How do the ScotWind bids compare?

Offshore Wind Developers were required to submit a Supply Chain Development Statement (SCDS) as part of the ScotWind process. This required applicants to outline how much they would commit to spending in Scotland across four categories of spend and how much they think they could achieve if there were sufficient enhancements in the supply chain. The SCDS responses of each successful applicant were published yesterday (27 April 2022) and we have had a chance to consider what the responses mean for the Scottish economy during the development and construction phase.

The opportunity is huge

In total, the applicants have committed to spending over £20 billion in Scotland during the development and construction of the ScotWind projects. The majority of this will be in the manufacturing and fabrication of the required elements (such as cables, towers, jackets etc). The market for this is expected to be at least £12.8 billion.

Applicants have also indicated that in an ambitious scenario, the value of orders in Scotland could be up to £30 billion. This will require even further investment in the manufacturing and fabrication infrastructure and in skills.

Technology and strategy drive differences between applicants

The SCDS process contains penalties for not meeting the level of commitment spend submitted as part of the application. Applicants will have taken different approaches to complete the SCDS returns and as a result, some of the responses may not be directly comparable. However, the differences between applicants are stark. Falck and their partners top the list of expected spend in Scotland per MW installed in both the Commitment and Ambition Scenarios.

The type of technology used to support the turbine is one of the most significant factors in determining the level of spend in Scotland. On average, those projects which will be on floating platforms expect to spend twice as much in Scotland compared with those fixed to the seabed.

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Applicants have more confidence in development expenditure than they have in manufacturing and fabrication

Applicants were most confident about the level of expenditure in Scotland during the development stages. On average the level of Scottish expenditure in the Ambition Scenario was 21% higher than in the Commitment Scenario.

The largest variation in expenditure is within the manufacturing and fabrication. The Ambition Scenarios outlined by applicants highlighted this area as one in which the largest investment in infrastructure and skills would be required to meet the values outlined in the Ambition Scenario. In addition, there is significant potential for bottlenecks and capacity issues within the supply chain for manufacturing and fabrication, which applicants have taken into consideration when drafting their Commitment Scenario. In total, the level of spend in the Ambition Scenario for Manufacturing and Fabrication is 61% more than in the Commitment Scenario.

Finally, there is a 40% variation between the Commitment and Ambition scenarios for the installation contracts.

Summary

The development and construction of ScotWind projects represent a massive opportunity for the Scottish economy regardless of where the Commitment or Ambition Scenarios are reached for each project. The skills, investment and infrastructure required to achieve the largest economic impact in Scotland are likely to benefit all projects. The Ambition Scenarios outlined by each applicant will therefore require everyone across the industry, the public sector and investors to work collaboratively to ensure these are in place in time.

The economic impact and number of jobs supported by each project have the potential to vary significantly depending on if the applicant achieves the Commitment or the Ambition spending assumptions. As applicants start the process of quantifying the 'Worst Case' scenario (equivalent to the Commitment Scenario) in their Environmental Statements we would recommend that they also consider what it would mean for the Scottish economy if they were able to achieve their Ambition Scenario. This will help them to make the wider case for investment.