The new team of legal experts you have brought together, what kind of knowledge and experience with regard to renewables are they bringing with them?
They bring significant energy experience that is helping our clients navigate complex challenges. There has been increased uncertainty around energy in recent years, exacerbated by changes in the sector’s fiscal regime, in addition to the ongoing efforts to accelerate the UK’s energy transition.
To tackle this, and other key issues facing the industry, we formed a multi-disciplinary team of legal experts. The energy industry is vast and encompasses facets of other areas of our economy, particularly so in the North-east of Scotland, so it was important to have a specialist team in place that reflects this.
Comprising experts in corporate and business advisory, commercial real estate, employment, and dispute resolution, our specialist energy practice is ideally suited to support clients working through an ever-changing regulatory landscape.
To date, we have mainly focused on advising businesses in the supply chain, rather than acting for the energy producers. Our supply chain clients benefit from our knowledge of what is customary in the energy sector in terms of contracting terms and commercial practice, and whilst we have not generally advised energy producers themselves in the past, we have many contacts within those businesses, collaborating with them in trade bodies etc. that we are involved in, which is beneficial to our clients beyond our deep knowledge of black letter law.
Being headquartered in Aberdeen, it’s a given that we work with oil and gas clients, many of whom are in the midst of diversifying into renewables, while some are also involved in the decommissioning of oil and gas infrastructure situated in the North Sea. As our base of clients grows, we are adding renewables-focused organisations, including those working in carbon capture and storage, and carbon offsetting. All of this grants us a breadth of experience that we can carry forward to help steer clients through any new challenges and scale up to support energy transformation.
What does the current demand look like with regard to diversifying towards renewable energy and who are the main players involved?
Scotland’s renewables ambitions are strong and will ultimately accelerate the UK’s energy transition. Government support is allowing the Scottish offshore wind supply chain to growth in strength, with an encouraging number of projects now in the pipeline through INTOG and ScotWind.
The recent announcement that the Scottish Budget has earmarked £150 million in additional investment for offshore wind, which will help to leverage private investment of £1.5 billion for infrastructure and manufacturing capacity, also demonstrates the supply chain opportunity ahead. We have seen major traditional players such as bp and Equinor form new consortiums and partnerships, and we anticipate more M&A activity and joint ventures to form.
However, despite the great potential presented by the offshore wind sector, particularly in floating offshore wind, the government and regulators need to be cognisant of the challenges facing potential new projects. The time and cost involved in developing a wind farm have caused major energy players to rethink their involvement. Shell recently announced it no longer intends to invest in new offshore wind projects and bp has been cited as reconsidering the level of its investment in offshore wind projects.
It takes a significant amount of time and investment to arrive at the point where an offshore wind farm is operational. For example, the proposed SSE-operated wind farm situated in the Berwick Bank off the east coast of Scotland has been travelling through the planning approval process for two years now, with the added complication that planning consent in both Scotland and England is required for this project. Our cross-jurisdictional legal team, based in both Scotland and England, can assist with planning applications in the early stages and with reviewing tenders and framework agreements once projects are green-lit, to make sure projects are set up for success from the get-go.
What do you see as the main challenges facing the acceleration towards Net Zero, and how can Aberdein Considine help to overcome them?
Decarbonisation is obviously a complex issue, and one that cannot be tackled overnight. It is very encouraging to see positive steps being made in the industry, but there are significant hurdles that will need to be overcome in the years ahead to reach net zero emissions and Scotland has a new target of 50 percent clean power by 2030, which is hugely ambitious.
Fiscal pressures, particularly high interest rates, inflation, and constraints within the supply chain, are all impacting energy companies right now by making financing and scaling green projects a more difficult endeavour. This is not a UK-specific issue either, instead a pressure that is felt in markets around the world.
Budgetary crunches have resulted in organisations, particularly those operating in oil and gas, adopting a bullish stance on issues such as risk allocation. We have seen our clients being presented with contracts that pass on significantly more risk than would have been customary in the past, under the industry’s widely adopted and internationally recognised LOGIC standard contracting regime and have assisted them in achieving a more balanced contracting position.
