The wind in Scotland's sails powers its future

Scotland's renewable energy ambitions have attracted the attention of Abu Dhabi's Masdar, and further investment in Scottish wind power may reap rewards for both sides

A wind turbine at Whitelee wind farm on Eaglesham Moor, near Glasgow. Scotland generates 48 per cent of all wind power produced in the British Isles. Jason Alden / Bloomberg News

Wind turbines have been a feature of the European landscape for decades. But few governments have shown the level of commitment to harnessing wind as the Scots have exhibited.

Alex Salmond, the Scottish first minister, has embraced renewables as few other political leaders have, and he has set out an ambitious plan to satisfy 100 per cent of Scottish energy needs from alternative sources as early as 2020. The government has even cast its eyes across the border, and exports of green electricity to England and even farther afield are part of the long-term vision.

"It's very high on the political agenda in Scotland," says Jason Morris, a partner at the consultancy PricewaterhouseCoopers. "The Scottish government is a very strong supporter of all things green."

Apart from hydropower, wind is the major component of this strategy. With less than a tenth of the UK population, and about a third of its land mass, Scotland has the capacity to produce 18 per cent more renewable energy than neighbouring England, and generates 48 per cent of all wind power produced in the British Isles. As visitors to the Scottish Highlands can testify, conditions for wind power in Scotland are among the best in the world.

The unbridled enthusiasm for, and the potential of, renewable energy in Scotland has not gone unnoticed in the UAE. After repeated visits to Abu Dhabi by Mr Salmond, he signed an agreement last month with Masdar, the government-owned clean-technology company.

"This … agreement provides vitally important investment and development opportunities for both partners," Mr Salmond said at the time.

It is on the investment side that Scotland and Abu Dhabi might well find most common ground. Masdar is exploring the potential of wind power in Abu Dhabi, and has already committed to a 30 megawatts wind farm on Sir Bani Yas Island. But it has also significantly increased its emphasis on investing in clean-energy businesses abroad, and to this end has brought to life a third fund, a joint venture with the Development Bank of Japan.

Scotland's government will be pleased at the prospect of outside investment in its renewables sector. Its interest in green energy far exceeds environmental concerns, and mirrors the rationale invoked by governments around the world. In the Arab world, China, the US and Europe, the renewable-energy industry is regarded as a way to boost employment.

In Europe, the economic malaise that was sparked by the meltdown of the banking sector in 2008 has been prolonged by the sovereign-debt crisis and is still depressing labour markets.

In China, renewables help to meet the growing demand for energy stemming from rapid industrial development while helping to drive that boom. In the Arab world, renewable energy can help countries to free up crude oil and natural gas for export and help fight high unemployment, which has been identified as a prime cause of the social unrest of the Arab Spring. Organisations including the World Wind Energy Association (WWEA) and the Emirates Solar Industry Associationhave championed their energy technologies by extolling their impact on job creation.

"Wind power has become - as a low-cost, low-risk and non-polluting energy option - a pillar of the energy supply in many countries," He Dexin, the WWEA president, says on the organisation's website. "These countries have been able to create new industries and hundreds of thousands of jobs."

The message also applies to the British Isles.

"[Wind power] is seen as an opportunity in the UK to lead the way in a new area of technology that can be of benefit to the environment, but also in those times of economic duress," Mr Morris says.

As a consequence, installed capacity in Britain rose by 730 megawatts to more than 6 gigawatts last year. This is still a fraction of capacity elsewhere. China, the biggest player in wind power, added a staggering 18 gigawatts last year. Even in Europe, Britain's wind power base is dwarfed by Germany's and Spain's.

The focus on installed capacity and Scotland's ambitious generation targets obscure the fact that the biggest profits lie in the manufacturing of wind turbines, while production of equipment is more labour-intensive than installation and maintenance work. Experts estimate that materials and the construction of the turbine parts account for about two thirds of the cost of a turbine.

While Scottish & Southern Energy and Scottish Power are two of the biggest producers of wind power in Europe, Scotland has been less successful in building a turbine manufacturing base.

"The fear is that we are missing out on supply chain opportunity in Scotland," Mr Morris says. "Eighty per cent of technology that goes into wind farms has come from Scandinavia or Germany."

International manufacturers such as Gamesaand Mitsubishi have started setting up shop in Scotland, but have restricted themselves mainly to research and development centres.

The government believes that the sheer scale of the renewables programme will make growth in the domestic manufacturing base inevitable. Maintenance and installation work will invariably be executed in Scotland itself, and capacity growth cannot fail to create jobs.

But most of the profit generated may well continue to leave the country.

"There is a risk that we won't grasp the opportunity as much as we'd like to," Mr Morris says. "I think we will have local jobs, but I don't know if we will have local ownership."

Any investment flows from Abu Dhabi into turbine manufacturing or power generation in Scotland would equally result in profit heading to the Emirates.

Judging by Mr Salmond's eagerness to establish close ties with cash-rich Masdar, that risk will not derail his drive.

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