Hello and welcome to the latest Fraser
of Allander podcast.
My name is Mairi Spowage
and I'm the director
of the Fraser of Allander Institute.
And I'm delighted to say,
I've got two ladies with me today
who are going to talk a bit about
what's going on in the renewables
economy in Scotland,
a very important part of the story
of the energy transition.
How and to what extent
can we grab the economic opportunities
that are presented by our vast
natural resources?
So today I'm joined by Claire Mack,
the chief
executive of Scottish Renewables.
And I'm also joined
by Susan McDonald of Deloitte.
So I'm just going to ask you ladies
if it's all right
for you to introduce yourself
and say a bit about what
you do at your respective organizations.
Particularly, it's good for our listeners
to hear about the sort of work
Deloitte do,
Many people who listen to our podcast
will be familiar with Claire, I'm sure,
and the sort of work
that Scottish Renewables does,
but it's good to hear a bit about it.
So why don't you begin, Susan,
tell us what you do.
Yeah.
So we're really excited to talk about,
renewables in the context of Scotland.
So, and as you mentioned,
I'm from Deloitte
and the energy transition lead
within our sustainability practice,
and very much focus on power
utility renewables.
But, I think your first ask what we,
what do we do in Deloitte?
So we have a breadth of capabilities.
We love to work alongside,
both private public sector,
and charities,
in the context of sustainability.
What I'm really interested in is actually
how do we deliver,
on our ambitions, around climate change
adaptation and mitigation.
So the type of work that I get involved
in is around strategies.
So how do we actually take that long term
view but also put the actions in place.
So you know, in my renewables perspective,
some of that work is in kind of securing
helping organizations
to secure the supply chain
to deliver the infrastructure
so we can connect this vast,
offshore renewables
in the northeast of Scotland all the way
through to business cases, and also
setting up new business models as we look
at the diversification, renewables.
So it's a real mix.
And I think what's important to call out
is, we have a lot of diversity of skills
because skills is a key thing.
I'm an engineer.
Electromechanical engineer.
And I'm really excited to be here
at Strathclyde, where I graduated.
And so we have a lot of people
from different skills, from policy,
engineering, to business
to international skills to languages.
So, you know, I've been with now
Deloitte for,
gosh, coming up to nine
years, this industry for, for six.
And I'm looking forward to today's
discussion.
Thank you.
And it's really great
to have the Strathclyde link.
You know the strengths
that we have in engineering.
We are, of course,
the place of useful learning.
And, you know, it's really important
to think how that's going to be supporting
the energy transition more broadly.
Claire also has a Strathclyde link I believe.
So why don't you tell us a bit
about what you do in your organization.
Yes. Yeah.
Also very, very proud graduate
of Strathclyde in a different discipline.
So yep.
I was on a the economic side of things.
So, there’s
nothing wrong with that Claire.
Absolutely right.
We're all important,
but
renewables is where these two things
are coming together at this very moment.
So my day job, though, is a working
as the chief executive
of Scottish Renewables,
which is a trade association
for the renewable energy
industry in Scotland.
Which is hugely important
because we have an enormous pipeline
of projects here in Scotland,
both past and upcoming.
I manage a membership of around
400 different, organizations.
Some of those are public sector,
some of those are private sector,
but largely about 85% of
those are the supply chain.
And we are helping us to deliver
these renewable energy projects,
at even greater pace.
And as we're driving down on things
like costs as well, because, it's
really important, part of the process
that we're going through right now
is the cost reduction piece.
But also just thinking about how we,
how we create a legacy, of,
using these natural resources
to ensure that we actually create
an industrial legacy as well.
As socio economic benefit
as we go alongside all the great stuff
that we're doing to reduce carbon
emissions and, and hopefully support,
an environment into the next few decades
and centuries as we go.
Yeah, absolutely.
And, and the hook for today's
discussion, is a bit of research that,
that the Fraser of Allander Institute
did in partnership
with Scottish Renewables to kind of try
and look at some of those benefits,
try and quantify some of those benefits.
And we've done a number of these reports
together of over
the last few years haven't we Claire,
And there are some challenges which we'll
perhaps come on to in terms of being able
to measure the sector well,
but what our report is really trying to do
is to kind of capture
and quantify those, those wider impacts.
And this is the fourth in our series
we were trying to talk about,
the economic opportunities
from the energy transition
and also digital adoption
and diffusion and innovation in Scotland,
and again, very much in the renewables
and technology space.
That's where those two things meet.
But as I say that with yes,
that research we've done in partnership.
Claire, what did you make of the
what the research that we did
this year showed about the industry.
So we were really pleased.
I mean, it's really difficult.
And you've alluded to this with data is,
is challenging for lots of reasons.
And we'll go into that.
But headline figure was
that we'd seen effectively a growth,
in terms of the number
of jobs, which is great news,
for us as a sector.
And that's what you would expect to see.
Because we, you know, one of the things
that these numbers will always do
is to track the deployment of projects.
Right?
So our jobs figures headline figure
was 47,000, which was, which was great.
And we saw that the output
there was about 15.5 billion pounds.
So significant industry
industry of significance.
And that's exactly what we should be
seeing.
In terms of that jobs
breakdown, we've seen, a bit of a shift,
probably in Scotland from, you know,
moving from onshore wind to offshore
wind, onshore wind has been
the sort of backbone of deployment here
and Scotland's islands in the UK
actually for about 20 odd years.
