Scotland aims to provide £150mn in the coming year to back offshore wind and leverage £1.5bn in private investment
The funding is welcome. But experts have warned of challenges such as seabed space, local opposition to infrastructure and the need for more investment
Recent XLCC and Sumitomo deals show the government’s strategy of using public money to attract private investment, but more is needed

Scotland’s path to net zero has hit turbulence, but the government continues to pin its longer term hopes on the energy transition. Offshore wind funding will be crucial to this expansion.

In April 2024, it abandoned its aim to cut carbon emissions by 75% by 2030. The action required were “unjust, unrealistic, and could damage households and our communities in many ways”.

But it’s “steadfastly” determined to achieve net zero by 2045.

When finance secretary Shona Robison unveiled her proposed Budget for the year ahead, she said she had made the “significant strategic decision to invest in this nation’s green future”.

Parliament will vote on the Budget in February. Should they approve the plan, it will provide £150 million in offshore wind funding in the next financial year. In particular, this will support the creation of an Aberdeen-based government hub.

Offshore wind funding

The money is part of a £500mn pot the government promised to invest over five years starting in 2024-25. It will draw down £67mn in the current financial year.

The increase for 2025-26 will, Robison said, “accelerate our investment to support the offshore wind sector”. It will help leverage £1.5bn of private investment in the “infrastructure and manufacturing facilities critical to growing the sector”.

The politician said Aberdeen was “perfectly placed to become a global hub for green energy and to support this, we will establish a Scottish government hub for offshore wind in the North East to provide an additional route for industry to engage with our teams”.

The news was broadly welcomed. Claire Mack, chief executive of Scottish Renewables, called the announcement “pleasing” and “encouraging”. Brian McFarlane, industry co-chair of the government-backed Scottish Offshore Wind Energy Council, said it was “pivotal” with the “potential to transform Scotland’s supply chain”.

Implementation impact

While there is support for the investment, there are questions over implementation.

Net zero and energy secretary Gillian Martin explained the cash for the offshore sector would be targeted at encouraging private investment in “ports, manufacturing, assembly work and major supply-chain opportunities”. But there are still concerns about how, exactly, the money is going to make an impact.

Colin Palmer, director of offshore at Scottish Renewables, welcomed the commitment. But “what we would like to see is a bit more transparency on how this is now going to be spent”.

Scotland has “a great opportunity with the offshore wind pipeline and energy transition, but we need to develop out ports and harbours and develop out the supply chain,” he said. “That money can certainly help with that. It’s not going to cover it but having contributions from those sorts of pots can be a trigger to help move those projects forward [with private sector investment].”

The government has said it will invest its money on a partnership basis. It aims to use small pledges to entice private companies to make much larger commitments.

But Professor John Underhill, director of the Interdisciplinary Centre for Energy Transition, said the £150mn offshore wind funding was a “drop in the ocean”.

“For wind power to put electricity into the system we will need developers to invest their capex offshore, get all their planning in place, have cabling to the shore and sub-stations on the beach. Then connectivity to the grid with new pylons,” he said.

“The latter two are already raising hackles in local communities and it’s not clear which of those challenges are being tackled by the £150mn.”

Spatial squeeze

The Scottish government’s Green Industrial Strategy envisages harnessing significant economic benefits from the development of the offshore wind sector. But Underhill said the number of projects could be limited by an unrealistic view of seabed development.

“The technical work we’re doing at Aberdeen University is looking at the spatial squeeze,” he said.

“If you put a wind farm over a potential carbon store you could knock out one or both the technologies – a wind farm joint venture won’t want potential emissions under their farm. Wind farms have also been proposed in areas that could cause an existential risk for fishing. It’s a really complex piece.”

Such considerations could dissuade private partners from making supply-chain investments. These are required to ensure the electricity generated offshore can be transported to the land and connected to the grid.

However, Palmer noted that the more the Scottish government can point to successful co-investments, the more likely it is to instil the confidence required to secure further private sector participation.

A funding package provided to Sumitomo Electric UK Power Cables last year is a case in point, he said. The Scottish government, Highlands and Islands Enterprise and Scottish Enterprise collectively provided £24.5mn towards the £350mn cost of a cable factory at the Port of Nigg. This will supply ScotWind projects as and when they begin producing.

“That’s brilliant for Scotland and really positive,” Palmer said. “It’s the kind of thing we want to see more of.”

SNIB backs XLCC

The Scottish government announced this week that the “first in a series of strategic commercial investments in Scotland’s offshore wind supply chain has been delivered” via the Scottish National Investment Bank (SNIB).

It has invested £20mn in subsea cable manufacturer XLCC. This is to help develop a £1.4bn HVDC cable factory at Hunterston, in Ayrshire. This is part of Peel Ports’ £150mn transformation of the Hunterston marine yard into a renewable energy hub.

Once complete, the factory is expected to support 900 jobs, of which 200 will be apprenticeships.

XLCC CEO Ian Douglas welcomed the SNIB investment, helping support critical infrastructure.

“By 2030, demand for subsea cables is expected to be two and a half times greater than the supply. The Hunterston facility will help us meet this demand and bring highly skilled jobs to Ayrshire.”

The XLCC and Sumitomo investments show how public money can catalyse private.

But these successes highlight what more there is to be done. The £150mn government package faces demands to tackle a number of areas at the same time. There is the spatial squeeze problem, local resistance to infrastructure and supply chain development.

The SNIB deal suggests the government sees the balance between private confidence and public investment.

However, dropping the 2030 target shows how challenging the path to net zero by 2045 will be.

Success will depend on catalysing more such investments. But Scotland also needs to overcome technical and community challenges, which stand between these announcements and the desired green industrial revolution.

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