Race is on to grab a slice of renewables work but who’ll be the winners?

Salmond met the site’s new owner, Roy MacGregor, the executive chairman of the Inverness-based Global Energy Group, who not only reckons he’s a descendent of Rob Roy but also believes that Nigg will be one of the first places in Scotland to manufacture the massive turbines required to build the offshore windfarms that will produce 40 per cent of the UK’s renewable energy. With other ports and yards jostling for turbine-related investment, he’s out to convince the market’s leading players that Nigg is their best bet.

The deal wasn’t easy to do. Jointly owned by an American industrial conglomerate, KBR, and an Oxford don, the site had been mothballed for a decade. In its heyday the site employed 5,000 building oil rigs for the North Sea, its sheltered position ideal for working so close to weather roughened seas.

“It wasn’t an easy transaction but in the end we managed to understand a multinational mindset as well as that of a Scottish professor working at Oxford University,” says MacGregor. “He wanted his asset protected and carefully managed. At the end of the day the chemistry between the three parties was right whereas before that it wasn’t right.”

MacGregor says the whole process took about 16 months since interested parties were invited to bid for the site and its sale to Global Energy. Before that Highlands and Islands Enterprise (HIE) had attempted to force a sale through a compulsory purchase order.

Global Energy funded the acquisition – for an undisclosed price – through its own retained earnings and a little debt supplied by Lloyds Banking Group.

The firm is young, but massive. It has 40 different facilities, 18 in the Cromarty Firth, 11 in Aberdeen, another seven in Fife. Adding Nigg to the firm’s operations turns them into the biggest fabricator in the UK, more than double the size of its nearest rivals.

He says he expects his firm to take advantage of a massive increase in investment in the offshore oil and gas sector but renewables is also a major part of his agenda. “The First Minister is driving it very hard. This is the biggest and best facility in the UK to do that. It is five times the size of the facility at Bifab in Fife. As we get bigger turbines offshore and more fabrication facilities to build these turbines, it needs a lot of land with deep water. And Nigg has that.”

Scottish Enterprise is currently evaluating up to four major investments by foreign manufacturers of wind turbines that are set to benefit from a £70 million National Renewables Infrastructure Fund (NRIF). These are understood to include Spain’s Gamesa, Japan’s Mitsubishi as well as South Korea’s Samsung and Doosan.

The enterprise agency is remaining tight-lipped about what is being evaluated, although three of the four major wind turbine manufacturers have recently been dipping their toes in Scottish waters and making hopeful noises.

Allan McQuade, director of business infrastructure at Scottish Enterprise said: “There is strong market interest in the ports outlined in the National Renewables Infrastructure Plan. We are in negotiation with the port owners, existing account managed companies, potential inward investors and other partners on options which will unlock investment. We anticipate that announcements will be forthcoming in the next couple of months.”

Last month Gamesa, which is part-owned by ScottishPower’s owner, Iberdrola, opened its £12.5m technology centre in Bellshill and is deliberating whether to establish a manufacturing plant in Dundee – on a proposed site owned by Forth Ports – or in Hartlepool.

Last December, Mitsubishi Power systems Europe also promised to base a £100m centre for advanced technology, and that this too could lead to the establishment of a manufacturing site. Its location was indicated generally as being “somewhere” in the Lothians, with the understanding that Forth Port’s property in Leith was a serious contender. The firm also announced its acquisition of Loanhead-based hydraulic drive technology firm, Artemis Intelligent Power.

A spokeswoman for Mitsubishi declined to comment, but said that any announcements about its R&D hub were “a long way off”.

The third firm to flirt with Salmond’s £70m NRIF pot was Doosan Babcock. In March, the government announced it had entered a memorandum of understanding that Doosan would establish a renewables R&D centre at its existing plant in Renfrewshire, but that this, too, could lead to eventually establishing a turbine manufacturing operation in Scotland representing an investment of £170m.

MacGregor for one is confident that his site will prove more attractive than other sites – particularly those of Arcus-owned Forth Ports – that are attempting to lure the manufacturers. He expects to seal a deal as early as the first quarter of 2012.

“Both Gamesa and Mitsubishi have been in our facility in the last week,” says MacGregor.

