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Scotland, England vie for $52 Billion Offshore-Wind Future
Gamesa Corp.
A Gamesa G97 wind turbine.
A Gamesa G97 wind turbine. Photographer: Gamesa Corp.
Feb. 21 (Bloomberg) — Alina Bakhareva, renewable energy research manager at Frost and Sullivan, discusses the outlook for the natural gas and wind power industries in Europe and Asia.
She speaks with Andrea Catherwood on Bloomberg Television’s “Last Word.” (Source: Bloomberg)
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Scotland Vies With England for Offshore-Wind Future
Chris Ratcliffe/Bloomberg
The U.K. is planning to install hundreds of giant wind turbines in the North Sea, as it looks to raise the country’s offshore generating capacity.
The U.K. is planning to install hundreds of giant wind turbines in the North Sea, as it looks to raise the country’s offshore generating capacity. Photographer: Chris Ratcliffe/Bloomberg
Scotland and England, haggling over
the possible breakup of the U.K., are competing to create a hub
for the country’s $52 billion offshore wind industry.
Leith, the port area of the Scottish capital, Edinburgh,
and the northeast English coastal town of Hartlepool are vying
for a 150 million-pound ($237 million) investment from Spanish
wind-turbine maker Gamesa Corp Tecnologica SA. The local
governments plan to lay the foundations for a concentration of
skills and investment servicing North Sea wind parks just as
Aberdeen transformed its economy with the oil industry.
“The U.K. should be the dominant world market for offshore
wind by 2020,” said Ronan O’Regan, director of energy and
utilities at PricewaterhouseCoopers LLP in London. Ports that
secure the industry’s investment will likely see “a significant
economic uplift,” he said.
Gamesa (GAM)’s decision may end up being a bellwether for the
competing ambitions of Scotland and northeast England to become
the center for the U.K.’s offshore wind energy projects. The
industry may be worth as much as 33 billion pounds over the next
eight years, according to the Carbon Trust, which was founded by
the government to help reduce emissions.
The Spanish company may create as many as 1,200 jobs at a
time when Britain’s unemployment is at the highest rate in 16
years, said Stuart Drummond, the mayor of Hartlepool, located
140 miles (225 kilometers) to the south of Edinburgh.
Big Opportunity
“The U.K. has the skills from offshore drilling,” said
Gerard Reid, a renewable energy analyst at Jefferies
International Ltd. in Frankfurt. “The opportunity for either
England or Scotland is pretty enormous.”
Hanging over the decision is a debate about Scotland’s
constitutional future and whether its economy can afford to go
it alone. Scottish First Minister Alex Salmond plans to call a
referendum on independence in 2014, the year Gamesa aims to
produce turbines at its new British plant.
Gamesa, Europe’s third-biggest wind-turbine maker, plans to
establish the factory, maintenance center and logistics
operations in Britain as the nation ramps up wind-power
production to 31,000 megawatts by 2020. More than half of that
capacity, or 18,000 megawatts, is to come from offshore wind, up
from about 1,500 megawatts now.
Gamesa is still analyzing the relative merits of Leith and
Hartlepool and holding talks with officials, a company
spokeswoman said on Feb. 15.
Attracting Jobs
Competition for the Gamesa project underscores the
attraction of jobs in renewable energy on both sides of the
border as U.K. Prime Minister David Cameron pushes through the
deepest budget cuts since World War II.
It’s also a political issue as Salmond, the 57-year-old
leader of the semi-autonomous government in Edinburgh, strives
to make renewable energy a pillar of an independent economy. The
Scottish government aims to get all its electricity from
renewable energy by the end of the decade.
As well as onshore and offshore wind farms, the seas around
Scotland have the potential to provide up to 25 percent of
Europe’s tidal power and 10 percent of its wave power, according
to Scottish Development International. Salmond has said the
industry can generate 130,000 jobs.
About 1 billion pounds has been invested in offshore wind
in Britain since April, U.K. Energy Secretary Ed Davey said on
Feb. 9 after inaugurating the world’s biggest offshore wind
farm, which is in the Irish Sea off Britain’s west coast. The
money includes a Jan. 31 announcement that Samsung Heavy
Industries Co. will base a 100 million-pound offshore wind
project in Scotland, creating more than 500 jobs.
Turbines and Blades
Gamesa, based in Zamudio near Bilbao in northern Spain,
would build and open the plant making turbines and blades by
2014, according Scottish Development International, the agency
responsible for bringing in foreign investment.
“Gamesa is an important player in Scotland’s developing
offshore wind sector and we continue to work closely with the
company,” Tom Lamb, head of renewable energy at the agency,
said in an e-mailed statement.
Hartlepool, an industrial port, is counting on its location
and history. It could also do with the jobs. It has an
unemployment rate of 12.6 percent, the ninth-highest of 408
municipal areas in Britain, according to labor data from the
Office for National Statistics. Middlesbrough, 10 miles to the
south of Hartlepool, has the highest rate, at 15.1 percent.
“We’re ideally placed geographically and we’ve got a
legacy of heavy industry and construction,” Drummond, the
mayor, said in an interview by telephone. Drummond, who lobbied
last year for the Gamesa project in Madrid, said it would create
between 800 and 1,200 jobs.
Independence Question
Gamesa’s decision will be made on purely commercial
criteria and the spokeswoman declined to comment on how the
prospect of Scottish independence would complicate that
analysis. She also declined to be identified because of company
policy.
CBI Scotland, the biggest business lobby group, and
Scottish Financial Enterprise urged Salmond last month to spell
out his positions on taxation, employment laws, public debt and
the currency. Citigroup Inc. analyst Peter Atherton said in
November that power companies should exercise “extreme
caution” investing in Scotland until the political outlook
becomes clearer.
The U.K. is meanwhile planning to install hundreds of giant
wind turbines in the North Sea, accessed from both Leith and
Hartlepool, as it looks to raise the country’s offshore
generating capacity.
Drummond, who became mayor in 2002 after campaigning as the
monkey-suited mascot for the local soccer club, said the town is
in talks with Gamesa and “looking at ways of cutting down
costs” to win the project.
Securing the wind-turbine project would help transform
Hartlepool into a hub for renewable energy, he said. “It’s one
piece of the jigsaw if we can get it,” he said.
To contact the reporters on this story:
Rodney Jefferson in Edinburgh at
r.jefferson@bloomberg.net;
Ben Sills in Madrid at
bsills@bloomberg.net.
To contact the editor responsible for this story:
Tim Quinson at tquinson@bloomberg.net
