National Renewable Infrastructure Plan Stage 2

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National Renewables Infrastructure Plan

National Renewables Infrastructure Plan Stage 2Report from Scottish Enterprise and Highlands and Islands Enterprise

July 2010


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2National Renewables Infrastructure Plan Stage 2 Report | Contents

Contents

Stage 2 Report - Executive Summary .......................................................... 3

1. Introduction .............................................................................................. 5

2. N-RIP Industry Collaborative Approach .............................................6

3. Market Interest in Port Clusters/Groups ..............................................7

4. First Phase Site Investment Cases ......................................................... 8

5. Planning Processes ............................................................................... 11

6. N-RIP Funding Approach ....................................................................... 13

7. N-RIP Total Site Capacity Potential Economic Impact .................... 17

8. Wave and Tidal - Port Infrastructure Needs ....................................... 19

9. Conclusions and Recommendations .................................................... 24

Appendices ....................................................................................................26


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9/469National Renewables Infrastructure Plan Stage 2 Report | First Phase Site Investment Cases

For sites identified as having the scale required

for integrated manufacturing in N-RIP Stage 1 acombination of these facilities could be accommodated.

For those sites identified for distributed manufacturing

at least one of these uses could be housed in the

location. In addition cable manufacturing facilities will

be required and will have a different layout to those

listed above. There is also potential for Scotland to

host substation platform fabrication and monopile

production at these sites.

Based on knowledge of existing buildings and costed

designs of particular types of facility, a generic

benchmark cost for these types of facilities is set out.

This is indicative and a guide to the order of building

costs envisaged. The costing relates to a shell buildingonly. In addition, there will be a range of internal fit out

costs and external site costs driven by the particular

users needs. Table 1 below sets out these benchmark

costs.

Table 1 - Estimated building costs.

[Source: SE Estimates of shell building costs based on indicative floor areas]

Manufacturing Building Type Indicative Cost(shell building)

Jacket production facility 10m

Nacelle production facility 10m

Blade production facility 25m

Tower manufacture facility 10m

A range of options are available for the procurement

of these new facilities user procured, asset ownerprocured and third party developer procured. Each of

these instances leads to different beneficiaries from the

revenue streams arising from the manufacturing use.

Bespoke Equipment/Facility Requirements - The

third element of infrastructure investment is to support

particular users requirements. This relates to craneage/

lifting equipment, load out quayside configuration and

bespoke plant and equipment required by the particular

manufacturing process for example steel casting, gear

box testing plant.

It is difficult to predict these elements at this stage

as they are directly related to the user and their

requirements. A range of approaches to financing theseelements are available and these would be considered

with any user by the asset provider.


10/4610National Renewables Infrastructure Plan Stage 2 Report | First Phase Site Investment Cases

[Source: Site-owner supplied investment plans]

Port Cluster Site OwnerEstimated Investment

Costs (excl. Building) mScale of potentialManufacturing Use

Forth/Tay Leith Forth Ports plc 35 Integrated

Forth/Tay Dundee Forth Ports plc 5 Distributed

Forth/Tay Fife Energy ParkSE own site/JV agreement withFife Council

8 Distributed

Moray Firth Nigg KBR Ltd/ Wakelyn Trust 22 Integrated

Moray Firth ArdersierWhiteness Property CompanyLtd (WPC)

15 Integrated

Subsea Aberdeen Aberdeen Harbour Board 24 Distributed

Subsea PeterheadPeterhead Port Authority /ASCO

27.3 Distributed

West Coast Hunterston Clydeport Ltd 65 Integrated

West Coast ArnishStronoway Trust own land/ HIElease

13 Distributed

West CoastMachrihanish /Campbeltown

Argyll & Bute Council/ HIElease

5.5 Distributed

West Coast KishornThe Crown Estate / ApplecrossEstate Trust / Kishorn Port Ltd

2.75 Distributed

Total Estimated Infrastructure Cost 222.55

Table 2 shows the estimated infrastructure cost for

each site excluding building costs. Depending on marketinterest, the investment in infrastructure at each site can

progress on a phased basis. Sites are grouped by the

clusters set out in Section 3 that relate to offshore wind.