And now we're starting to see
these much larger, scaled projects
that are offshore wind projects,
much bigger than these onshore projects.
But starting to see the jobs figures
kind of filters through there.
I think one of the key distinctions
that we need to make about all of this,
aside from the fact that there are issues
with gathering the data,
we really do need to get on top of that.
Is that people continually
look at these figures,
for a measure
of how the energy transition is going.
Right.
And that I find quite
challenging in and of itself.
So everybody looks for a drop in oil
and gas jobs and an increase in renewables
jobs is a good thing.
I don't see that necessarily
as a good thing.
You know, we can we can.
We do have to work together.
And both are really important sectors
in terms of investment
with a really important sectors.
And you know, so that money side of stuff
but really important sectors
in terms of the people side of stuff, as Susan was just saying,
because we've got this great
blend of skill sets and people around us.
And so I think we need to get to
that point where we don't
see an increase in one and a drop
in another as the right thing.
Because actually what we want to see
is thriving sectors and being able to,
to sort of drive investment
through all of these opportunities.
And that's not about sort of asking for,
you know, extensions
to oil and gas and all of that
kind of really emotive stuff
that comes along with all of that.
I think we just need to face the reality
of the fact that the energy transition
is going
to see some ebbs and flows as we go,
but so really, really important
to understand how we get on top of,
of, of matching, of monitoring it
and matching what our expectations are
to what we're seeing
in terms of reality of of economics.
I think that's really important actually,
because,
you know, these jobs figures and figures
that are produced,
about the wider energy system
or oil and gas related jobs.
You know, the vast majority of the jobs
are talking about are supply chain jobs.
You know, it's not the direct generation,
it's the organized,
the businesses that support it,
whether it's on the kind of services
side or the manufacturing side,
specialist bits of services
like engineering, for example.
And most
of these companies that we talk
to, you know, are involved
in the energy sector broadly,
and that will be lots of different types
of technologies, will be different mixes
for different companies.
But this sort of yeah, this sort of
dichotomy story of one succeeds,
One has to fail for the other to succeed almost.
It's just not the reality for businesses.
And, you know, people are diversifying
across the energy sector,
and we need to see,
you know, the north east of Scotland
and the north of Scotland,
where a lot of this stuff is happening
and this sort of widest energy sense
and making sure we have the right mix.
So that these opportunities can be grasped
by different companies
as different technologies ebb and flow.
But I'm talking too much.
Susan, what did you make of the latest figures
that we saw .
I think Claire you make a really good point.
And I think that the key thing all this is
actually that
thriving industry is thriving
Communities.
I think underscoring that, certainly,
when I can reflect on some of the work
and engaging with the supply chain,
mainly focus on, electricity transmission
delivery today
is actually, you know, it's the same type
of organizations that are here
that are delivering
for the renewable projects
as well as infrastructure projects.
And then when we look at civils,
for instance,
you know, there's a lot of, you know,
you know, excitingly, growth activity
in, a whole range of infrastructure.
So not not only in terms of electricity,
but also in public schools,
in public
infrastructure like prisons, highways.
And so actually, when we take a step back,
well, and, and I always come back to,
with that kind of systems
thinking approach
is, I think the context of this report.
And the economic opportunity
for Scotland is really great,
but there's some fundamental things that
we need to have in place to underpin it.
And I think coming back to that, is
I think we need to kind of
get that fidelity of data around
where do we have to place investment.
You know, I'm really excited about
Glasgow,
Scotland and UK becoming
this hub of talent and investment.
But we need to know
where do we deploy that parcel.
And I think when I reflect
the last two years, I mean, there's
exciting focus around how do we deliver
on the energy transition.
But there's been such a complex web
of consultations, announcements
that what's been really interesting
when engaging with,
the CFOs of energy organizations,
I was really surprised to learn
that actually,
the last five years in their boardroom, UK
political risk was actually
on their register, which wouldn't
have be there ten years ago.
And I just thinking around that,
these are organizations,
all organizations,
the energy industry is not immune to this.
are going through capital
discipline.
Capital discipline is a real focus
of which projects will capital
be flowing through.
And I think as you stack that all up.
We need to as you, as Scotland, as the UK.
We really, you know, continue to be very
clear in that long term strategic policy.
And so
I think, I think we're edging towards it.
But I think when we look at that strategy
and still it's still going and coming out
and you know, we're looking towards
the central strategic network plan
to give us some more clarity.
But coming back to that job.
So what that means is actually
how do we help people
who are coming into the workplace
or indeed career switchers and returners
know where to place their bets?
Because actually, ultimately,
we want people to see exciting careers.
And when I think about it, you know,
you know, we're sitting in Glasgow.
My grandfather was a  rope maker.
And so actually,
there's even things to other ways, like,
you know, anchors, we need more anchors,
because of floating offshore wind, and
how do we create that? You know,
everyone's got a link,
If you speak to someone in Glasgow,
someone's got a link to the shipyards.
They've got a story.
And and certainly
when you think around it,
as we just touched around the oil
and gas,  communities
have thrived in the current fuel
mix,
you know there's been thriving communities
thriving opportunities.
We want that to be
through the energy transition.
But it's like we need to recognize that
it's around how do we make sure that
that benefits people in the community and
and really be that leapfrog?
And for me, that was an opportunity.
My parents were the first ones education.
I've had the privilege and education.
So how do we allow and unlock
those opportunities either through
foundation skills, vocational skills,
or formal education?
