The FDI angle:  

• Houston-based private equity firm Quantum Energy Partners is investing an initial £300m to transform an industrial site in Ardersier, along the northern Scottish coast, into a hub for the country's rapidly growing offshore wind industry.
• Lewis Gillies, the CEO of Haventus which is operating the project, believes that the UK's ambitious offshore wind goals will ensure demand for port services at Ardersier for decades to come.
• The UK is a world leader in offshore wind, but the industry has seen some setbacks recently with Swedish developer Vattenfall halting work on a North Sea wind farm in July due to rising costs.

When a vast industrial site at Ardersier, on the shore of the Moray Firth in northern Scotland, closed its doors in 2001, the area faced an uncertain economic future. The site, which supported 4500 jobs at its height, had been used for 30 years to assemble platforms for the North Sea oil industry. But as the oil industry matured and began to decline, the facility eventually became obsolete.

Now, however, a fleet of diggers and trucks are once again busily at work at Ardersier, flattening earth and readying the site for its next incarnation. Ardersier’s new owners, Houston-based private equity firm Quantum Energy Partners, announced an initial £300m investment in April. It plans to transform the facility into a hub for Scotland’s rapidly growing offshore wind industry.

Lewis Gillies, CEO of Haventus, the company established to operate Ardersier, says that the site provides an “absolutely ideal” location, due to its size and proximity to planned wind farms in the North Sea. The “blank canvas” spans 1.82 sq km, about the size of London’s Regent’s Park. Mr Gillies says that no other port facility in Scotland has a comparable area of land available. 

Haventus plans to allocate around around 10% for decommissioning oil and gas equipment, with the rest of the site split between manufacturing facilities and a marshalling yard for assembling turbines. The first phase of the project – which involves the construction of a new quay – is due for completion by the end of 2024.

Floating future

Size matters for ports that service the offshore wind industry. Increasingly huge turbines – which can be almost 300 metres tall – need to be assembled at the shore. It is often more economical to also manufacture the largest components at the assembly point, given the cost and difficulty of transporting enormous blades and towers, along with the bases of offshore turbines. 

Around 40% of planned wind farms in UK waters are set to use floating designs, according to the UK government. Floating structures can be placed in much deeper waters than turbines with fixed-bottom foundations. They can then be sited further out to sea, where wind speeds are higher.

Industry group RenewableUK said in March that the UK will need to upgrade up to 11 port facilities into industrial hubs to support floating offshore wind.

Mr Gillies believes that the epic task of installing so much wind power will ensure demand for port services at Ardersier for decades to come. He dismisses talk of a gold rush, however. “This is not going to happen quickly, this is going to happen over a sustained, prolonged period,” he says.

While the UK is a world leader in offshore wind, the industry has seen some setbacks recently. Swedish developer Vattenfall halted work on a North Sea wind farm in July, warning that the price it would receive for electricity under the government’s Contracts for Difference scheme is insufficient to cover rising costs.

So, is Mr Gillies concerned that the turbulence in the wind market could put the economic case for Ardersier’s redevelopment at risk?

“Absolutely not,” he says. “It always seems to take some projects failing for governments and industry to come to an alignment on what this technology is actually going to cost. I think we’re just going through that price discovery phase.”

Local benefits 

Ardersier is one of several ports along this section of the Scottish coast that stands to benefit from the offshore wind revolution. 

In January, the UK and Scottish governments announced the creation of the Inverness and Cromarty Firth Green Freeport. Businesses that establish operations at sites within the freeport zone will be able to claim various tax and customs incentives, including enhanced capital allowances.

“Ports and harbours are really strong levers of sustainable economic growth for the Highlands and Islands,” says David Oxley, director of strategic projects at Highlands and Islands Enterprise, the local investment promotion agency. 

Mr Oxley notes that the massive scale of the offshore wind deployment – including the delivery of 20 planned projects under the ScotWind licensing round – will “create a sustainable level of jobs” in the area’s ports and their associated supply chains.

“If we can capture manufacturing as well as assembly and construction, then we have a real opportunity to make this a global centre of excellence for the delivery of offshore wind,” he says. “It’s one of those opportunities that comes around maybe once in a generation.”

One of the challenges as offshore wind develops will be ensuring that port operations minimise disruption to wildlife. The Moray Firth is famous for its population of bottlenose dolphins, one of only two groups of the species resident in UK waters.

“We will need to consider the potential environmental effects on protected areas as plans develop,” says Chris Donald, Central Highland head of operations at NatureScot, the Scottish government body that manages wildlife. He adds that remediation work is likely to be needed after some damage occurred to a protected area during work at Ardersier.

Mr Gillies promises that Haventus aims to have a ‘net positive’ impact on the environment. He adds that the company has agreed that activities such as dredging will occur within specified time windows to avoid interfering with the reproductive cycles of marine mammals.

Meanwhile, Haventus is looking for more opportunities to redevelop port facilities as it seeks to take advantage of the offshore wind rollout. Mr Gillies says that the company is looking at potential investments in other parts of the UK, as well as in continental Europe and North America. 

But it is the prospect of offshore wind helping to reinvigorate the economy of the Highlands that excites Mr Gillies. “It’s a fantastic opportunity for the Highlands and for Scotland,” he says. “It should generate a whole lot of wealth for this community, as opposed to that wealth from deploying this technology accruing overseas.”

This article first appeared in the August/September issue of fDi Intelligence