Table 2 Estimated Site Investment Cost Excluding Buildings (Phasing Not Shown)


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12National Renewables Infrastructure Plan Stage 2 Report | Planning Issues

Dredging will need to be considered at those ports and harbours which cannot

currently accommodate vessels of the required draft. Dredging is likely to resultin increased turbidity, with consequent effects on fish, light penetration and

smothering of sediments. Sedimentation patterns along the coast could be affected

which could affect bird feeding areas. Increased vessel movements could also

affect sedimentation patterns.

Mitigation has been considered using the mitigation hierarchy of avoid, reduce, remedy

and/or offset. Measures include:

avoid land reclamation that would encroach on biodiversity interests;

use alternative extant land where habitat losses may result from reclamation and/

or land clearance;

undertake construction work (particularly piling) at times of the year appropriate for

the species in question.

Measures for the mitigation of these adverse effects will need to be integrated into portand harbour planning and design. Consultation with organisations with responsibility

for the environment at an early stage of project development is key to successful

mitigation of adverse effects.

These issues will be addressed through the N-RIP, as required or by the site owner as

they progress their approach.


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13National Renewables Infrastructure Plan Stage 2 Report | N-RIP Funding Approach

6. N-RIP Funding Approach

The investment decision for a site owner is based on their assessment of

future revenues arising from the use of their site by this industry. There area range of beneficiaries from this investment who are seen to be potential

partners in the process.

For developers who hold The Crown Estate leases, investment that creates efficient

installation bases can reduce installation costs and risks. Investment that attracts

manufacturers will help to create a strong and innovative Scottish based supply chain

which will drive down costs through design innovation and increased competition.

For manufacturing supply chain companies (turbines, towers, jackets, blades, cables),

practical locations that have modern fit for purpose quayside and load out capacity

are at a premium in the UK and a finite resource around the North Sea. Investment

by Scottish port owners, with support from the public sector where appropriate will

expand the range of potential locations.

For port and fabrication location asset owners, investment in infrastructure willfacilitate the use of their facilities by the industry and thereby drive lease payments

and port income. Port income will relate to installation processes where items will

be brought into the quayside and then loaded out (requiring in and out handling) and

manufacturing uses where there will be a load out port charge. Where ports are used

for operation and maintenance there is the potential for long term port fees for regular

small vessel uses and planned maintenance uses.

Asset owners and any public sector pump-priming decisions on investment will need to

weigh this range of potential beneficiaries and consider how each may contribute to the

investment needed and the revenue streams arising from investment. Funding support

by the public sector will be focused on securing a sustainable economic impact.


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16National Renewables Infrastructure Plan Stage 2 Report | N-RIP Funding Approach

Support to Jacket Manufacturer BiFab

In spring 2010 BiFab was offered 2m of Regional Selective Assistance by Scottish

Government and a 4m commercial loan from Scottish Enterprise to help finance a

new Jacket production facility at Energy Park Fife, Methil.

At the same time Scottish and Southern Energy Plc (SSE) purchased a 15% stake

in BiFab for a total consideration of 11m to further enhance the companys

competitiveness. In addition, SSE secured an agreement with BiFab for the supply of a

minimum of 50 jacket substructures per annum commencing around 2014 for a periodof 10 to 12 years. BiFab currently has around 350 employees at their Methil facilities

producing 40 structures per year. It is anticipated that the company will more than

treble its annual production to 130 structures a year helped by the Scottish Enterprise

and SSE investment.

BiFabs jacket production facility is located at Energy Park Fife. This location has

already attracted 23m of public sector investment from Scottish Enterprise, FifeCouncil and the European Union to develop infrastructure on the site and support

company growth.

BiFab also operates a facility at Arnish, currently employing 70 people and fabricating

components and sub assemblies for the renewables sector. HIE has invested

15million in the Arnish facility over the last 10 years creating a multi-user site with a

strong renewables focus.

Support to Tower Manufacturer - Campbeltown/Machrihanish

In early 2010 Welcon Towers, a subsidiary of Skykon began a 25m investment at

Machrihanish backed by 9.2m of Regional Selective Assistance and 5.6m from

Highlands and Islands Enterprise. The new buildings will modernise production at

the plant and enable the manufacture of larger turbine tower sections for both the

onshore and offshore renewables market. The investment safeguards 100 existing

jobs and Skykon aims to increase the workforce to 300 over the next two years.