I just
I think it's it's beginning
to unravel to be a bit clearer,
but I just don't think
we've got a clear picture to allow people
to know where to place their bets.
No, I think that's really interesting.
That links
back to the second podcast in our series
that we did with your colleague Netti,
where she was talking about some research
Deloitte done with investors.
And so interesting.
The findings from that, I thought,
particularly given the difference in view
between energy industry
people and investors, you know, energy
people were much more optimistic,
I suppose, in general about our ability
to, you know, get to the various targets.
But, you know, the thing that came up
was policy uncertainty causes
the difficulty here. We need policy certainty.
We need to, you know, something that goes
beyond parliamentary cycles, you know,
signalling from government
often can be the most important thing.
Funding and investment
is always important too.
But that signaling
and that sort of clarity of regulation
and, you know,
purpose is really important to come.
So I just think it's really,
really interesting
that links to that other research
that Deloitte's done, which was
a really good, good piece of work.
But Clare just picking up on
what Susan said.
I mean, it does talk a lot about,
maybe the regional opportunities
within Scotland.
And that's not something we're able to do
in the report that we've published.
But, you know, you'll be able to tell us
about the kind of developments
that are going on and the impacts
that they could have potentially
to particular local communities.
If we get this right.
And, of course, the North East,
where we have seen that,
you know, incredible economic opportunity
from oil and gas
over the last,
you know, half a century, is part of it.
But it's not the only part of Scotland
that's likely to benefit is it Claire.
Absolutely not.
And I've been on a bit of a grand tour.
I've been hopelessly behind on
trying to publish this on LinkedIn,
so I'm glad to have the opportunity
to have a chat about it.
So I've been on a bit of a tour around
various different places,
and I started in Inverness, which is again
really, really important part,
you know, not
not the northeast, not the oil and gas
legacy, but Inverness huge amount to offer
in here and part of their kind of
strategic planning that is going alongside
the, the,
the energy transition and renewables
led kind of growth that they recognize up
in the Highlands and Islands.
in there and just some really small
kind of anecdotes.
So obviously went to see
the mass of operations at Ardrasheig,
are that are going there, you know,
huge amount of investment
that's going in there and,
and significantly without an order book
right at this point in time.
And that is quite unusual to see.
And something that is, is good to see
because people are kind of a
and the people are putting their money
behind
this, are recognizing the opportunity.
And I think some of that does come down to
to the more strategic approach
to planning that we're not seeking,
but then shooting ourselves in the foot,
almost immediately is a big frustration
is that we're taking this big strategic
view and then shooting ourselves
in the foot in that kind of,
creation of
policy uncertainty, something
that is totally within our control.
You know, like, like bringing in concepts
like zonal pricing
which, which have such a major impact
on future revenue streams.
And I was asked in another kind of
discussion quite recently,
is it about keeping the investors happy?
Yeah, actually it is,
because we don't have
a big part of public money
anywhere to pay for the energy transition.
Imagine trying to give investors
confidence to invest
Indeed.
And so I think, you
know, sentiment is a thing.
Vibes are a thing.
And it's really important
to remember that.
And that can change
really, really quickly.
And it can
change the fortune of things like,
you know, a yard, you know, doing stuff
like, Ardrashieg, and even smaller
stuff around Port of Inverness.
So they, they recognize that
they're not going to be doing
some of the bigger, bigger bits of work.
But as Susan, you were talking about,
you know,
there's lots of different specialisms
and things like anchors and teams and
other bits and pieces
which are going to become
the value drivers
and the revenue drivers as we go.
And I think that's
that's a really important
bit, is to think about just other stuff
that's coming alongside that.
So, you know, we for years
we talked about,
you know, delivering the A9, the
the upgrade of the A9 and dualling
of the A9 massive, you know, for freight,
which goes by road
and to connect the Highlands
to the rest of the, of the UK actually.
And it was going to be
the electric highway,
you know,
that's what we were talking about.
We're going to deliver
loads of EV infrastructure along that.
That's that that line of road
which didn't really come to pass.
And some of that was nothing to do
with how that was planned.
Some of that was just to do with consumer
adoption of things like EV technology.
But I'll get to the point.
The Port of Inverness
have created a little space there.
And, and in that space, they've created
charging infrastructure for,
for the Inverbus,
which is an electric bus service.
It’s a phenomenal bus service.
And I do say that, having used it,
its adoption, digital technology,
smart technology, which, you know,
really focuses on the passenger and,
and allows them to, to use this
really amazing, efficient, effective,
environmentally friendly service.
So they have now actually created
the electric highway.
And what that will do, you know, through
having this new bus link in there.
So you've you've created
a whole new transport
link into that area
which will be, you know, transformational
for things like tourism and hospitality
and all the other stuff
that a, you know,
an economy in a place needs to thrive.
And I think that's really interesting.
And another example is
I've been to Shetland very recently,
you know, absolute
heartlands of the energy transition.
We see the Sullom Voe terminal
and what they're doing up there.
And in terms of decarbonization
and what they're doing for the future,
as well as looking at the Viking offshore
wind farm and Shetland
and how that's being built now, they're
again, a frustration at the heart of that.
And what is the frustration?
Was that all the way along that project
had been planned with a community stake,
you know, financial investment
stake for the community in that and there
and, you know, basically, for lack of
being able to work out how to apportion
the risk between developer and community
for lack of a financial model,
to allow the community to get involved,
you know, and,
and to be able to do that in a safe way
that allowed them, you know,
to be there, the
that kind of opportunity came and went.
