Marine Energy Industry

– in the Scottish Parliament on 20th September 2018.

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Photo of Linda Fabiani Linda Fabiani Scottish National Party

The next item of business is a members’ business debate on motion S5M-13815, in the name of Liam McArthur, on Scotland’s marine energy industry has potential to grow. The debate will be concluded without any question being put.

Motion moved,

That the Parliament recognises the importance of maintaining Scotland’s global lead in developing wave and tidal stream technologies; acknowledges the wider set of socio-economic benefits associated with these technologies, such as the GVA and job potential set out by the ORE Catapult report,

Tidal Stream and Wave Energy Cost Reduction and Industrial Benefit

, published in 2018; further recognises what it considers the important role that marine renewables need to play in the mix of technologies that will be required to meet Scotland's energy needs and climate change commitments; celebrates the successes of the industry to date, including Scotrenewables Tidal Power’s successful full year of continuous testing in the sea around Orkney, which it considers has played a leading role in the development of marine renewables over the years; notes the contribution of the Scottish Government’s Ministerial Marine Energy Group in supporting the sector, and notes calls for the Scottish Government to do everything in its power to support the further development of the industry and continue to make the case to the UK Government to introduce a programme of market support for tidal energy in the UK, in order that Scotland continues to be the home of tidal technology.

Photo of Liam McArthur Liam McArthur Liberal Democrat

Back in February 2015, I led a similar debate on the future of Scotland’s wave energy industry. At the time, we were reeling from the sudden demise of Pelamis and Aquamarine Power and from what appeared to be a crisis of confidence about, and even an existential threat to, the future of marine renewables.

I reminded the chamber of the many reasons to be proud of what we had already achieved, including world’s firsts and world’s onlys, and the reasons to be confident about what could be achieved in the future. I called for bravery, vision and commitment from ministers and politicians north and south of the border, and I repeat that call this afternoon, at what Scottish Renewables has described as “a critical juncture” for the marine energy industry in this country.

I am grateful to all those who signed my motion for allowing the debate to take place, and I am particularly grateful to colleagues who have spared the time to contribute to what I hope will be a constructive and productive exchange of ideas. The wave and tidal energy sectors undoubtedly face serious challenges, which should not be underestimated. I will return to those challenges shortly and look at what might be done to mitigate or overcome them.

First, though, it is helpful to remind ourselves why the development of marine renewables matters and why it matters that they develop here in Scotland. Scotland has, of course, played a leading role in setting stretching climate change targets. That has been achieved on a cross-party basis and, as new climate change legislation begins its journey through Parliament, I am confident that the same consensual but ambitious approach will be taken again. Any future targets will, of course, require the further decarbonisation of our energy system. Although the focus will be—quite rightly—on heat and transport, where too little progress has been made to date, we also have a way to go with regard to generation. In that context, a mix of technologies, including storage, will be needed. I believe that wave and tidal energy will have an important role to play in that future energy mix, helping to displace carbon generation from the grid.

That belief stems from a view that we should play to our strengths—and marine renewables certainly does that. It plays to the strengths of our natural resources: Scotland is home to 25 per cent of Europe’s tidal stream and 10 per cent of its wave resource. It plays to the strengths of our academic research base: our universities are world leading in the expertise that they have developed over the years. To me, Heriot-Watt University exemplifies that—and I say that as an Edinburgh university graduate. I have a shameless plug for the reception that I will host on 3 October, which will showcase Heriot-Watt’s interdisciplinary work on the blue economy and how we can balance the different, sometimes competing, uses of our marine environment in sustainable ways. Through its Stromness campus in Orkney, which hosts the international centre for island technology, Heriot-Watt has been in the vanguard on marine renewables and, more recently, taken a lead on how green energy systems are managed, including, crucially, the use to which that energy is put.

