The Scottish Low Carbon Investment Conference

Q: How can Scotland resolve some of the infrastructure issues that need to be sorted out if the supply chain is to mature?

A: At a very high-level, we have commitment – and the National Renewables Infrastructure Plan (NRIP) which identifies that infrastructure is very important. It is clear that grid connections and transmission and steel cabling and transformers are important. However, there are practicalities on the ground about exactly who is going to do exactly what and when – and we do not think that there is a clear view on that yet. In addition there is increased pressure to develop innovative funding and commercial models for delivery – this all needs to be paid for. There's real enthusiasm from businesses to be part of and build capacity in the supply chain, but many organisations are holding back and waiting for someone else to make a move.

Q: How can we make the breakthrough?

A: The 2020 Supply Chain Group has been trying to get into the supply chain at a greater level of detail and brings an industry perspective. Moving forward from the NRIP and the challenges laid down by the government at the conference last year, we have been trying to work through practical answers to “What needs to be done?”, “Who would be best-placed to do it?” and “What is the right sequence to do it in?”

Q: What timescales are we talking about?

A: The supply chain group is looking at key actions over the next 5, 10, 15 and 20 years. We do not want to create a ‘boom and bust' where the industry falls off a cliff after 2020. The 2020 targets offer a useful milestone, but we have to look at the longer term – and while we welcome the positive steps already made in the early parts of the supply chain, we're not sure the 2020 targets are making businesses do something radically different to what they would be doing anyway.

Q: There was lots of discussion at last year's conference about ‘who jumps first?' to get the supply chain moving. In the private sector, who has jumped?

A: SSE has clearly made some big, interesting strategic investments – for example in BiFab, Aquamarine and at pretty much at every point in the supply chain. They're showing real leadership for the industry and we also see that in Ian Marchant's personal leadership of the 2020 Climate Group. Other businesses have made strong commitments in early stage development – think Doosan, Mitsubishi and Gamesa – all really welcome moves, but there's still a big gap between conducting research in Scotland and building a local supply chain to manufacture and assemble products here.

Q: What are the positives in terms of what is happening in the supply chain?

A: There is increasing collaboration – and an appetite for more. We always say that the pie is big enough for everyone and that we should be finding new ways to collaborate. There are some IP issues around technologies but the scale of what is needed is so great that we think there is space for everyone. For example, we're aware of great collaboration between David Brown Gears (Clyde Blowers) and Strathclyde to develop the offshore condition monitoring centre and they're engaged in developing the skills capabilities needed as well.

Part of the job of the Supply Chain Group established under the 2020 banner has been to help join up those discussions. There have been some valuable conversations between, for example, big companies, port operators and vessel owners at the installation, operation and maintenance end of the supply chain.

Q: Can Scotland do it all alone?

A: No. There is a tendency to think Scotland should aspire to build an end-to-end supply chain locally – but that's just not credible.

Most of the recent big company investment in Scotland in renewables has been in the R&D space – from Gamesa, Doosan and Mitsubishi. It is just a reality that not all the manufacturing work will come here. We should perhaps play to Scotland's significant strengths – these could be in areas like steel fabrication and gearbox manufacture.

We believe Scotland stands the best chance of being successful when we work as part of a global supply chain – some businesses here might make equipment that is deployed locally, others might produce components that are deployed elsewhere. Given the scarcity of resources and size of the challenge, it's about intelligently picking where investment should best go for the best return – where can we build products quickly and credibly – at a high quality and a price buyers are willing to pay?

Q: Is there a danger we try to do too much in this space?

A: Possibly, yes. We do not have unlimited resources to throw at it. Yes, let us identify the end-to-end supply chains, but accept that we might source some of it from outside our national boundaries and that's okay. But it works both ways – to pick up on the previous point about Scotland's role in a global supply chain, PA has experience of exploring global supply chains which identified Scottish businesses which could provide components for renewable technologies being deployed elsewhere.

Q: What are the main blockages in the supply chain at the moment?

A: When we started the Supply Chain Group, we asked precisely that question and got about 30 fairly hefty items – everything from “can we source adequate supplies of steel at the right price?” and “will we have sufficient vessel capacity?” to “will there be a favourable regulatory environment and cost recovery for utilities through consumer electricity pricing?”, to “will Grid connections be in the right places at the right time?” and “can proven technologies be manufactured at the scale and costs required?”Our work here is about building some of the clarity and collaboration needed to provide greater confidence for potential investors. This is the key theme coming out of the supply chain work and will be important for this year's event.

Q: How can they be overcome?

A: We are trying to look at some really practical steps. If we try to look at an industry level across an indeterminate number of technologies, it's much harder than looking at a specific technology or the supply chain for one organisation. Our ambition is that by this year's conference, we want to get into a greater level of detail and share some real insights and practical steps in the form of technology delivery plans.

We have also talked to government about playing a kind of ‘system architect' role – so how do we take that strong direction we have had from government and translate it into practical action and collaboration by engaging people from across the supply chain? We will continue what we have been doing for the last 12 months – and try to help along those enormous opportunities for collaboration between different companies and between businesses and the public sector.

James Hamilton leads PA's work with the Supply Chain Group as part of Scotland's 2020 Climate Group's objectives to consider how Scotland's business, voluntary and public sectors can work together to help achieve Scotland's targets and the transformational changes required in the Scottish Government's Climate Change Delivery Plan.

For further information James can be contacted at james.hamilton@paconsulting.com and would also invite you to join theLinkedIn® group. For further information on PA Consulting Group's wider work around greening business and renewables please click here.