The Local Authority, Argyll & Bute Council with assistance from the EuropeanRegional Development Fund are making an investment of 12million in Campbeltown

harbour which will facilitate the export of larger tower sections and improve

the capability of Campbeltown to respond to future Operations & Maintenance

opportunities.

Case Studies


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17National Renewables Infrastructure Plan Stage 2 Report | N-RIP Total Site Capacity Potential Economic Impact

7. N-RIP Offshore Wind Potential Direct Manufacturing Economic Impact

N-RIP aims to ensure that Scotland can offer a range of locations that can

be developed in a sustainable fashion. To understand the scale of potentialeconomic impact that would arise if sites are developed for manufacturing

use, a high level economic impact model has been developed. This model

sets out gross indicative direct manufacturing jobs only.

Alongside this, Scotland can expect to see significant additional economic impact

arising from the design and development processes for offshore wind, construction/

installation phases and from the associated ongoing operation and maintenance of

the installed offshore wind arrays. In addition to these direct benefits and the benefits

from other core aspects of the industry there will be potential significant indirect and

induced benefits to other sectors such as transportation, material suppliers, service

suppliers such as Health and Safety support and vessel suppliers.

As this industry is still evolving exact direct employment in each type of facility is

difficult to predict. However, based on estimates derived from discussions with supply

chain companies and relating this to employment densities for other similar industries

it is possible to broadly estimate potential direct employment for different kinds of

manufacturing use. As the industry develops, it will be possible to predict the potential

impact with greater certainty. For example, some manufacturers have indicated an

intention to potentially scale up production to a three shift working pattern which would

lead to greater direct employment and increased annual output. This, displacement

and local parameters have not been factored into the current model.

Based on the capacity of the sites it is estimated that Scotland could accommodate at

least five plants for each of the following manufacturing uses nacelle, tower, blade,

jacket. Many of the sites have the potential to serve a range of uses depending on the

environmental impact of these different processes. Table 4 (page 18) gives a broad

estimate of the potential gross direct employment from that scale of use in Scotland.


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18National Renewables Infrastructure Plan Stage 2 Report | N-RIP Total Site Capacity Potential Economic Impact

Notes - Gross Direct employment estimated from market information/employment density for industrial/manufacturing plant use. GVA based on 1

year only presented in 2010 prices. Annual estimates based on the first full year of full operation. 30% optimism bias factor included in line with the

principles of best practice Green Book guidance for risk and uncertainty.

N-RIP shows that, if the market were to grow to this extent, Scotland could be able to provide facilities that would

support a large proportion of the offshore wind supply chain.

If the output of a typical facility is 150 units a year, this suggests that if these uses were based in Scotland then output

would be in the order of 750 units a year.

UK Round 3 and STW leases would require c 7000 wind turbines over the next decade. In addition construction

continues on Round 2 and newly leased Round 2 Extensions. Outwith UK waters, there are growing demand pipelinesthrough seabed leasing off France, Netherlands, Belgium, Germany, Denmark, collectively offering a potential

European market in excess of 80GW.

There is therefore a significant economic opportunity for Scotland to become the home of the offshore wind industry

both in terms of providing the critical infrastructure to ensure timely, economic delivery of offshore projects, and a

commitment by industry and public sector partners to support the development of this new industry for the economic

benefit of Scotland.

Gross DirectEmployment

(Single Facility)Annual GVA

(Single Facility)

Estimated Capacityof First Phase(N-RIP Sites)

Potential TotalGross DirectEmployment

Potential TotalAnnual GVA

Nacelle 120 6.8m 5 600 34m

Tower 327 18.6m 5 1635 93m

Blade 327 18.6m 5 1635 93m

Jacket 262 14.9m 5 1310 74.5m

Total 5180 294.5m

Table 4 Annual Gross Direct Jobs and Gross Value Added (GVA) associated with indicative facilities


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19National Renewables Infrastructure Plan Stage 2 Report | Wave and Tidal - Port Infrastructure Needs

8. Wave and Tidal - Port Infrastructure Needs

Scotlands lead in the development of the wave and tidal energy sector is

demonstrated by the establishment of the European Marine Energy Centrein Orkney, the only grid connected, UKAS accredited, wave and tidal test

facility in the world for fullscale testing, combined with arguably the best

financial support in the world with enhanced Renewables Obligations

Certificates (ROCs) (5 ROCs for Wave and 3 ROCs for Tidal), capital

investment in R&D demonstrated by the recent WATERS 13million awards

and the 10million Saltire Prize. This activity and encouraging environment

has lead to the worlds first commercial scale leasing round and thedevelopment of a new consenting regime, with Marine Scotland to enable it.