“There are four major manufacturing R&D projects going in Scotland right now – Gamesa, Mitsubishi, Samsung and Doosan.

“They are all circling around the number of ports to find out where would the best location be to site a turbine manufacturing facility. No decisions have been made but we hope that Nigg will eventually land one of them.

“This site is ready to go. All the others require planning permissions. It will take half the time to get it up and running at Nigg. The disadvantage of Nigg until a week ago is it wasn’t on the market.

“When we didn’t own it we had all these manufacturers on the site three or four times. Since we have owned it demand has gone through the roof. That change in ownership is what the industry wanted.” Niall Stuart, the chief executive of the Scottish Renewables Forum, says: “It is a very strategic site and meets all the criteria required for large-scale manufacturing, which is why it would have been a tragedy if it had been prevented from happening over land ownership.”

But the rivalry between the seven sites outlined in the Scottish Government’s National Renewable Infrastructure Plan (NRIP) – three will be major manufacturing sites – is now hotter.

Since being acquired by the infrastructure fund Arcus, Forth Ports has radically shifted its plans for the Port of Leith, scrapping long-term plans for mixed use development and green space to make way for a wind turbine manufacturing and R&D facility as well as a biomass combined heat and power plant.

In Dundee, similar plans involving a biomass plant and 60 acres of land alongside the port have long been considered ideal for offshore renewables development.

Charles Hammond, the chief executive of Forth Ports, insists he is not worried about the competition and says that demand for landing in Leith and Dundee is fierce. “I wouldn’t say I see this as a race,” he says. “We are experiencing a large volume of renewables enquiries, particularly for Dundee but also for Leith.

“The NRIP plan said the two best locations for renewables were Leith and Dundee. The reason for that is there is access to a skills base, deep water and land availability together.

“Given the volume of interested parties we have got, I would feel confident we will play a significant part in renewables development.

“What is important here is we build a sustainable supply chain for the next 20 years plus. That involves talking to developers, manufacturers, and making sure all of that works together well.”

Forth Ports is also understood to be working closely with Edinburgh Council and Scottish Enterprise on a funding package from the NRIF pot to look at widening the loch entrance as part of works to ensure the site is ready for an investor to move in.

But this week the Scottish Government is expected to complicate Forth Ports’ plans for large scale biomass electricity plants, which the company wants to see taking a major role in the industrial facilities earmarked for both its sites. Already plans for the plants, particular in Edinburgh have met with fierce opposition from local residents.

Tomorrow, energy minister Fergus Ewing will meet his counterpart in Westminster, Charles Hendry, in order to persuade him to “rethink” investment support for biomass electricity on the grounds that supplying so much wood for electricity production on its own is unsustainable.

A Scottish Government spokesman insists this will not rule out the plants in Edinburgh and Dundee which are still in the process of getting planning permission.

Hammond says that the proposed energy plants already meet the Scottish Government’s latest expectations that any biomass plants should provide electricity as well as heat.

Hammond says: “We are happy with the prospective thermal efficiency of the plants we are proposing. If you look at the government renewable heat target by 2020, biomass could make a significant contribution to the heat target.”

But difficulties with the biomass plants on the east coast pale in comparison to the anger among the local community at Peel Ports’ development of a new coal-fired plant at Hunterston, which has received more objections than any other development in Scottish planning history, according to an environmental charity.

But the power plants will be necessary to support the necessary expansion of Scotland’s manufacturing industry if the country is to be able to meet Salmond’s ambitious vision for the offshore renewable energy industry.

For the wider array of sites listed in Scotland’s NRIP there are opportunities in the unproven but promising tidal and wave energy technologies, in addition to turbine manufacturing support, services and assembly.

Global Energy has built five existing tidal machines being trialled in Orkney, and MacGregor expects a further 400 machines will be built, a £2.2bn investment.

Engineering entrepreneur Jim McColl has said he intends to manufacture turbine transmission systems in Huddersfield with assembly to be carried out in Scotland.

For his part, MacGregor, who has built his £250m company in just six years, says the offshore renewables industry presents a major opportunity for engineering and manufacturing in Scotland.

“Scotland is the most innovative place in the world but sometimes we hide it. Look at what we have invented – television and the phone. Scotland has got to wake up and don’t hide its light under a bushel.”