The Chancellor's new approach to renewable energy risks putting billions of pounds of offshore wind investment and thousands of Scottish jobs in jeopardy, Aberdeen & Grampian Chamber of Commerce (AGCC) has warned.
Last week John Healey announced that the UK Government would only procure new clean power projects where they lower electricity bills overall and can connect to the grid.
Industry leaders warn the move threatens Scotland's emerging floating offshore wind sector, one of Scotland's greatest energy transition opportunities. The sector needs sustained investment and support to achieve the cost reductions already seen in fixed-bottom offshore wind.
AGCC is calling on the UK Government to ensure the upcoming Contracts for Difference Allocation Round 8 (AR8), and subsequent auctions, have sufficient budgets to support floating offshore wind at scale.
The Chamber is also demanding that the forthcoming Strategic Spatial Energy Plan (SSEP) fully accounts for Scotland's offshore wind pipeline, including more than 23 gigawatts of floating wind projects, rather than allowing short-term cost considerations to put that investment at risk.
Research commissioned by Crown Estate Scotland estimates that ScotWind and INTOG projects, the majority of which are floating wind schemes, could unlock £96.1billion of investment over the next 10 to 15 years, supporting more than 21,000 jobs annually.
Scottish businesses could secure between £28.6billion and £34.8billion in contracts from the projects, providing a major opportunity for the country's energy supply chain.
Russell Borthwick, chief executive of Aberdeen & Grampian Chamber of Commerce, said: 'The Chancellor is putting billions of pounds of investment and thousands of Scottish jobs in jeopardy with an approach that could stop some of the country's most important offshore wind projects from ever reaching construction.
"Nearly five years after the first ScotWind awards, developers are making real progress towards delivering these enormous projects. Investment decisions are approaching, businesses are preparing to compete for contracts and communities are looking to offshore wind for their next generation of skilled jobs. A narrow focus on cost risks leaving projects stranded before they have the chance to deliver.'
The warning comes as the north-east faces mounting challenges to its energy transition.
The UK Government has maintained the 38% Energy Profits Levy despite industry warnings over its impact on North Sea investment, changed the funding arrangements for the Acorn carbon capture project and cut £500million from hydrogen funding in last week's Budget.
Research by Robert Gordon University has shown that more than 90% of the UK oil and gas workforce have skills with medium to high transferability to offshore renewables. However, those opportunities must materialise if workers and businesses are to make the transition.
Mr Borthwick added: 'The UK Government cannot expect the north-east of Scotland to deliver an energy transition while making it increasingly difficult to invest in the industries that will make it possible. We have the people, the expertise and the industrial infrastructure. But where exactly does the government expect our world-class supply chain and skilled workforce to go if these opportunities disappear?
'Fixed-bottom offshore wind benefited from more than 15 years of sustained investment, government support and deployment, helping bring costs down dramatically. Floating wind needs the same opportunity. If ministers continually take the short-term view, those cost reductions will never happen, and neither will the jobs and investment that come with them.'
Source: Aberdeen & Grampian Chamber of Commerce