In comparison with the offshore wind sector, the wave and tidal energy sector is,

however, in the early stages of development. At present, there are a number of

prototype devices being tested to move towards proving that marine energy converters

can produce electricity at a competitive rate.

As part of N-RIP Stage 2, further consultations were undertaken, following Round 1lease option awards in the Pentland Firth and Orkney waters and building on those

undertaken by HIE in November and December 2009. A list of those consulted is

attached as Appendix 5. Any assumptions made at this point in time are likely to be

subject to considerable change as the technology and sector develops over the next

five years.

As indicated in the N-RIP Stage 1 Report any infrastructure to support the PentlandFirth and Orkney Waters leasing area is the most immediate need. Other lease option

awards for the Saltire Prize and any other future leasing rounds would need analysis

when locations for these become clear. Currently there is a leasing process underway

for a site in the Inner Sound in the Pentland Firth. Award of this site is expected later

in 2010. The areas currently with options for lease for development are highlighted in

Figure 1 on the next page.


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Figure 1: Map of development sites under the Pentland Firth and Orkney Waters Leasing Round


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For the purposes of this report the time periods have been divided into three periods:

2010-2015 immediate needs being for deployment of devices at EMEC and other

testing facilities, before moving on to the deployment of small scale arrays, both at

sites identified under the Pentland Firth and Orkney Waters leasing round, as well

as any other future leasing rounds, and at other locations identified by developers

themselves. Up to 50MW is planned for deployment on known sites, including those

in the Pentland Firth and Orkney Waters leasing area in this initial five years period,

the bulk of this likely in 2015.

2016-2020 assuming the continuing progression of technology development and

subject to the necessary grid infrastructure being in place, the industry should

be moving towards deployment of arrays of over ten devices using established

installation techniques. 1,150MW (plus the Inner Sound, anticipated to be 200MW

to 500MW) is planned on known sites during this period, primarily in the Pentland

Firth and Orkney Waters leasing area. Further the Saltire Prize is aimed to

incentivise at least two years commercial production of electricity from wave andtidal technologies by June 2017.

2020 onwards operations and maintenance of installed devices.

Figure 2 below illustrates the aggregate installation proposed under lease agreements

for the Pentland Firth and Orkney Waters leasing round. These dates for capacityinstallation are the deadlines under lease agreements and so deployment will

potentially anticipate this schedule.

Figure 2 Wave and Tidal Build Out Timescales


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Planned port developments to support Medium and Longer Term Activity

All ports in both Caithness and Orkney that could host or are already hosting deployment

activity have development plans with at least guideline costs for expansion of existing

facilities. Lead times vary, but three years to delivery, including obtaining planning

permissions and financing should be allowed for, and hence developer input on

requirements for larger scale deployments scheduled from 2017 onwards will need to

be determined by 2012-2013 at the latest and work needs to begin by 2014 at the latest.

Therefore, some decisions on port development and use may have to be made beforethere is any specific certainty in the market in order to meet the deployment timetables

as they are currently planned.

Providing deepwater quay space and cranes at deployment sites will increase the

number of technologies that will be successfully able to deploy, to include those that

have not designed around minimal infrastructure.

Quay space and cranes at deployment sites could enable manufacture and fabrication

to happen further afield from the lease sites as devices can be transported over a

greater distance by barge than wet towing. Moving on from this, delivery to deployment

sites in batches will create a greater need for laydown areas at both fabrication and

deployment sites.

The N-RIP Stage 2 analysis indicates that a range of locations could support wave and

tidal installation, fabrication and ongoing operations and maintenance. There will intime be a need for locations to support these uses, both in the initial Pentland Firth and

Orkney Waters leasing area, and other areas that may be leased in future around the

Scottish coast. These potential locations are shown in Appendix 6.

