IT should have been the Scottish Government’s golden goose and the SNP’s opportunity to show what Scotland could do if it had control over its own resources.
But Craig Dalzell, head of research and policy at Common Weal and a close observer of the ScotWind saga, reckons they blew it.
Shona Robison last week announced she planned to empty the ScotWind fund, cash that had been earmarked for investment in big renewables projects, to cover the Scottish Government’s day to day spending.
Dalzell (below) told The National: “It’s gone, the idea of there being any kind of wealth fund there for Scotland’s future, it’s just been raided.”
He has kept a beady eye on the ScotWind saga since the first noises started coming out about the project.
In brief, the ScotWind story centres on the award of licences for firms to develop offshore windfarms of the coast of Scotland.
It was managed by Crown Estate Scotland, which was created in 2017 as a devolved arm of the King’s estate around the UK.
Dalzell’s criticisms of the Scottish Government’s handling of ScotWind are twofold.
First, he believes ministers sold the licences for far less than they were worth.
Secondly, he is disappointed that those relatively small sums have been used as pocket money for the Government instead of what they were intended for.
Hailing the results of the licencing round back in January 2022, the then-energy secretary Michael Matheson said the Scottish Government had been “clear” it wanted to spend the cash “to help tackle the twin climate and biodiversity crises”.
When the licensing round was conducted it was the biggest of its kind in the world ever. The Scottish seas, as Matheson was at pains to point out, presented major challengers for developers. The weather is terrible, the seabed is almost unfathomably deep at points.
“It’s not an easy place to build,” said Dalzell. But Matheson (above), in his speech to the Scottish Parliament, struck a sunnier note.
He said it was “inspiring” to see the “tremendous rate of innovation” in floating wind farm technology and marvelled at “what more could be possible 10 to 15 years from now in this fast-growing sector”.
To wrap up, Matheson called the ScotWind auction a “once in a generation opportunity”.
Because of the challenges of the Scottish sea, it had been decided to put a price cap on bids for licences. Initially, it was £10,000 – a figure Dalzell said was “far too low”.
He conceded that the Government may have believed some “inducement” would be required to get people interested given the scale of the challenge for which firms would be signing up.
But Dalzell said the Scottish Government’s attitude betrayed a “severe lack of confidence”, a level of concern that subsequent auctions would prove to him as misplaced.
Dalzell monitored subsequent similar auctions around the world and was stunned by the sort of money other places were making.
In California, New York, Germany, even in England, governments were cashing in big time as markets went into a renewables investment frenzy.
“New York was the one that shocked the global investment world when people were bidding absolutely crazy amounts for those licences,” said Dalzell.
“If Scotland had matched the price of the New York bidding round, ScotWind would have brought in about £16 billion.”
For Dalzell, the Scottish Government had fundamentally misunderstood the point of an auction.
“This is how auctions work, if you don’t know what the right price is for something, you put it out to auction and you let the market decide,” he said.
But there may have been other concerns. Dalzell highlighted a licensing round in Germany where “absolutely obscene amounts of money were being bid on these licences”.
The German authorities raised concerns that the fossil fuel companies buying up these licences stood to lose money according to their own business models, according to Dalzell, who said the firms may have been “buying up these licences so someone else wouldn’t”. It could also have been a good old-fashioned speculative bubble.
“Even in that sense, Germany has the money now,” he said.
Dalzell said that – despite the SNP’s decades-long and politically defining campaign for Scotland to have control over its own natural resources – they just did not know what to do with the Crown Estate when it was devolved to Holyrood in the post-indyref settlement.
“I suspect that they simply didn’t know what to do with Crown Estate Scotland,” he said, contrasting it with the Scottish National Investment Bank (Snib).
“If you think about the mission-oriented path that Snib is governed by, ministers set the missions and Snib has to go and fulfil them, that doesn’t really exist for Crown Estate Scotland.
“I suspect it came in and they just weren’t paying attention and Crown Estate Scotland was doing its own thing.”
That lack of strong ministerial oversight is borne out in Crown Estate Scotland’s latest five-year plan, which says it was informed by “research and debate” with a “wide range of stakeholders”.
Compare with the three core missions of Snib, which are dictated by the Scottish Government.
For Matheson, in his former role as energy secretary, the ScotWind auction was a “phenomenal mark of confidence” in Scotland’s renewables sector. For Dalzell, it was an agonising waste of potential.
But for the Scottish Government now, hammered by budget pressures from every angle, it is simply another source of revenue to plug holes in a ravaged set of public finances.