And that for me is a complete frustration.
So is it's it's really important.
The place based elements of this
are really, really important.
But then so also are
those kind of professional services
elements of it as well,
which then make investment opportunities
a reality for for different players
within this whole system.
Because energy does touch everywhere
and everything.
And that's why it's so important
to get this bit right.
No. Absolutely.
I mean, one of the,
the ironies, I suppose, of the research
that we've done with you is that,
the lags in the data
that we use for this sort of stuff,
you know,
some of which we got disrupted by,
by Covid and things like that
and are being caught up at the moment.
And we can come onto the data
and I bet, means that
the figures that we produced
more recently were for the 2022 year.
Obviously, we're in
2025 and we're we're working with you on
on the next edition, which will come out
early next year for 2023.
But, you know,
this is a fast moving environment.
It felt to us
when we were looking at the research that
there was a bit of a kind of turning point
in 2022,
for a couple of reasons,
one of which is that,
we saw some of the supply chain operations
move in from the kind of construction
phase and to into more operational,
which we would kind of expect
to be happening and feels right, feels,
it feels like it's sensible.
But also we saw we saw the huge impact
of, input costs rising enormously in 2022.
So we all experienced as consumers
the impacts on our energy
bills during 2022. Of course.
But, you know, you can also quite
clearly see in the data
that we've looked at,
you know, a huge pressure on margins
as, as input costs rose,
you know, just as much basically.
So you know, that, that,
you know, posed a bit of a challenge.
So we saw in the data
those two, phenomenons.
So I just wondered
if you could both reflect on
whether that sort of chimes with your experience.
And then, you know what you may expect to
see as we go into future years, you know,
how do you think the sector has evolved
since 2022 to have those challenges about,
profitability, investment,
confidence got got easier or harder?
I think I know what you might be saying,
given what you've already said,
but Susan why don’t you kick us off?
I wouldn’t say we did find that kind of
shift ourselves back in 2022.
You know, there's shifts everywhere.
But from, the context of big focus
on electrification and obviously
unlocking, you know, a green economy,
decarbonizing energy system.
Well, you know, currently it offers
a different types of technologies,
but we focus on,
you know, offshore wind, onshore wind.
There's a need to connect it.
And actually at that time, you know, we're
we're going through a great revolution
at the moment in terms of rewiring,
and, and building out the grids.
And in 2022, you were not the only country
that's trying to decarbonize.
You know, there's a real focus
from a people planet perspective.
We know we need to, I was in Antartica
earlier this year for three weeks,
and we saw the sentiment. That
the real.
Sensitivity of, of, you know,
the impacts are having.
And so most organizations
most countries are signed up
and are committed
and following through around
how do they address climate change.
But in decarbonizing and connecting
offshore wind we need infrastructure.
And in 2022,
there was a real kind of recognition
that to deliver against our targets,
actually we need that supply chain.
So I think this a that's a real theme
for today is, I like to say, the emphasis
on the supply chain and and actually
when you look at other countries
we were attractive market.
But how we procured
was project by project.
There's a real shift in mindset
in organizations, but also within,
the regulator, within policy,
there was a shift needed
and so project by project
had to be portfolio led.
You know, organizations and supply chains
there were seeking volume.
Other organizations have a very different
type of commercial set up or
actually set up.
That meant that we could just go out
and procure.
We have a very different type of model.
And at that point,
very publicly, TenneT and TSO
went out to the markets and helped set out
a long term vision for their supply chain.
Now, we can go into details of what
that meant in practice,
but that has had a permanent,
lasting perception
in the market of what
the supply chain are expecting.
So we've seen organizations in the UK
have to both reflect on their strategy,
but also shifted.
So organizations are not only moving from,
project by project to portfolio.
It's early engagement.
So actually it's a very early stage of,
project definition
that otherwise that are being procured.
And there's also early, need for
early commitments,
financial commitments like factory slots.
And so you see, you in terms of how we've
responded as a country to that shock,
the organizations,
government and the regulators responded
to naval supply chain to be secured.
But, you know, the challenges aren't over
yet because, you know, I, I look forward
and they will help me commission this.
And quite a lot of these projects will be
committed to this in time of continuing.
So, planting ourselves back in March 2025
and we've got less than four years,
you know, runway to our 2030 targets.
There's a real big focus,
I think, around
being really grounded.
Like the ground truth has to be trained.
We, we speak to people around
what is projects
for this day, but actually
it's probably going to be in 12 months.
Like, I just think we need to have
a different phased approach.
So and I think we have it,
but we need to say what's right, the right
context for the next four and a half years
will change for the next five years.
And I just think we have to
have that, that reality. And,
you know, there's a lot of lessons
to be learned
through the response to Covid.
But the,
the that's the strengths that I saw.
I was part of that response to government
is that people were clear in the mission
and it was like, you know, we are
we all clear that this is our mission
and it's beyond just it's
what is the right thing for countries,
the right thing for the future.
It comes down to storytelling.
You know, I, I just
I think we need to tell the story.
Right.
Because at the moment
people are facing
It's a really stark challenge.
And a, you know, in terms of lifestyles,
the moment costs are going up.
You know, I'm a young mother,
you know, the cost of care.
You know, when you put all those things in,
I think we as, professionals in the energy
sector
need to be, you know, really
mindful of the stories and the future.
And because people are looking
at energy bills
and, and there's obviously
different levers government can pull.
