Nova Innovation has been “going gangbusters”, says CEO Simon Forrest, as the Scottish tidal energy pioneer breaks out across international markets and grows domestically.
Having quadrupled its workforce in recent years, the Edinburgh-based firm, which manufactures its kit in Scotland with impressive local content figures, is on the up, with work in Canada and France to add to its existing array in Shetland.
Last year it also won European funding for Seastar, a major 16-turbine array planned for Orkney, which will be the world’s largest.
However, despite tidal energy being on the up (it was brought into the Contracts for Difference (CFD) government subsidy scheme in 2022) there is a risk of Scotland losing out on its world-beating position if planning and access to market issues roll-on.
The “problem” for the sector is not one of technology, says Forrest – Nova’s turbines have been powering homes and businesses in Shetland for nearly a decade – but severe red tape around politics and planning.
He notes a stark comparison with Canada where, rather than the seven years expected to get turbines “in the water” in Scotland (more like 9-12 years in reality) similar projects over the Atlantic took just two years to get going.
Below, Simon Forrest talks about projects ahead, and what the tidal energy sector needs from the UK and Scottish Governments to make the most of this resource.
Give us a sense of what’s been keeping you busy over the last 12 months?
Simon Forrest (SF): We’ve been going gangbusters at the moment. Last year we doubled the capacity of the Shetland tidal array, we put our first turbine in France, we shipped our first one to Canada – it’s over there at the moment, ready to go – and we’ve been building our pipeline as well.
The big thing we announced at the end of the year, we announced the Seastar project in Orkney – 16 turbines.
When we went for that in April last year we thought we had maybe a five percent chance of getting it. A Scottish company, manufacturing in Scotland and deploying in Scotland, to win European funding is a huge accolade for Nova and a huge vote of confidence for Scotland as well. To win that post-Brexit, we’re over the moon. We kicked that off in January and we’re working with our partners to deliver that – that’s significant.
We continue to work here. One of the difficulties we struggle with as a company here in Scotland, in the UK, is the route to market and speed. If you and I decide to do a tidal energy project today, the quickest we can get turbines wet in the water and generating, the quickest – due to the way the regulation is set up – is seven years. It’s more likely to be 9-12 years. In Canada, we did it in two. So there’s an international competitiveness element to this. And how that seven years is made up – and that’s if everything goes along as you need it to – that’s the seabed lease, the grid, the consents. Generally you’re doing that in three years, and then your CfD process, bidding for that is four. And everything is sequential.
The problem we have with investors is they want to deploy their capital and get returns as quickly as they can, but things are taking that long.
So actually the challenge for Nova and the sector is not a technology one – the technology is proven, prices are coming down, we’re competitive, we can go toe to toe with people, we’re cheaper than diesel generation and rapidly coming down the scale. The problems we have are regulatory and political. We need political certainty and we need regulation red tape to be taken away.
Why is the difference in timeline so stark compared to Canada?
SF: They’re just as particular and protective about the environment, consents, they’re very strict on it, but they’ve got a pioneering culture.
We came in, did the pitch with them, they said ‘yep, let’s do it, how do we get it done?’ Whereas the culture here in the UK and Scotland is ‘okay yeah we want to do it, what’s the process? Let’s find the process to do it’ then everything becomes sequential. So they have a pioneering culture whereas we have much more of a process-driven one.
You manufacture here, you’re a Scottish success story. Are some of these planning mechanisms pushing you into other markets?
SF: Last year we did more work in other markets than domestically
Looking at the Cfd for tidal energy. That was good, it was welcome, because all support was pulled in 2016, so it’s been good that’s back on.
It’s not necessarily the perfect mechansim for new technologies coming through. We’ve seen that with wind last year. It’s not just about rolling out capacity, what we are delivering is an industrial strategy. So as an example, the last couple of turbines we delivered in Shetland had 70% Scottish content in them.
We manufacture the turbines. We’ve got the steel done in Lerwick, we’ve got the boats, the blades, there’s a lot of stuff – and that’s because we’ve taken an industrial strategy view and we’re playing the long game. We think long-term. And that’s very hard when in the UK we’ve got a culture of short-termism, we’ve got unstable political outlooks, you’re investing in assets that are 25-40 years length, but you don’t know if there’ll be support in 12 months’ time.
The difficulties we have in the sector are not technology – that’s what people tend to think, but our turbines have been powering business and homes, the Shetland grid for over eight years – but it’s political.
CfDs – how does that need to change to support Tidal?