Under the auspices of the Pentland Firth and Orkney Waters Delivery Group,

comprising The Crown Estate, the Scottish Government, HIE, Local Authorities and

the developers, work to refine these locations and investment opportunities will beundertaken as developer requirements become clear in the next phase of work.


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25National Renewables Infrastructure Plan Stage 2 Report | Conclusions and Recommendations

Wave and Tidal Infrastructure

The report concludes that there will be a need for investment by port owners in

various locations to make sites ready for this industry in the future. The specifics of

the port infrastructure required in the medium term for large scale deployment will

be developed by the Pentland Firth and Orkney Waters Delivery Group with knowledge

from the port sector and proposals for potential port development informing the

development of deployment and operations and maintenance plans. SDI will continue

to market the investment potential of port facilities servicing this sector.

The Crown Estate will shortly commission work to detail the Build Out story of

the Pentland Firth and Orkney Waters leasing programme by November 2010 in

partnership with Scottish Government, HIE and Local Authorities. This will be used to

help further collective understanding of opportunities and to help construct business

cases for investment.


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Appendices

Appendix 1............................................N-RIP Delivery Group Membership

Appendix 2 .................................................................Port Cluster Mapping

Appendix 3..........................................N-RIP First Phase Sites Information

Appendix 4..................................................................... Sources of Finance

Appendix 5.................................. Wave and Tidal Stage 2 Consultation List

Appendix 6 ............................................Wave and Tidal potential locations

National Renewables Infrastructure Plan Stage 2 Report | Appendices


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28National Renewables Infrastructure Plan Stage 2 Report | Appendix 2

Appendix 2 - Port Cluster Mapping


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Quayside Length/ Weight Bearing - Cargo handling

capability over 130m single straight edge quay that

can accommodate up to 3500 DWT vessels and 1 x

150 metres straight edge and 2 x 80 metres straight

edge.

Planning Status - This site is currently recognised

in the Highland Structure Plan as having potential

for oil and gas related development for the Atlantic

Frontier and appears on the Wester Ross Local Plan,which was adopted 2006.

Potential Offshore Renewables Infrastructure Role:

Kishorn lends itself to offshore wind manufacturing,

assembly and fabrication, operations and maintenance

and decommissioning. It also has the added feature of

concrete casting facility on site, if concrete gravity base

structures or concrete casings are required.

Market Use and Interest: In the last 8 months the

facility at Kishorn has had interest from 4 developers. It

has also been put forward for consideration for Offshore

Wind, Wave and Tidal Energy uses.

Infrastructure Development Requirement: The sitecurrently comprises:

A slipway and dry dock deep approximately 150m in

diameter.

Large pre-casting yard and 26 hectares of hard

standing and lay down areas.

Four deepwater quays.

On site concrete batching facility with 1.5milliontonnes of concrete.

Craneage and dock handling facilities.

Warehousing 4000 pallet dockside warehouses.

Sea freight services to the fish feed, forestry and oil

related industries.

On site quarry for supply of concrete aggregates.

Welding & fabrication workshops adjacent to site.

Kishorn Port Limited is in the process of developing a

masterplan for the port which includes costings for:

Strengthening the existing quays and lay down

areas.

Opening up the dry dock and slipway.

Erecting of sheds for manufacture, and operations

and maintenance.

Deepening of the water channel and improving the

on-site support services.

Further quay facilities achieving deeper water i.e.possibly up to 20 metres.

Delivery Approach: The anticipated delivery programme

is being considered by the owners with key next steps

being progressing detailed planning processes and site

development investment phasing.


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Appendix 5 - Wave and Tidal Stage 2 Consultation List


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Appendix 5 Wave and Tidal Stage 2 Consultation List

The following were consulted:

Aquamarine

EON Climate and Renewables

Pelamis

Marine Current Turbines

Scottish Power Renewables

SSE Renewables Developments

Open Hydro Site Development

Powerbuoy (OPT)

Tidal Generation Ltd

EMEC

Appendix 6 - Wave and Tidal potential locations


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Appendix 6 Wave and Tidal potential locations

Front cover image courtesy of Calum Davidson


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National Renewable Infrastructure Plan Stage 2