But at the moment we need people
to support us on this journey where,
you know, we will be hosting
infrastructure next. And I say,
we may need,
hopefully creating opportunities,
but I just
I think we need to do better
in storytelling.
since 2022.
Yeah, yeah,
I, I completely agree with that.
And yeah, sentiment of communities and
just the broader environment is is
as important as investor confidence here
because we need to go together on this,
this journey.
Claire, what's your sort of reflections
on the last few years
from, from, from the data we published?
You know, its been a roller coaster, hasn't it?
Yeah, yeah.
I mean, it's really,
it is one of those things
that when we look at it
and, and and the lag that
you spoke about, it's
really interesting in renewables
because it's like politics,
you know, a lot can change very quickly
and has and those input costs rising.
And exactly.
You're right.
That kind of pivot
perhaps from construction to operation,
some of our really big projects.
And we knew that the,
that the kind of
jobs profile and the economic profile
changes at that point.
And I think that that's still something
that we really need to again,
when you're
talking about bringing people with you,
Susan, is is about bringing government
with us, which is the renewable
sector is very different in its build.
It's it's pre-development
development and construction phase as it
is in its operational phase. Right.
And they need treated differently.
They need treated differently from
sort of what we need
from a political support perspective.
And they need treated differently
from a kind of regulatory perspective
and that kind of thing.
We also need to think really hard about
what are the benefits
and value that we want to drive
in each of these different phases.
Because at the moment I feel that we're
having this really difficult conversation,
about and very simplistic conversation
about things like community benefit.
Right.
And you mentioned this hosting
infrastructure
where that's really biting
is when you start
start to hit the absolute realities
of the economics of energy transition.
Because frankly,
if you don't build the project at all,
you don't have any operational benefit.
Right?
And that's the bit that we need to kind of
get our heads around at the moment.
And I think the bit
that works
really well for building the supply chain
and then doing all the stuff that we want
is that building construction phase.
So yep, you know,
we're right to be focused and on that.
But one of the problems I think, is
where we've got there is, is that
we're still got a bit of an investment
system that's really comfortable
with ports and harbors
and, and infrastructure investment,
less comfortable with,
you know, supply chain
investment in general, that kind of wider
supply chain investment.
We are actually at the end of the day,
your your kind of value isn't necessarily
something that you can put a hard
hat on and go and stand in front of.
It's something else, you know.
Is that actually what we've done
is we've created something, you know,
we've doubled the size of West Hill,
outside of North East, because
People say to me,
what does success look like?
And that's one of my success markers
actually not shutting down West Hill it's
about doubling the size of West Hill.
So creating  four Wood Groups, you know, in
some of that isn't actually as easy to put
your fingers on and touch and to see, you
know, that's where our investment went.
That's what we grew in as we did,
but actually in
in doubling the size of the renewable
supply chain, what we did was create
all these companies
that are really good at,
advanced manufacture.
We've created all these companies
that are really good at,
innovative financing models.
We've created all these companies that are
really good at creating digital twins
and using AI really effectively
within processes to understand, actually.
if we build it in this way,
the environmental impacts are X,
or if we build in this,
we are environmental impacts are Y.
And actually we've been able to shorten
that consenting process through using
the sort of things like digital twins
to be able to not go through
very, very lengthy kind of periods
of environmental monitoring, for example,
only to discover that
actually the baseline that we were using
was wrong in the first place.
You know, it's that kind of thing
where I think we've got to continue
to get a bit smarter.
But it isn't just about, you know,
we are going to build this one thing
and that's going to create these jobs
and that's it.
It's getting really smart about, right.
How do we use the opportunity
of building out,
a completely new energy system
to get us ahead in the world and,
and all these different races
that unfortunately
we have fallen behind in the UK on,
you know, we have fallen behind on
anything that requires cheap labour.
We're not going to do in the UK.
We can't win at that
because we do want to win it that.
But what we do want to win
at, is the jobs that we want to create
for the next 20 to 30 years.
And it is about, you know, sort of
and there have been identified,
you know, we know what they are.
They've been identified
for the new kind of UK
government industrial strategy,
you know, that sort of stuff.
But we do need to to sort of work out
how do we use this opportunity
to deliver on that,
not just continually seeing everything
in all these different silos?
And but again, the big change
that happened since 2022, I guess, is,
is that we had this natural left
building out of, of renewables new.
We were in Scotland in particular, we had
the ScotWind offshore wind leasing round.
It was enormous.
It was much bigger than we'd
expected it to be.
We were expecting around 10 to 11GW.
You know, we got something, you know,
we're now sitting at 40 plus.
So the the pipeline of opportunity
has become much bigger and much brighter.
But there was a bit of hubris,
I guess, in that.
And we're now coming to that point
where it is sort of leveling
off, and it's come from various
different pressure points.
You know, just
the natural pace of delivery is it has a,
has a natural pace that is a natural pace
of delivery in there.
That is a natural,
you know, flow of finance
that will come into one particular area.
Because I think, Susan, you talked about
this is a portfolio approach in here.
And we've got to accept that
that is how the investment markets work,
you know, and and just thinking about
how much you can possibly kind
of put out there in one go from a people,
an environmental perspective as well,
you know, all of that’s
come to a bit of a reality check.
As well as thinking about,
you know, how we catch up, things
like the supply chain and create
these funding and financing models,
that will help us kind of get to
to where we want to get to.
And this is and that's really
interesting because I think,
I think everyone's got
an understanding of the challenges.