All our universities have contributed to our other great strength, namely, the skills and expertise within the supply chain. The ICIT provides a perfect illustration of that, producing graduates who are at the forefront of the achievements of Scotrenewables Tidal Power—a company whose tidal stream turbine recently clocked up more than 3GW of renewable electricity in its first year of testing at the European Marine Energy Centre. Indeed, EMEC is a further example of how Scotland, and Orkney, have taken a global lead in marine renewables, offering the means for developers to test their devices at scale and in a real-life environment.

Those key strengths—in research, supply chain and natural resources—should give us cause for optimism about realising our climate change ambitions and about potential job and wealth-creating opportunities, not least through exporting products and services internationally. The Offshore Renewable Energy Catapult recently published a report that underscored that potential, reinforcing the fact that the economic benefits could and should be felt most significantly in coastal and island communities. However, that optimism must be tempered by a recognition of the challenges that face our wave and tidal industries.

As Scottish Renewables points out in its briefing,

“there is currently an absence of policy certainty and viable routes to market for many wave and tidal technologies”.

In the case of wave energy, we have seen a retreat back into the lab and a move away from funding specific companies and arrays. Sensibly, Wave Energy Scotland is attempting to support research and development that will benefit all developers and avoid costly duplication of effort. That serves to illustrate that we are talking about technologies that are still in the innovation phase. Even tidal energy projects, which are much further along the road in their development, fall into that category. Although Scottish Renewables argues that tidal stream is on the brink of developing from pre-commercial to fully commercial arrays, cost reduction is still needed.

We need to see that reflected in the support made available, particularly by the United Kingdom Government. I will not repeat the criticisms that I and others have made of the UK Government’s seeming ambivalence to renewables since 2015, which is in contrast to the strong support provided by my Liberal Democrat colleague Ed Davey during his period as energy secretary.

Inviting tidal stream projects to bid against offshore wind for contracts for difference makes no sense. Both may constitute marine renewables developments but only in the broadest sense. A competitive mismatch on that scale simply risks tidal developments being throttled at birth. A much better approach would be to challenge tidal developers and, in due course, wave developers to bid against other technologies—including storage—in an innovation category. That would chime with the UK Government’s stated and welcome commitment in its industrial strategy to promote innovation.

Hopefully I have managed to persuade colleagues on the Tory benches of the merits of such an approach and they will now agree to join in making representations to the UK Government along those lines.

From our previous discussions on this topic, I know that the minister shares that view, but I would encourage him to look at what more the Scottish Government can do to incentivise innovation in ways that help to bring the commercial deployment of marine renewables closer to reality.

I repeat what I said earlier. The development of marine renewables plays to our competitive strengths: our natural resources, our research and industrial skills, and the world lead that we have already established. It provides an opportunity to create jobs and wealth, including in communities such as the one I represent. It is part of the mix of technologies that will be needed if we are to meet our challenging climate change targets.

I very much look forward to the contributions from the minister and other members. I hope that, as we did with the debate in 2015, we can send out a strong, decisive message from this Parliament about our collective determination to stay the course when it comes to wave and tidal energy.

Photo of Alexander Burnett Alexander Burnett Conservative

I thank

Liam McArthur for bringing this important topic to the debating chamber and refer members to my entry in the register of interests regarding renewable energy.

As we all know, renewable energy is the future. It is the way forward to protect our environment while enabling our society to continue. The Scottish Conservatives recognise that Scotland must maintain its lead in developing renewable energy technologies, including wave and tidal stream.

As an MSP from the north-east of Scotland, I must mention how delighted I have been at the recent opening of Vattenfall’s European offshore wind deployment centre off the coast of Aberdeen—a feat of engineering, innovation and technology that will produce enough electricity to meet the annual power demand of 80,000 British households. Offshore developments such as that have an important role to play in diversifying the energy mix, as well as in the decarbonisation of energy.

We all agree that there must be a mix of technologies to meet Scotland’s energy needs and climate change commitments. However, the Scottish Conservatives are keen to see an evidence-based approach to the mix of renewables across Scotland. It is clear from the ORE Catapult report that the tidal stream industry brings many benefits, not only to the job market in Scotland but to the wider UK economy.

