Oil and renewables urged to do business as unlikely allies

The expertise of Scotland’s oil and gas industry could help reduce costs of offshore wind operations by at least 20 per cent, according to new research.

Scottish Enterprise has calculated that £330 million of savings could be made over the life of an average offshore wind farm by the oil and gas sector.

They have created a Guide to Offshore Wind and Oil and Gas Capability to highlight the opportunities for the oil and gas industry from getting involved in the offshore wind sector.

Potential crossovers highlighted in the guide include installation skills, maintenance activities and personnel.

The authors calculated that a 500-megawatt project over 20 years of operation would cost £1.558 billion to set up and £40m a year to run, without oil and gas expertise.

However, by using the expertise from the oil and gas sector these costs could reduce to £1.347bn set-up costs and £33.9m-a-year running costs.

Over the two decade life of the project, this would work out as a £330m saving.

The UK, Germany and China are currently the three largest offshore wind markets in the world and together over the next four years are expected to install 11GW of new offshore wind capacity – almost 83 per cent of the total global capacity.

The UK is forecast to be the largest market during 2011 to 2015 as the UK completes the first phase of projects linked to the Scottish Territorial Waters and Crown Estate Round 3 licence awards. Scotland could see up to 10GW capacity installed by 2020.

Scottish Enterprise director of energy and low carbon technologies, Adrian Gillespie, said: “Scotland has over 40 years’ experience in the oil and gas sector, which could greatly benefit the offshore wind sector.

“By encouraging greater collaboration and knowledge sharing between these two important sectors, we will create a lasting and positive effect on the Scottish economy.”

The guide has been published as international delegates gather for the second Scottish Low Carbon Investment Conference (SLCIC), taking place in Edinburgh today and tomorrow.

First Minister Alex Salmond said: “Inward investment announcements over the last year have underlined Scotland’s position as a leading location for the development of offshore renewable technology, building on our competitive advantage gained through decades of offshore engineering expertise from our oil and gas industry.

“The summit that proposed this guide was itself a result of discussions at last year’s inaugural SLCIC.

“As the SLCIC returns this week, there will be further debate about how public and private sectors can work together to seize the opportunities of the burgeoning global offshore renewables industry while tackling the challenges, including driving down costs. The guide can provide an important contribution to those discussions.”

Aberdeen-based energy engineering consultancy, Xodus Group, diversified from the oil and gas sector into offshore wind, which now makes up more than £2m of its turnover. It predicts this will rise to £10m by 2015.

Chief executive Colin Manson said: “The opportunities in the low-carbon market, and specifically the offshore wind sector, for oil and gas companies are vast and we anticipate our turnover to increase significantly over the next four years through greater collaboration with developers, academia and the finance sector.”