Like what, what was quite revealing to me.
And I think alongside,
the joint report, that Scottish Renewables and the Fraser of Allander Institute have
published,
is that Deloitte investor,
surveys, the top enablers that investors.
saw for energy transition
the first was larger, more margin grid.
It was planting and harvesting and it was
more grids, the electricity storage.
And I thought that was quite revealing.
It wasn't, you know, the next force was,
thought to be offshore
wind and,
you know, because of the large scale,
but I think it is that condition of,
you know,
92% of investors said they want to see,
if they want to see one, they see
energy transition as an opportunity.
But equally, in the same breath 84%
Want to see, well they will invest in the energy
transition, if the returns
match other opportunities, I think
I think that's quite revealing
because I'm not I'm not surprised by it.
But actually,
you know, there's that question mark, is do we need a different economic
model or measure?
And I don't think we've really squared that away
Totally agree I totally agree.
I think we in this really interesting
period of time and Susan you know,
I look back and retire when we're retired
because yeah, that
that was the kind of 2025
to 2035 era, you know,
and this is my big hope for it.
This is where my optimism comes from.
It's because we're having to do this
kind of
reset of the relationship
between government and business.
I think.
I think that's a really important piece,
which is that
we've we've gone through an era of,
you know, privatization of utilities.
Right?
And we're now sitting in that space
for a lot of those chickens
are coming home to roost.
You know, it's
look at two very different outcomes
water sector versus energy sector.
Right.
Neither of whom have built the right level
of infrastructure
for the last 20 years,
but for different reasons.
One, like the money
literally leaked out of the sector,
whilst it was water
leaked out, the infrastructure
and then the other, we just
didn't have a strategic plan in place
because it just didn't occur to us
that actually,
you know, energy needed a strategic plan
and always has done.
And we stopped doing it
for a little while.
And now we've come back
round to this way of thinking of, right.
Actually, we need to have
continual investment in infrastructure.
We need to, you know, be able to work out
how we fund and finance that.
And that might see
slightly different levels of return.
But it's about managing the investment
sector
in terms of expectation and players
as well,
getting the right players in to help us
be able to do all of that stuff.
But also just that reality check between,
you know, government understanding
what they can ask of a private sector,
you know, private sector market
and private sector investors
to get those kind of outcomes
that they need for stuff
like trains and energy and water,
because all of these three areas
are utterly fascinating to me.
I mean, I read about it every day
because I, you know, it's just what lights
my fire as an economist,
you know, this stuff needs to happen.
It needs to be paid
for. It's the stuff of life.
So can we please new start to get down
to some more sensible conversations
about how we manage that relationship
between government
and the private sector
to deliver the stuff of life?
Yeah.
I mean,
you know what's true of the sector,
which you've mentioned is true
of the whole economy in terms of
the lack of capital investment
over the last 30 years.
And, you know,
if you look at the levels of capital
deepening that's not happened
and it should have happened
probably in the economy
and the sort of attrition
to our capital stock,
really, I think
is at the heart of a lot of the issues
we have in the economy, to be honest,
in terms of our productivity and so on.
So I think it's such an important point.
And it feels,
you know, a lot of folk
are feeling at the moment
that lots of things seem quite broken
all of a sudden, almost,
and they fall over.
But that's what happens if it's,
if there's continual underinvestment
by all government levels of government.
But to get off my high horse,
you talking about government then?
Just a couple of last things to finish up.
Obviously we have this kind of there's
there's
a target about 2030 and clean energy.
And you both mentioned
different forms of strategies or policies
that might support or hinder that.
You know, there's things
like the industrial strategy or so on.
And there's planning reforms
and then and these sorts of things.
Clay, what's your view about?
I suppose, again, we are in Scotland.
Scotland's role and achieving
that kind of UK target.
And, and you know, how
and what we should the governments,
the devolved government work
with the UK government to achieve that.
Yeah.
We were you were talking just before
we started recording
that we're in a really great era
where we finally do have actually a strong
functioning relationship between UK
government and Scottish Government.
And I think that that's really important.
My hope is that, you know, inevitably,
you know, everybody sort of talks
in corners about,
you know, the election coming in Scotland
and how that could impact
the relationship.
I'm hopeful that we've got
some institutions that will help us to,
to override that,
that that potential, you know,
because it comes in both ways,
you know, comes from, from,
you know, a UK election could can help
to destabilize that relationship as well.
So hopefully we've got, you know,
you know, NESSO, massive.
You know, that is an immensely
powerful organization
and one that as someone who's
got a very long background in regulation,
I hope that we we treat that
with the respect it deserves.
It's a massively important institution.
It's doing a lot of strategic planning,
strategic planning
that will have very powerful
economic outcomes as well.
So that that is a really important piece
and I won't I'm puzzled at this point
in time about where Scotland's voice sits
within an organization like that.
So that's a really important part
that leads me in to the point that,
you know, Scotland's role in the energy
economy of the UK is essential
and it's essential
not just because we've got access to the
to the best number
of gigawatts up here in Scotland.
It is essential because it's
all part of a wider megatrend.
And I think, you know, again,
if if it's a fundamental
lack of investment
capital infrastructure is one problem.
Ignoring the megatrends,
ignoring the big problems
that we need to tackle is another,
you know, climate change.
How are we paying for an aging population?
How do we keep our bit of the world
as stable as possible in the face
of really tight tensions
on on geopolitics?