We support research and development in organisations involved in emerging renewable technologies, particularly tidal, to secure a viable route to market. I am sure that members across the chamber will agree that that needs to be done in a way that respects biodiversity and protects seabirds, marine mammals, fish and the marine environment.

Despite the SNP Government stating that it wishes to support marine and tidal energy, it has still not awarded a £10 million prize for innovation that was set up a decade ago.

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

On the point about the Saltire prize, does the member accept that the withdrawal of the 100MW allocation for guaranteed CFD pot money for the marine energy sector has been one of the key factors in why no technology has managed to achieve commercial scale as yet in order to satisfy the conditions of the Saltire prize?

Photo of Alexander Burnett Alexander Burnett Conservative

Since 2010, the UK Government has allocated more than £90 million grant funding to wave and tidal stream technology, so I will not take lessons suggesting that we have not been supporting the industry.

I return to the Saltire prize. In 2008, the former First Minister Alex Salmond launched the prize in a bid to drive marine energy to generate enough electrical output commercially for at least two years in Scottish waters. However, to this day, the award has not been handed out and there is no light at the end of the tunnel. The prize has been unable to attract a sufficient number of candidates, despite Nicola Sturgeon’s insistence on redrawing the criteria to address that issue. In the meantime, two major competitors have gone bust. The scheme remains under review, with experts, civil servants and the industry in disagreement about a relaunch and its cost.

Given that members of the expert committee overseeing the challenge have had to ask for an up-to-date analysis of the marine energy industry to inform their deliberations, it is unclear why Nicola Sturgeon is not willing to find an outcome that benefits the sector, rather than leaving it in limbo. My fellow member Liam McArthur has spoken about that before and we join him in his calls for the Scottish National Party Government to either drop the prize or finally deliver for renewables.

The Scottish Conservatives remain committed to low carbon and the mix of renewables, but we want an evidence-based approach that does not hinder any area of development. We will continue to work with members across the chamber to ensure a greener energy system. [

Interruption

.]

The Deputy Presiding Officer:

Are we all quiet now?

Photo of David Torrance David Torrance Scottish National Party

I thank Liam McArthur for bringing the motion to Parliament today and further raising the profile of tidal and wave energy and its benefits for our environment, local economies and the wider national economy.

I will start by looking at the importance of renewables to our future. Renewables are absolutely vital to our drastically reducing our carbon footprint. As we move away from using fossil fuels, tidal and wave energy are key to fulfilling and maintaining our nation’s energy requirements. If we do not properly utilise our renewables sector, we will be simply unable to sustain the energy usage that we currently enjoy.

Furthermore, in order for us to remain world leaders in the sector, we must continue to invest in research and development relating to wave and tidal energy and the construction of wave and tidal power stations. The Scottish Government has an outstanding record in delivering investment through Wave Energy Scotland, which it requested be formed in 2014, for the development of wave energy technology in Scotland.

While we in Scotland are investing, conversely, the UK Government is more focused on nuclear energy and is back-tracking on investments that it promised in the tidal energy field. The UK Government has rejected plans for the Swansea tidal lagoon, which would have been the world’s first tidal lagoon power station if it had gone ahead and would have propelled the UK to the top of the league as a world leader in the industry. We cannot leave it to the UK Government to take Scotland forward in the tidal stream and wave energy industries.

I will now move on to look at the economic impacts of investing in those renewables. According to a report by ORE Catapult, wave energy could contribute £4 billion to the UK economy and 8,100 jobs by 2040, and tidal energy could contribute £1.4 billion and 22,600 jobs. A cumulative total of £5.4 billion and 30,700 jobs could be brought into the UK, particularly Scotland, Wales and the south-west of England, while preserving our environment and ensuring that we become a world leader. Scotland alone has 25 per cent of all Europe’s tidal resources. If enough research and development was conducted, we could become a major world player in exporting green, clean energy and valuable technology to a global market.

