Region Deal and with £180m of Scottish and UK Government money, it’s of no industrial benefit to Aberdeen or Scotland at all and has produced nothing tangible.
It says its mission is to accelerate the energy transition to net zero. By any measure, even after spending all that money, it has failed. Its contribution to the Scottish supply chain is immeasurable in that there hasn’t been any.
The same can be said of the Energy Transition Zone. This copies a failed Scottish Enterprise model of believing calling a building an Innovation Centre or a Science Park will trigger a surge in the creation of innovative and science-based companies. It never does. Its funding includes £53 million of UK and Scottish Government money.
Norway whose rapid progress in the development of new renewable energy sector companies I discussed last month didn’t require an ETZ to make it all happen. Neither did Denmark which is a global leader in wind turbine manufacturing.
I must ask why you would want ETZ to provide a hydrogen testing and demonstration facility when there is no hydrogen industry of note in Scotland that’s producing anything to test or demonstrate.
This is real cart before the horse stuff. Sacrificing green space in Aberdeen for this is simply ridiculous. There’s plenty of spare industrial accommodation if we need it.
When the ETZ plan was unveiled in 2020 it was said it would “help the north-east economy capitalise on the energy transition, potentially creating thousands of jobs in the process and “the prime task is getting businesses underway”.
Well folks, this isn’t happening. A couple of existing companies have moved in but that’s it.
Measuring the cost of failure
Recently the Just Transition Commission (JTC) has again warned the “cost of failure is sky high” if Scotland doesn’t increase investment in renewables.
We’ve heard this before yet when Logan Energy, a hydrogen design and systems engineer in Edinburgh, recently won a contract to build a hydrogen bus fuelling system in the Czech Republic and that a critical part of the deal was the supply of electrolysers, storage tanks, compressors and fuelling components the Scottish renewables supply chain still wasn’t capable of rising to the challenge.
This must change and it should be obvious now that part of the problem is that we’re simply funding the wrong things.
To borrow a phrase from the very excellent and worldly economist Mariana Mazzucato we need to adopt a “mission-orientated” approach.
For example, if we want to get into the hydrogen business, we need to be able to make a range of electrolysers. So, let’s proactively make that happen by creating a company and properly funding it so it can recruit people to drive it.
There’s an adage: “One definition of insanity is to keep doing the same thing and expecting different results.” It’s high time for a major rethink.
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