And the way you do that is through energy
security and investing in Scotland's
energy system is investing in the UK
and Northern Europe's energy security.
So and I don't say that lightly,
I think that's really important.
I think we're allowing ourselves
to get a bit distracted, here.
And it is is, something
that's, that's not unique to Scotland
but is, is particularly focused
in Scotland
because of the fact of that great,
grid upgrade
that you were talking about,
Susan, is that we're doing
a really good job of talking up
the negative at the moment and,
and talking about,
you know, we need to bring people with us.
Yes, of course
we need to bring people with us.
But it isn't just about,
you know, throwing cheques
at people
who can see big bits of infrastructure.
It's also about, you know, really
supporting what we're trying to do here,
which is to deliver energy security
for Scotland, the UK,
and actually the wider and wider
set in terms of northern Europe as well,
and thinking about those sort of strategic
alliances, because this isn't just
it isn't just economic,
it's political as well.
And I think that's where Scotland actually
can, can just bring so much to the party.
And let's say you, you hear my frustration
at times that we are getting a
allowing ourselves to be distracted
by certain conversations when actually
we should just be getting on and doing it.
Yeah, this is a
bit of a mad conversation
to be being distracted
and having your head in the sand
about various things. But yes.
I hope that I think I think you're right.
Your characterization of it is right.
We need to have a focus on on
what's going to work, to be honest.
And then make us actually achieve these targets,
rather than pretending the realities,
the are there, aren't there, particularly
when it comes to investment investor
sentiment or the impacts of geopolitics
or or whatever it might be.
We have mentioned it
a few times about the data challenges.
We have been doing this,
for a bit of background,
and there's some stuff in the report
if people are interested in this,
and you know, listeners will know that
I always like talking about data. But,
one of the challenges here is
that the sort of the traditional way of us
thinking about sectors in the economy,
don't distill the energy sector
into different forms of generation.
You know, we look at electricity
and gas separately, sure,
but it doesn't seperate out
You know, electricity generated
by particular technologies,
which makes the, the decomposition
of, of the economy into sectors
that are related to renewable technologies
quite challenging.
And always has done
that is a survey that we used to do this,
that the ONS produced, but it has
its limitations are set out in
Technicolor in the report.
And to be honest is likely to be,
underreporting the sort of activity
that is linked to the,
the renewable energy economy.
And as Claire says to a certain extent the
the distillation is unhelpful in some ways
because, you know, whether a company
chooses to classify itself in a certain
we can,
can have a big impact
on the sort of activity we're capturing.
Having said that, you know,
we've
we've obviously done the best research
we can with the data that's available.
And I think it's still an important,
thing to do
because it starts the conversation
both like we've had today, but also,
you know, helps us
think about how we could do this better
in the future. I don’t know Susan if you have
any reflections on this area
in terms of how important it is
that we have good research on the impacts
that the sector is having on the economy.
I think just touching on this,
that I think with good data
that brings insights
and, and, and decision making.
And so I think first of all, I think
in the certainly when I, when I reflect
and, and our focus at Deloitte
is a you making impact that matters.
So you can’t measure
the impact that you're having
unless we have a good baseline.
And so I think that, you know that
that that's really key when you're
in the conversations I have in
that industry is you
we've never had
this need to have this level of fidelity
and in some sense begs the question,
why not?
Why not?
And I'm sure that's a different
we you probably have a different podcast
on that.
But I think there's
I think regardless, there's a need now,
and there's a need
for not only for, for a
or in parts of industry, but governments
and all the supply chain stakeholders
and regulators to,
to actually have a level of fidelity.
So what you're seeing now is when we talk
about trends as a trend of organizations,
you know, when they do get the green light
for projects, having
actually having to get to the level
of detailing when you need that person
do we have those skills
that are going to deliver
that infrastructure
in the next five years, let alone the ten,
if not actually supply chain.
What interventions do you need?
What support is needed on that?
I just I it's I think I'm
really encouraged by those conversations.
But I think there's pockets of really
good excellence around data
and pockets of really poor data.
And I think the you're seeing a drive
within government
to start build up that baseline.
And work with industry.
But I still
I do believe pace is really important.
Because it
comes back to this is this is a once
a generation opportunity
to we need to ensure
that Scotland remains attractive.
And the UK
in, in the context of its investment
isn't you
unless you've got certain covenants or
or patterns, your capital will flow
where the best returns are.
And so we need to retain that.
But I, I you know, I, quite like to say,
I'm reasonably optimistic.
But what we want to do is be here in 2030,
let alone 2040.
And you know
I feel very much part of industry
as part of like my responsibilities,
being that we have failed to realize that
for for Scotland, let alone the UK
and I, I think most people feel that,
but I think we're still,
we're still finding our way
of what that means.
And I think you touched on that
the earlier
because was our measure of success,
because actually that drives different
outcome to ensure that we have,
you know, you know,
90% or 80% of our,
you know, our employees
and, and Scotland's,
and, and that's our focus on the UK
and how these specialist skills
that are you serving not only the UK
and Scottish market but elsewhere or is
are you that it's almost like,
what is our what is Scotland's ambition?
And I think I'm clear in terms
of what that means at political level.
But what does that actually mean in 2050?
And then it's back where the things
we want to be known for as Scotland
and I think and it's maybe, you know,
you that that means in different things
for different industries.
So I, I just think the outcome is
we will have people
that have healthy, leading, healthy lives.
They've got great education.