Burntisland Fabrications—or BiFab, as it is better known—which is based in my constituency, built the Oyster wave energy converter, which is better known as the Oyster 800 tidal device. That device is located in the European Marine Energy Centre in the Orkney Islands. EMEC is the first and only centre of its kind in the world to provide developers of wave and tidal energy converters with a purpose-built, accredited, open-sea testing facility.

EMEC is a not-for-profit company. To date, around £34 million of public funding has been invested in EMEC by the Scottish Government, Highlands and Islands Enterprise, the Carbon Trust, the UK Government, Scottish Enterprise, the European Union and Orkney Islands Council. That investment has ensured that Scotland retains a leading role in the development of marine energy, with 84 contracts awarded, involving more than 177 separate organisations across 13 countries.

I again thank Liam McArthur for securing this worthy debate. I hope that the tidal and wave energy industries continue to go from strength to strength, as they have an important part to play in the renewables sector and in meeting our target of 100 per cent of all electricity generation coming from renewables.

Photo of Lewis Macdonald Lewis Macdonald Labour

I, too, congratulate Liam McArthur on securing another debate on marine energy. His persistence is to his credit—and much the same could be said for many of those involved in the sector itself.

Such persistence and optimism are well founded. They are based on the far-sighted decision back in 2003 to establish the European Marine Energy Centre in Orkney, with backing not just from Europe but from ministers both here and at Westminster, from Highlands and Islands Enterprise and from Orkney Islands Council, as we have heard.

EMEC did not so much address a market failure as represent a market intervention. It sought to stimulate a potential new energy industry in which Orkney, Scotland and the UK could aim to achieve first-mover advantage. Up to a point, that has proved to be the case. As Scottish Renewables points out in its briefing this week, more wave and tidal devices have been developed in the Highlands and Islands of Scotland than in the rest of the world put together. EMEC should take a lot of credit for that enterprising approach.

However, it is only right to acknowledge that the past 15 years have seen ups and downs for marine energy. There have been false dawns and disappointments as well as exciting innovations and technological breakthroughs. Perhaps premature talk of a marine energy boom a decade ago did the sector no real favours, but the hard work has gone on nonetheless.

Alexander Burnett mentioned Vattenfall. Just as marine energy innovation was getting under way in Orkney, a parallel development was taking place in the north-east. The Aberdeen Renewable Energy Group got up and running in 2002 and soon identified having an offshore wind farm in Aberdeen Bay as one of its central ambitions. That seemed just as challenging at the time as achieving commercial viability for wave or tidal energy in Scotland’s islands.

After 15 years of hard work and ups and downs, it was great to see many veterans of AREG sail out of Aberdeen aboard a NorthLink ferry for the official opening of the Aberdeen Bay wind farm by Magnus Hall—the chief executive of Vattenfall—and the First Minister. That event proved that a vision for offshore renewable energy can be delivered if the commitment is there and the right commercial developer comes forward to invest in the right project at the right time.

Aberdeen Bay now boasts the world’s biggest wind turbines. Like EMEC, the project has benefited from support, both financial and otherwise, from local and national Government and from Europe. Where Orkney boasts the European Marine Energy Centre, Aberdeen is now home to the European Offshore Wind Deployment Centre; in addition, innovative new technologies are being pioneered off the coasts of both Buchan and Kincardineshire.

The very success of offshore wind is of course part of the challenge for wave and tidal energy. Wind developers have halved the costs of building and installing turbines in recent years. That means that, in spite of the good work that has already been done to drive down the costs of wave and tidal energy, they have become relatively less competitive in the short term.

However, Scottish Renewables also points out that an ancillary benefit of offshore wind deployment is reduced capital cost for the wave and tidal energy sector, and it is precisely access to capital that is needed now for tidal energy in particular to move on to the next phase. Liam McArthur talked about support from the UK Government in the context of the need to recognise that the technologies are not yet commercially mature. That is absolutely right, but tidal turbines are in the water, producing power. Wave energy has lost some momentum in the past couple of years, but with the right progress on technology it can move forward, too.