Getting offshore renewables projects off the ground can also be a prolonged process, thanks to a complex planning system, in addition to a regulatory landscape that is currently in a period of flux. Sound legal counsel allows our clients to keep their heads on straight in what can be a challenging environment filled with lots of red tape.
We also act on behalf of a number of SMEs in the energy sector and have observed a large uptake in clients seeking advice about framework agreements for the provision of goods and services, a trend we predict will continue in the months ahead.
To ensure the smoother launch of renewable energy projects, we will need to see increased alignment between Westminster and Holyrood, including on agreements around planning applications, subsidies and incentives within the industry to promote further investment.
Also, whilst technology is advancing, there are still challenges related to energy storage, grid connection and efficiency improvements that need to be addressed to enable a successful transition.
What kind of activity are you seeing in Aberdeen with regard to attempts to diversify into renewables?
Aberdeen and the North-east of Scotland have been at the heart of the UK’s energy sector for more than 50 years now. It is only right that the region builds on its storied history in oil and gas with a growing mix of unique low-carbon projects that will strengthen its developing position as a powerhouse in renewable energy.
The decision to headquarter GB Energy in Aberdeen, alongside the recent announcement of plans to establish an offshore wind hub in the city, creates a further vote of confidence in the region from both governments [UK and Scottish] that the North-east of Scotland has what it takes to lead the way in the diversification into renewables.
Looking at Scotland as a whole, the country is set to play a pivotal role in the UK’s net zero ambitions, with targets in place to deliver up to 11GW of floating offshore wind capacity by the end of the decade. Scotland is well-positioned to be a world leader in floating offshore wind and to export our expertise and technology globally, as we have done historically in the oil and gas sector. It is an exciting marketplace to be working in right now and will be one of the key areas to watch going forward.
What other entities are you already collaborating with, regarding renewables, and intend to collaborate with in the near future?
I am proud to say that I am on the board of directors of Aberdeen Renewable Energy Group (AREG), the original energy transition organisation. AREG has championed the renewable energy sector in the North-east of Scotland and beyond for more than 20 years now and has supported some of the region’s most important renewable energy developments, notably the Aberdeen Offshore Wind Farm.
My position on AREG’s board has granted me insight into the renewable energy supply chain, and we want to support its development by unlocking new opportunities, both domestically and internationally.
In addition to AREG, Aberdein Considine recently joined Offshore Energies UK (OEUK), allowing us to strengthen our connections within the supply chain and play an active role in supporting the strategic development of the UK’s energy economy, while giving voice to the issues that matter most to our clients.
We are certainly open to collaboration with other renewables-focused trade bodies and professionals, and Aberdein Considine is actively considering the ongoing role that it can play within this space to support the UK’s journey towards net zero.
Rod Hutchison will be chairing a panel session at the Scottish Energy Futures Conference - at 3.45pm on 4th March, with Ricky Ssaez of SSEN Transmission, titled ‘How we can deliver the infrastructure to achieve net zero’. Participants in this panel session will be:
Ricky Saez is a Programme Director with SSEN Transmission and is accountable for the SSEN element of what will be an enduring Joint Venture Programme of works with National Grid. Ricky is appointed by the Joint Venture Board as Project Director for Eastern Green Link 2 (EGL2), and is accountable for the safe, sustainable, timely and cost-effective delivery of the EGL2 and EGL3 projects.
Reshma Varghese is a Principal Process Engineer with over 8 years of experience in field development and concept development studies. She has also undertaken various technology screening, market screening, technical due diligence and cost estimation studies. She is also experienced in multiple owner’s engineer roles for field development studies together with various lenders technical advisory roles.
Angus Milne is currently the Director responsible for the Offshore Energy Market for DNV UK and Ireland. He has over 30 years’ experience with the Oil and Gas industry, mainly involved with CAPEX newbuild projects. Prior to his current role, he held key positions for DNV including Head of London Approval Centre from 2006 through 2018 followed by Head of UK Verification until taking up his current role in 2021.