SF: The security to know it’s going to be there is one, the pots are going to be there. Obviously the more capacity, the better.
There is absolutely no technical due diligence in the CfD. If you’ve got your grid, your lease and your consents you can bid. You might never have produced a kilowatt-hour of tidal energy before, but you can bid-in.
What’s happened in the first couple of pots is there were a lot of companies bid into it who never actually delivered. They swallow up the pot, if you like. So some kind of light touch would be quite good.
The other big thing that could be done, and would make a huge difference, is rather than having to have your grid, lease and consents in place you could have conditions which would help to shorten that seven years down. You can go for the CfD if you’ve got the lease, then you’ve got 18 months to get your consents, your grid, etc.
So there’s ways of concatenating it down. And these are all things which could be done that would speed up and help the roll-out. There needs to be the will to do it.
Say a financial superpower like China wanted to ramp up the investment available for this sector, could Scotland lose its world-beating position?
SF: Absolutely. We have our lead at the moment, there’s no doubt, we’re holding the aces. But unless we’re given the route to market, the acceleration and growth, we will lose it as we did wind in the 80s and 90s. We led the world, companies here – Howden actually where I started working I remember seeing their turbines in the yard. We were world-leaders and we lost it.
That goes back to the short-termism and the need for that long-term view. There’s not been a power technology that hasn’t had the backing of government at some point.
All the early things: Can this be done? Yes it can. Can it be done reliably? Yes it can. Is it going to be cost effective? Yes, it already is.
Costs are going down but there comes a point when you need to scale up and you need the numbers to build the factories and we need that security of pipeline to do it.
What would you like to see from the Scottish Government’s upcoming energy strategy, due to be published?
SF: I hope it’s written from an industrial strategy point of view, not just energy deployment.
What is the benefit? It’s not just about producing green kilowatt hours. What are the jobs behind it? What’s the supply chain, local content?
An example of how not to do things; the NNG offshore wind farm by EDF just off the coast of Fife, it’s not particularly big – a £2bn wind farm, there’s not a bolt made in Scotland in that wind farm.
We’re working in markets in France, Canada, Indonesia as well. They all insist on a degree on local content ICV – in-country value – and that ranges from 40-60%.
Back to the NNG example. £2bn – if the Scottish Government had said ‘we’re after 40% local content in it’ that’s £800m into the Scottish economy over the space of 5-7 years. That money goes in to building the local supply chain, it then circulates in the local economy, and to give an idea of scale, that £800m is more than the Scottish Government got from all of the ScotWind licences. And that’s for one project, we’ve got another 20-odd of them coming along.
We’ve got the levers to do it – the government . . . energy is reserved, and it’s a problem in terms of doing a Scottish strategy, but what we do have is planning. So what you do is put the targets on these companies, measure them and if you do well with your ICV then you go front of the queue for planning. If you don’t, go to the back of the queue. Same with licences and consents. So you have to use the levers that you have, and to-date that hasn’t been done.
Back to EDF – the people of France will learn from that of the people of Scotland.
ScotWind’s supply chain ambitions – Crown Estate Scotland might push back on the option agreements example in isolation?
SF: Yep, they’ve got targets in there – they absolutely have and it’s commendable. It’s the first time they have, but the penalty for missing them is paltry.
You’re talking hundreds of thousands. So on a project of £2bn, if you miss a target you just pay the fine. Just pay it. It’s easier than actually doing it, so why not bring in steel from Malaysia and China and just pay the fine?
Switching gears, just to get more on Nova itself. What’s your headcount at the moment? And what does the next couple of years look like?
SF: We’ve got 40 people at the moment. We’ve grown steadily over the last five years, from 10-12 people up to 40-50 and we’re now internationalising – and there’s a few things ahead we’re due to announce later which will show that expansion and growth.
To round us up, is Scotland doing enough to utilise this tidal energy resource?
SF: We need to do more, we need to look at the levers we have with planning, consents and routes to market.
The Royal Society came out with a report, I think at the start of last year. It’s peer-reviewed, and they said the practical level of tidal being developed UK-wide is 11.5GW – that’s more than all the nuclear we have installed at the moment.
That’s predictable electricity all around the country, not intermittent, no toxic legacy and the technology and the supply chain is sitting within your own country.
Why haven’t we done this so far?
SF: Because we do not think industrially. We need to have an industrial strategy. And to go back to similar things that happened with wind in the 80s and 90s where, again, we led the world. You look at what Denmark has done over the last 30 years with a fraction of the resource.
Well, it had an industrial strategy and a government that was willing to think long-term.
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