Like offshore wind in Aberdeen Bay, marine energy in Orkney and across Scotland has huge potential. With continuing persistence and backing from investors and Government at every level, it can deliver another step change for renewable energy. If it does so, we will be able to celebrate even more progress the next time we have such a debate.

Photo of Mr Mark Ruskell Mr Mark Ruskell Green

I thank Liam McArthur for bringing the debate to the chamber and for being one of the Parliament’s key champions of renewable energy. I first met him at a marine energy conference more than a decade ago, as I was heading out of the Parliament and he was getting his feet under the table for the first time. During the past decade, we have witnessed many ups and downs in the sector. Orcadian images of sea snakes and oysters and all manner of subsea turbines have graced our television news programmes, but the routes to market and full commercialisation have often been plagued with financial risk and uncertainty, caused largely by subsidy regimes that have failed to support our future energy needs.

The opportunity remains. Scotland still has one quarter of Europe’s tidal resource and a 10th of its wave resource. That resource is not going anywhere; as ever, the real prize is to fuse the academic and industry expertise with great test beds and a pipeline of finance to take projects from small-scale arrays right through to fully commercialised technology. The sector has struggled to get to commercialisation because of a circular problem: small projects struggle to attract finance because of high fixed costs, yet those small projects are the very ones that are needed to build confidence to secure financial support for the larger commercially viable projects.

The story and the solutions are familiar. When the Burgar Hill test wind turbines were spinning in Orkney in the 1980s, the Danish Government stuck the best part of £1 billion into the onshore wind sector and sucked most of the expertise into Denmark, where the turbine manufacturers could also sell their kit. Denmark was open for business while the UK was shut. Of course, it was not always like that with our industrial strategy. We used to be proud of our companies, and we were not afraid to put the best part of £1 billion into Rolls-Royce in the 1970s, a move that enabled the company to develop engines that went on to provide the backbone of a £7.4 billion global business.

Private investors need leadership from Government and certainty that policy will not change from year to year. The demise of the renewables obligation has been largely disastrous. Marine energy is unfairly being asked to compete with offshore wind technology, which is 20 years ahead and which has had time to evolve and deliver substantial cost reduction. Our renewable energy technologies should not be forced to compete with one another through contracts for difference, because we need an energy mix that can develop over time, bringing in technologies that complement one another and which harvest different sources of renewable energy. That is why the Westminster Government must bring in a ring-fenced CFD for marine. It is important to back winners and proven, cost-effective technology, but we should not give up on an entire source of energy that is sitting there untapped in our oceans.

The prize is great. The BVG Associates study for ORE Catapult shows that 8,100 direct new jobs could be grown, from our industrial heartlands in Fife right the way to the northern isles. Our great academic institutions, such as the University of St Andrews and Heriot-Watt University, are playing a role and could play a greater one in driving the research that can make the industry cost effective and environmentally benign.

However, those prizes will not be won simply with the dead hand of the market at the tiller. We need the leadership of a UK Government that is prepared to work hand in hand with the Scottish Government and industry—albeit sadly without the financial support of European Union structural funds. The economic prize is great and the imperative of climate change and energy security is unavoidable. We must deliver the opportunity of a vibrant marine energy sector in Scotland.

Photo of Jamie Halcro Johnston Jamie Halcro Johnston Conservative

I remind members of my entry in the register of members’ interests.

I congratulate my fellow Orcadian Liam McArthur on securing today’s members’ business debate on a subject that is of such importance to our islands and to my wider Highlands and Islands region. We have heard a number of interesting and thoughtful contributions, and members have given details of projects that are taking place in the waters off the northern isles.