They're living,
in a, vibrant community
with lots of sports, lots of,
you know, with a cultural music life.
I think if we define that a bit more,
I guess for me,
the energy industry underpins all of that.
You know, businesses will invest
when they know it's low cost.
People will come into, into communities
where it's thriving.
And I just, you know, I,
I don't think will solve that ambition,
but I think we need to be really clear of
with that data is the outcome.
Actually, we're going to just do
energy and energy bills.
That's a metric
that we could actually focus that.
And as the government has levers,
industry has a responsibility.
Or is there is actually
how do we measure the
some of those indirect impacts
that we have as an industry.
They can drive actually some really bigger
benefits of that is realizing.
You know, it's a really good point
about the clarity of purpose of different,
you know, policy
initiatives or strategies.
Which I do think has been, you know,
I can see this
perhaps you wouldn't,
you know, that's definitely been lacking.
You know, if we try to achieve everything
and all priorities will achieve nothing,
and you do need to have
that clarity of purpose
and recognize that there's trade offs
about particular choices one makes.
And we have to be clear about,
what we're trying to achieve.
But but clearly, given we've been talking
about the issue for, what, 6 or 7 years
together, just just to give you
the final word on, on on that.
And, you know,
we are hoping to do
more work on this, but,
you know, there's only so far we can take
the data that we have and potentially.
Totally
And you know,
we we really value that relationship.
And we value having something like
the Fraser of Allander within Scotland,
you know, we, we, we need to,
you know, you, you we're starting to see
the breakdown of, of almost the
social compact in lots of different areas.
And actually data becomes truly important,
you know, because it becomes a,
you know, your, your, your central truth
and that
and that's one of the reasons
why the we value the relationship so
well with, with an institution
like the Fraser that,
that has the credibility and independence
of, of thought to work with that.
But the key again,
you know, playing to that, that kind of
what's the outcome
that you're looking for here.
This isn't just about me
leading the trade association
and accounting for
What is thatwe do, better data and a better
understanding of what those jobs are,
which technologies are driving them,
what skill sets sit beneath
those technologies allow us to do that.
More sophisticated planning that I was
talking about, which is the legacy piece.
You know, the renewable energy sector
is going to go through, 20 to 30 year
boom, which will allow us to equip
and enable the people within their society
with the right skills and attributes
that will take them potentially
into 40 to 50 year careers.
And that's, that's the important bit here.
So if we haven't got a handle on
what's going on in the heat
and no, we've got no hope of being able
to sort of tack on those additional
kind of extra benefits that we want
and is no, you know, it's it's
no secret that the conversation that,
you know, conversation with the public
has become ever, ever more important.
And having good data
at the heart of that, again, to manage
the expectations again, every industry
goes through amps and flows.
You know, you have that period of time
when there is a big boom
in terms of construction.
And once the jobs come in there,
people need to understand as well that
sometimes when those jobs change shape
or move somewhere else in the economy,
not such a bad thing
as long as we see it coming,
and as long as we can use that data to,
you know, work our skills
delivery mechanisms and to, to work out
and or business investment
mechanisms in the right way
so that we continue to deliver.
So we don't face
cliff edges and potholes and drop offs
and all that sort of bad stuff.
It's all about creating the good stuff.
Just while you were
speaking there Claire
There are my reflections,
Is that point around education?
We're sitting here
in the rest of Strathclyde and
we were sharing just before we recorded
on our different roles outside of our main roles
And it was I'm a trustee of the Women's
Engineering Society.
And that route into schools and education.
How are we equipping you,
you young school students, let alone
you, as I said, career returners or career switchers
Certainly
again from an engineering perspective.
If we've got less than 20% of women
and engineering
sector and I don't see
that will differ in terms of skills.
But again, it's
how do we that that clarity of data,
that clarity, where we want to be will
help us make some of these interventions
and a more sophisticated I think if you
talked about prioritized way,
which is
both exciting, that you and the skills
we need,
you know, in ten years
time, we'll be so far apart in terms
of where we are in terms of
and in school education right now.
That that's interesting.
It's interesting how much skills
has come up in all of the podcast
we've talked about, as well.
And you know, between us, I think
we have kids that span a huge range.
And now I've got teenagers, Claire's,
the kids that are a little bit older.
And you've obviously got young kids.
Yes, she turns 2 next week
So you know, we are all seeing our kids
go through the various points
of the education system and
and probably we would
I know I'm not the one to put words
in your mouth, but, you know,
there are definitely things
to do to improve the
the sort of options are presented
to young people, in my view. And,
you know, the new
opportunities
we have to present quite exciting careers
and think about that,
that future workforce,
not the one that we have at the moment.
So yeah, but, time is against us.
So, so but thank you so much
for joining me today.
Thank you.
Susan and Claire.
Mack. OBE - congratulations on that!
But thank you so much.
I am so proud to come here.
But yeah, been a great conversation and,
yeah, perhaps we can have another one
on skills sometime.
You know.
I need to guess the economic equation.
Capital plus people, you know,
very important.
So, you can hear the rest of our podcasts
and our, ehm,
series in partnership with Deloitte,
and they're all on our website
and as I say, this is the fourth
one in the series.
So have a listen back and there'll be more
to come over the next year.
As we, we
build up to, the conclusion of our series,
and in early 2026 with Deloitte.
Don't forget,
if you're interested in hearing more
about the broader
work of the Fraser of Allander Institute,
you can go on our website,
Fraser of allander.org.
Yeah.