HIE Interview

Elaine Hanton (EH) and Audrey MacIver (AM) jointly head up the Energy team at Highlands and Islands Enterprise. Here, they tell us what the agency's role is in the development of the energy industry and give some insight into the projects they are currently working on.

Q: What is HIE’s role?

AM: Highlands and Islands Enterprise (HIE) is the Scottish Government’s regional development agency, tasked with aiding sustainable economic growth and strengthening communities across more than half of Scotland.

HIE's focus is on: Supporting high growth businesses in sectors such as energy; improving infrastructure, including property and IT, for competitiveness; and strengthening communities, especially in fragile locations.

In terms of energy, it has been identified as one of the key sectors for economic growth and HIE is tasked with supporting high growth businesses within the sector. HIE recognises that energy is going to play a key role in the growth of the region's economy.

Renewable energy, and in particular offshore renewables, offers the Highlands and Islands a time-limited opportunity to maintain a leading position in this global market, from R&D and fabrication through to assembly and testing and then on to full-scale deployment and operations and maintenance.

Q: What is HIE's vision for the energy industry?

EH: HIE's vision for the energy industry is: “To be recognised as an exemplar region through the continuing development of a world class industry in sustainable and renewable energy using our people, knowledge, natural resource and technology for the economic and social benefit of the H&Is.”

While the energy sector, primarily through oil and gas related activity, has long been a contributor to the economy of the region, the main focus of HIE’s energy activity is the development of the renewable energy sector, both for the potential long term economic and community impact it offers and because of the relatively immature status of the market and the continuing need for public sector intervention to support its development.

HIE’s vision of a successful renewable energy sector aims to see substantial sectoral development, with significant, sustainable economic and community benefits accruing to the area over the coming years.

Q: What does this mean, in practice, for businesses in sectors like energy?

AM: HIE helps improve competitiveness and productivity in high growth businesses. Its services include enhancing capabilities in leadership; international business; innovation and R&D; investment finance; use of technology, and workforce development. Financial support can include loans, equity investment, or capital grants.

HIE, in consultation with industry and other partners, has identified eight areas of focus for supporting the growth of the energy industry.

1. Supply Chain Development
2. Infrastructure provision;
3. Investment and trade;
4. Promotion and awareness raising;
5. Research, development and deployment;
6. Community engagement and benefit;
7. Influencing policy direction including grid issues; and
8. Skills.

Q: What ‘big-ticket’ regional energy-related projects is HIE involved in?

EH: Three current examples are:

European Marine Energy Centre (EMEC), Orkney - the world's first grid-connected marine energy testing facility. This is an incredibly exciting project that is seeing ground-breaking technology in action. With almost all its test berths fully contracted during 2011, EMEC is starting to reap the benefits of significant developer activity, high berth occupancy and associated income, which has enabled it to become operationally self-sustaining.

Wind Towers Ltd - the wind turbine tower manufacturer who, in 2011, took over the facility at Machrihanish in Argyll and are undertaking a significant expansion of the facility creating more jobs and enabling the site to supply larger towers for the offshore and onshore wind markets; and

Fabrication Yard Development, Arnish, Lewis - ideally situated to maximise fabrication opportunities in oil and gas and renewable energy. The site has been involved in a number of ground-breaking renewables projects, including the two Talisman Beatrice offshore wind turbine towers and three Pelamis wave devices deployed in Portugal. More recently, Bifab, operating out of the site, have produced jackets for the offshore wind sector and the company have recently been awarded a contract to manufacture a sub-structure for the Hamerfest Strom tidal energy device due to be deployed at EMEC in 2011.

AM: Other projects in hand or in the pipeline include:

Shetland Decommissioning - an infrastructure project to expand Lerwick Port in order to increase the area's decommissioning capability and expertise;

National Renewable Infrastructure Plan (N-RIP) - a Scotland-wide project that has come out of the Scottish Government's Renewables Action Plan and identifies 12 key ports and harbours, five of which are in the Highlands and Islands, that have the potential to play a significant role in offshore wind manufacturing, construction and installation. During 2010 and 2011, HIE has invested significantly in three of these sites: Machrihanish, Arnish and Nigg.

Pentland Firth and Orkney Waters Project - the world's first site to be opened up for large-scale, commercial tidal and wave energy development with the award of seabed leases by The Crown Estate to ten marine project developers; and

Energy related research across the UHI partnership, including marine environmental research at the Environmental research Institute in Thurso, marine biofuel research at the Scottish Association for Marine Science in Oban and Greenspace in the Outer Hebrides, developing tools for managing energy for buildings.

Q: What are the main challenges facing the industry?

AM: For some time now, HIE and the wider industry has been working to help alleviate the barriers to the growth of the renewables industry. Key constraints include: technology related challenges, grid constraints and charging; availability of finance required for projects, particularly in the emerging offshore renewables sector; and skills.

It is recognised that the various renewable energy technologies are at different stages of development. Hydro, biomass and onshore wind are all relatively established, whilst others, such as wave and tidal remain under development and still to be technically and commercially proven.

Development of offshore wind projects in the deeper waters around Scotland is also creating its own particular set of challenges, including in relation to foundation/mooring type, installation techniques, accessibility and maintenance. Turbine technology continues to evolve with many manufacturers focusing on increasing scaling up their products for the offshore market.

Equitable grid investment, access and charging arrangements will be critical to supporting the growth of the renewable energy sector across the North, and particularly for the islands. HIE, and its Local Authority partners, is working closely with Scottish Government to encourage a move away from the present system to one which recognises the importance of unlocking the resource in this area in order to meet both Scottish and UK targets for new renewable generation.

EH: Raising finance is a challenge across all renewable technologies, but especially the emerging offshore wind and wave and tidal sectors.

This is even more of a challenge now that we are facing such difficult economic times and also due to the risk profile of these projects. For example, the level of finance for developing the offshore wind projects within the Scottish Territorial Waters round is estimated at £15-£19bn. Investment to develop all of the projects awarded leases within the Pentland Firth and Orkney Waters lease area is estimated at around £5bn.

In addition to grid and finance issues, developers also have to compete with the more established and lucrative oil and gas industry to secure the relevant engineering skills. While HIE has no direct remit in relation to skills provision, we can support individual businesses on workforce development and training, and also work closely with organisations such as Skills Development Scotland to ensure that effective training and learning provision is in place.

A key challenge for HIE is to ensure maximum benefit from projects is retained within the Highlands and Islands. To achieve this it is important that infrastructure sites across the area are fit for purpose and attract manufacturing, installation and operations and maintenance activity, and that local businesses are able to effectively engage with the sector and grow their presence within it.

Q: Where does HIE’s role link up with academia ?

AM: For the region to fully maximise the economic benefits presented by the emerging renewable energy sector, HIE recognises that investment in academic infrastructure to support its development is critical. HIE has put significant resources into supporting the development of UHI, the emergent University of the Highlands and Islands, which is already leading in a number of key research areas including marine bio-energy and environmental assessment of wave and tidal energy developments.

The agency also works to attract further investment and local activity with other Scottish universities, such as Heriot Watt and Stirling, and with the Massachusetts Institute of Technology. Heriot Watt University has had a campus on Orkney, the International Centre for Island Technology, for a number of years which is active in the renewables field, including through its MREDS programme of research into marine renewables.

Importantly, HIE works to increase levels of knowledge transfer from academia into the region’s businesses, and to increase business/academic science and technology links.