Earlier this week, I had the pleasure of sitting on a panel in Stromness at Orkney Renewable Energy Forum’s event, alongside Liam McArthur and Robert Leslie, who was representing the Scottish National Party but who also works for THAW Orkney and Orkney Housing Association. What became clear at the event was not just the opportunities that present themselves on the islands, but the enthusiasm of local people and organisations and the good work of bodies such as EMEC. That was highlighted by the calls from some people for energy and renewables tourism as a potential way of dealing with the interest in renewables from the islands and further afield.

It is no secret that some sectors of the Highlands and Islands economy have waxed and waned in recent decades, but we can look at the current success of our growing renewable energy industry with pride and with hope for the future. The projects that we are speaking about have the potential to be the industrial successes of the future, which will provide clean and renewable energy to support our economy.

It is particularly welcome that the UK industrial strategy identified “clean growth” as one of our national priorities. That was expanded on recently in the UK Government’s, “The Clean Growth Strategy: Leading the way to a low carbon future”. Clean and sustainable economic growth will be of increasing international importance as countries around the world look to address their international commitments on climate change and decarbonisation. Scotland having a leading role in the development of emergent technologies can have benefits around the world, while securing our domestic energy supply at home.

We can consider the global context, but a much more local dimension is keenly felt in communities such as those in the northern isles. An area of continuing concern is how renewables benefit local supply chains and provide a long-term basis for training and skills development in the communities in which they are deployed. Many members will have heard complaints about the need to import materials and expertise for the wind energy sector. New technologies are an opportunity to get things right—that point follows on from what Mark Ruskell said. There are obvious benefits to be secured through not just the immediate creation of jobs but the building of a local labour market that is skilled in technology-based professions.

There are also, undoubtedly, local challenges to be overcome. In Scotland, the challenges are primarily geographical. Transmission remains an issue—and one that is felt most keenly on the islands, for quite apparent reasons. The Office of Gas and Electricity Markets is currently examining the needs case for a new Orkney interconnector, which has the potential to provide an enormous boost to the industry locally.

Overcoming such barriers to success is, rightly, an area in which Governments should co-operate. The ability of the UK and Scottish Governments—as well as local authorities—to work together will be vital if we are to make progress.

It is positive to reflect on some of the energy sector’s achievements. In recent years, there has been a considerable drop in the cost of a number of renewables technologies as they have moved from being emergent to being established. As a result, clean energy can compete on price, thereby lowering costs for businesses and individuals.

The motion mentions some UK-level policy decisions around tidal energy. I understand that interests in Orkney have a good level of interaction with UK Government ministers in the Department for Business, Energy and Industrial Strategy and the Scotland Office—indeed, I think that ministers from both departments recently visited Orkney.

There has been recent progress on island onshore wind and there is a renewed focus on new offshore wind, as part of the industrial strategy.

In many cases, renewables technologies are demonstrating the sort of innovation that we want to see across industry. Such innovation should be encouraged and supported. Here in Scotland, we have a range of pioneering examples of projects with a record of development, collaboration and delivery, all done while providing benefits to their communities and the wider economy.

Those attributes will undoubtedly be key to building up Scotland as a global centre for renewables in the years to come. My region, the Highlands and Islands, and my home county of Orkney, in particular, continue to play a leading role in developing and making the renewables of the future.

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

As other members have done, I thank Liam McArthur for securing the debate, and I thank members for their speeches, this lunch time

.

I share Liam McArthur’s view that our sending a strong decisive message to UK ministers—and, indeed, to the sector—to show our support for the sector is a welcome outcome of today’s debate. There is, of course, a long history of support for marine energy in the Scottish Parliament. The Scottish Government has a strong track record of supporting the sector, as David Torrance said. Support from elsewhere has, perhaps, not been so robust.

We are a maritime nation, and much of Scotland’s influence on the world is built on our scientific and engineering heritage. One of the ways in which that legacy continues is through our approach to the technologies that will power this century and beyond.

As members said, Scotland is home to the world’s leading wave and tidal test centre, the European Marine Energy Centre, in Mr McArthur’s beautiful constituency. More devices are being tested there than are being tested anywhere else in the world, as Lewis Macdonald rightly said.

