An unresolved dispute over the safety of local birds has thrown the UK’s Neart Na Gaoithe offshore wind farm project in the outer Forth Estuary – originally planned to come online by 2020 – off its investment timetable, leaving the future of the endeavour in serious doubt and exposing potential weaknesses in the government’s subsidy schemes.
Hopes had been high for the £2bn Neart Na Gaoithe project since securing its Contract for Difference (CfD), the government subsidy contract that awards a 15-year guaranteed strike price (set at auction) for electricity produced once a low-carbon project is up and running.
The project’s developer Mainstream Renewable Power had noted that its strike price of £114.39/MWh would make its electricity the cheapest offshore wind power in the country. The construction of the offshore wind farm – planned to have 64 turbines – would also unlock £1.1bn of spending in Scotland, and create 500 local jobs during construction and a further 100 jobs throughout its planned 25 years of operation, Mainstream said.
“All the building blocks are now in place to deliver this power plant into operation by 2020,” said Mainstream Renewable Power CEO Andy Kinsella in January. “All consents have been received; the Contract for Difference was awarded; the technology and construction contractors are in place and, very significantly, the required debt funding for the project has been sourced from commercial banks.”
Neart Na Gaoithe: a nest of trouble
But five months later, Neart Na Gaoithe’s prospects have taken a turn for the worse.
The source of Neart Na Gaoithe’s troubles is a legal challenge launched by the Scottish branch of the Royal Society for the Protection of Birds (RSPB) in January 2015 to dispute the Scottish Government’s approval of Neart Na Gaoithe and several other wind farms planned in the Firths of Forth and Tay, citing concerns about the impact of the turbines on local sea birds that breed along the Scottish coastline, including colonies of gannet, kittiwake, puffin and razorbill.
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By GlobalDataThe area also incorporates the world’s largest northern gannet colony on the island of Bass Rock, which hosts up to 150,000 birds and is regularly cited as one of the “wildlife wonders of the world”.
The challenge was brought to a hearing at Edinburgh’s Court of Session in May 2015, where the Scottish Government’s consent to the projects was reviewed, but Lord Stewart, the judge who presided over the hearing, has yet to issue a ruling.
The ongoing uncertainty over the unresolved legal challenge has delayed the final investment decision for Neart Na Gaoithe. But under the project’s CfD contract, various investment milestones need to be reached to meet contractual obligations.
One such milestone was to commit £200m to the project by a deadline of 26 March. When Mainstream failed to meet the deadline, the Low Carbon Contracts Company (LCCC, the government-owned organisation that administers subsidy contracts) cancelled Neart Na Gaoithe’s contract, denying Mainstream’s request to give the project an exemption under ‘force majeure’ until the legal dispute is resolved.
So Neart Na Gaoithe is in a state of limbo as Mainstream enters an arbitration process with the LCCC, saying it “strongly disputes the validity of the termination notice”.
Valid wildlife safety concerns
There is certainly no evidence to suggest that RSPB Scotland launched its legal challenge spuriously or without cause.
“We have not taken this decision lightly,” said RSPB Scotland in a statement when it launched the challenge last year. “RSPB Scotland continues to support the development of carefully sited and designed renewables, including offshore wind. However, individual developments must be sited to avoid significant harm.”
The challenge was likely prompted by a government-funded study by researchers at the universities of Exeter, Leeds and Glasgow, published in September 2015, which found that the new wave of wind farms could kill 1,500 birds a year, 12 times more than previously thought.
Gannets had been thought to fly well below the planned minimum height (22m) of the wind farms’ turbine blades, but using tracking devices on birds’ tails, the study found that birds searching for fish flew at average heights of 27m, well within the danger zone.
“Unfortunately, it seems that many gannets could fly at just the wrong heights in just the wrong places,” said Dr Ewan Wakefield of Glasgow University, calling for the minimum heights of turbine blades to be raised to give birds more headroom.
One the other side of the debate, renewable energy trade association Scottish Renewables’ policy officer Hannah Smith responded by noting that “[the study] focuses on developing a new method using a tiny sample of less than 1% of the total gannet population that can be found at the Bass Rock…Offshore wind farm developers in Scotland spend up to three years collecting detailed data on bird populations which is then scrutinised by various nature conservation bodies as part of their planning application.”
After RSPB Scotland’s legal challenge was launched, Scottish Renewables senior policy manager Lindsay Leask stressed the importance of balancing wildlife concerns with the need to decarbonise the UK’s energy system and promote Scotland’s green energy industry.
“Every one of these projects has been through an incredibly rigorous, detailed and independent assessment lasting anywhere between one and two years, and it now looks like there will be another lengthy examination of that process in court before they can go ahead,” Leask said.
“This action is now holding up two-thirds of the schemes in development around our coastline. This new delay will make it even harder for Scotland to catch up with the rest of UK and Northern Europe, which already have a sizeable offshore wind industry and supply chain supporting thousands of jobs.”
Cracks in the UK renewable subsidy system
Outside of the wildlife protection debate, the effective cancellation of Neart Na Gaoithe pending the outcome of the LCCC arbitration has revealed the complexity of oversight when it comes to managing renewable energy subsidy schemes.
Even RSPB Scotland, whose legal action is the root cause of Neart Na Gaoithe’s woes, made a point about the lack of cohesion between renewable projects’ consenting process and management of financing for approved works.
RSPB Scotland’s head of planning and development Aedán Smith says: “It seems that there could be better join up between the project consenting process for offshore windfarms, which is the responsibility of Scottish Ministers, and the management of the financing for offshore windfarms, which is the responsibility of Low Carbon Contracts Company and DECC [Department of Energy and Climate Change].”
The Scottish Government said it was “disappointed” about the cancellation of the subsidy contract but has not given further comment as the LCCC arbitration is ongoing, while DECC, which originally awarded Neart Na Gaoithe its CfD, said it is LCCC’s responsibility to manage CfDs and the government does not decide on whether a delivery milestone is met.
Given that a major offshore wind project has been so effectively derailed not by an unfavourable legal ruling but simply by a delay to that decision, there is certainly an argument to be made that the government and its agencies should, as RSPB Scotland notes, have a more joined-up approach.
This would ensure that environmental standards are maintained while allowing for a logical, case-by-case decision-making process so that companies are not pushed out of one of the UK’s most important markets by forces outside of their control.