Scotland is home, too, to the world’s largest tidal stream array: the MeyGen array in the Pentland Firth, which might expand to close to 400MW—scale being a key issue, to which I will turn later. To date, the Scottish Government has invested £23 million in the project in order to get it to its current stage.

Scotland is also home to the world’s most powerful 2MW tidal stream turbine, which is Scotrenewables’s SR2000 device. As Liam McArthur said, it is a source of pride. It has generated 3 gigawatt hours of energy so far, and the world’s largest wave energy technology programme organisation, Wave Energy Scotland, has to date invested £30 million of public support and funded 84 projects involving 177 organisations.

Those are all great successes. Those achievements, and others, can be attributed in no small part to the consistent and committed support of the Scottish Government and our enterprise agencies but, most of all, they can be attributed to the passion, expertise, investment and innovation of this young industry, which we all believe has such huge potential domestically and in export markets.

Despite those successes and the clear potential of the marine energy industry to generate economic growth, the path to commercialisation remains a key challenge. The challenge of building a large-scale home-grown success story has—needlessly, in my view—been made more difficult by the UK Government’s decision to remove a ring-fenced subsidy for marine energy. The former Prime Minister David Cameron promised a ring-fenced 100MW-worth of contract for difference funding for marine energy. Unfortunately, that promise was reneged on when Theresa May’s Government came in; the offer was removed in December 2016.

We know that the UK—Scotland, in particular—has world-leading strengths in wave and tidal energy. Liam McArthur encapsulated that well when he described the academic base, the natural resource and the supply chain that we already have. There are hundreds of jobs in the Orkney islands that depend on the R and D activity in marine energy.

We know that there is global demand for such technologies. There are opportunities in small island states in areas such as the Indonesian archipelago and the Philippines, where wave and tidal technology would be an ideal way to deliver sustainable energy for island communities. There are also such opportunities at home in our islands.

As ORE Catapult has demonstrated clearly—David Torrance and others mentioned this—there is great potential for cost reduction. Scale is critical. Lewis Macdonald mentioned offshore wind. He was right in what he said—the capital cost of investment in offshore wind has halved, and the levelised cost has come down substantially. That has been achieved through manufacturing economies of scale, use of increasingly large turbines and an increase in manufacturing volumes, as we have seen with solar energy and onshore wind. We need to encourage commercial-scale projects in wave and tidal energy.

As David Torrance and others said, we are talking about the creation of a significant number of jobs by 2040. ORE Catapult has estimated that 8,100 jobs could be created in the wave energy sector by 2040 and that 4,000·could be generated in the tidal stream sector by 2030, but what the sector needs now is a route to market, in order to enable commercial-scale projects, such as the later phases of MeyGen, to be built out.

As the Department for Business, Energy and Industrial Strategy was unwilling to do so, I have convened senior stakeholders from across the wave and tidal sectors, as well as the relevant Scottish, UK and European trade associations, to consider the issue. The key aim of the Scottish Government’s marine energy industry working group, which is referenced in Liam McArthur’s motion, is to ensure that the sector speaks with one voice and presents a consistent message about its impressive achievements to date, its value to the energy system, the environment and the economy, and the support that it needs to achieve its full potential.

The working group is now halfway through its programme of meetings, but I make it clear that we would be happy to keep the group going beyond its scheduled duration. The group has discussed recent developments and concerns across the sector, and has had a particular focus on finance issues. It has considered the important parallels that Lewis Macdonald mentioned between how, in our offshore wind sector and in our oil and gas sector, the supply chain operates. It has also looked at the work that is under way to develop the revenue support case and the cost-reduction pathway that Mr McArthur calls for in his motion.

Photo of Liam McArthur Liam McArthur Liberal Democrat

I should probably declare my interests as someone who is in receipt of feed-in tariffs and renewable heat incentive support.

In relation to the financial support that the minister mentioned, I know that he shares the view that an innovation pot might be a route forward. Has he had any discussions with UK ministers about that proposal?

Photo of Paul Wheelhouse Paul Wheelhouse Scottish National Party

We are certainly keen to support innovation. We are already funding a number of projects, either through Wave Energy Scotland or—as in the case of MeyGen—directly. We are also providing support for other important companies; for example, Nova Innovation, which has developed the Bluemull Sound array. We will continue to engage with the industry, and the issue will be discussed by the working group as we consider how we can support the industry. We are restricted in our ability to support generation of power directly, but Liam McArthur is quite right that technological innovation is one of the areas in which the Scottish Government can provide support. Through the low-carbon innovation fund and other routes, we can look for integrated projects and see whether we can make more use of the Government’s leverage on R and D to support the sector.

I look forward to working with the working group in the coming months, given the very useful dialogue that we have had to date.

If I may, Presiding Officer, I would like to respond to some comments that were made in the excellent debate that we have had today, and certainly to the points that Mr Burnett made early on. I take his point about the Saltire prize. We were all disappointed that that has not yet been awarded, but I ask him to reflect on the fact that withdrawal of the 100MW of CFD minima has had a key role to play in preventing projects from reaching commercial scale and therefore capitalising through the Saltire prize. I hope that we all share the aspiration on the prize.

Lewis Macdonald referenced the ups and downs of the industry. He was quite right to say that there have been a number of them. Clearly, with any new technology there is a “valley of death” phenomenon. If I may mix my metaphors, I say that we need to see light at the end of the tunnel and we need an opportunity for commercial-scale development, so that having gone through the early-stage pre-commercial phase, technologists will be able to see that there is a commercial route for them, which is lacking at the moment. We can learn a lot from the development of offshore wind power.

As Mark Ruskell said, unfortunately Scottish ministers no longer have access to ROCs—renewable obligation certificates. That is a matter of great regret, and we continue to press the UK Government to recognise the innovative nature of the technologies that are referenced in such certificates, and to provide them with support.

As far as time is concerned, I have overstayed my welcome. If it will be acceptable to you, Presiding Officer, I will move towards concluding by drawing members’ attention to the number of references in the energy strategy to the deployment of marine energy. In closing, I will say that we have made many achievements in Scotland’s pioneering wave and tidal sectors. If I may do so briefly, Presiding Officer, I would like to mention a few developments that are relevant to the discussion that we have had.

First, the EU-funded NeSSIE programme—which has nothing to do with the monster in Loch Ness but everything to do with the North Sea solutions for innovation in corrosion for energy project—recently completed a call for applications. Three companies were successful: SIMEC Atlantis Energy, EMEC and SSE. NeSSIE aims to produce business cases for demonstration projects in the North Sea and a detailed value chain for energy corrosion across the partners. Again, that would look at life-cycle costs and at keeping costs down.

Scottish Enterprise has now approved funding for Scottish partners in the last of six transnational projects selected by ocean energy ERA-NET cofund—the official reporters need not worry; I will pass my notes to them. The total SE grant for the six projects is £2.8 million. The total R and D spend, including by companies and other funding organisations, for the projects will be about €15 million, and they will start in the course of this month.

Finally, I am delighted that Edinburgh is hosting Ocean Energy Europe’s sixth conference on 30 and 31 October. Having addressed the fifth conference in Nantes, I know that it is a prestigious and growing international event that reflects the strong international interest in the sector. It is therefore an excellent opportunity to showcase Scotland’s marine energy strengths, ambition and appetite for collaborating with our international partners. I look forward to welcoming delegates to Edinburgh, and I ask all members here to support the promotion of Scotland’s marine achievements in the course of the two-day event. To any UK ministers who may be watching, I say that the conference would be a great opportunity to announce stronger support for what is potentially a hugely significant sector—not just for Scotland, but for the world.

13:28 Meeting suspended.

14:30 On resuming—