Glasgow Chamber Of Commerce

ScottishPower's chief corporate officer Keith Anderson has told a Glasgow business audience of the enormous opportunity awaiting the city in expanding its growing reputation as a hub for renewable energy.

He highlighted the major issues facing the energy industry itself - the engineering skills challenge facing an industry that is set to lose "four out of five" of its employees to retirement within the next 15 years; and the challenge of satisfying rising long term energy demand when "within the next roughly 10 years" a fifth of current generating plant is due to shut down.

Mr Anderson was addressing a sellout audience at the latest of the Chamber's Glasgow Talks series in the city's Blythswood Square Hotel.

He spoke of the need for Scottish companies to do "more work around the supply chain" and for "the need to get moving to on building facilities and infrastructure" in this country.

On the future of Glasgow as the UK's leading renewables hub, he said: "ScottishPower is based here, Scottish & Southern Energy has set up office in Glasgow primarily focused around renewable energy, we have the Technology Innovation Centre at Strathclyde University, organisations like Gamesa who have opened offices, Siemens is here - it is already a hub and a great place to do business in the energy sector. It is now about growing that and making it bigger and better. There is also the new government-funded Catapult centre to develop offshore renewable energy and the investment that's coming with that."

He went on to state that Whitelee, Europe's biggest onshore wind farm - on Glasgow's doorstep at Eaglesham Moor - and would end up generating 550MW every year, the equivalent of about 300,000 homes in sustainable energy. This year half a million people had come to visit the site to walk, cycle, horseride and more - giving lie to opponents' accusations that the public didn't like wind farms.

He added that ScottishPower would build a new headquarters as part of its commitment to the city, a new 14-storey office block to be completed in 2015.

He said: "At government level and at industry level this city is seen as being the place to be for the future of renewable energy and that's a fantastic opportunity. It's now about how get the schools and colleges properly involved and engaged in that process.

There was a cautionary note, when Mr Anderson warned that a lot of work still had to be done around the supply chain, where there is a lack of awareness of what was going on in the offshore sector - even to the point where his organisation was asked "when is it going to start?"

He said that it has begun five years ago, and that ScottishPower was in the middle of a £1.6b programme for an offshore wind farm in the East Irish Sea - raising the issue of why companies from Glasgow and Scotland were not involved in that project - manufacturing the parts for the machines, or supplying vessels, crews and port infrastructure.

He added that he was currently working with a number of organisations which were spending £50m redeveloping Belfast Harbour into Europe's first offshore wind construction harbour - asking how do we get that done in Scotland?

He said: "You go around the north coast of Europe, to places like Bremerhaven on the coast of Germany where they have developed huge port facilities for offshore wind. Not just for the German market, they'll also be competing in the UK market. We need to get moving to on building facilities and infrastructure not just for projects in this country, but in other countries. France has just launched a big offshore programme, so why can't Scottish and UK companies compete in that market?"

He added that while there are risks in investing for the future, we had to get over that hurdle now, and said: "If we keep waiting for when's it going to happen, we'll miss it. My organisation can help and put information out there, but it's going to be also about working with government, finding the right mechanisms and the right support to encourage that investment to grow. It's not an easy thing to do, I'm aware of that, but unless companies invest and expand the opportunity now, we'll miss out."

He then tackled the skills challenge facing the UK energy industry, saying that four out of five of the industry's employees in the UK are due to retire in the next 15 years - "a tremendous challenge, but also a terrific opportunity".

ScottishPower has 4500 people directly employed in Glasgow, and would probably recruit another 200 engineers over the next couple of years. However his organisation now had a focus on apprenticeships in Glasgow, as it was finding it "incredibly hard" to get experience.

He said: We have to get people through school, through the education system, through colleges, through the universities. Give us graduates and we'll train them up. We are running out of engineers and for the last 15 or 20 years we've not been encouraging nearly enough people to join the profession, so we now have ambassadors who go out to the schools and colleges to encourage the kids, and make them aware of the huge job opportunities."

On the challenge of satisfying long-term energy demand, the energy industry was trying to make the UK's future energy more sustainable, make it more secure and make it more affordable. However the three aims did not all sit naturally well together, creating conflict and opposition.

The basic problem facing the energy sector is that in one shape or form over the long term energy demand is set to continue to rise, while within the next roughly 10 years about a fifth of all of all existing generating plant is due to shut down.

A sustainable future did not simply mean building a lot of wind farms, and that there had to be a mixed generation portfolio - with onshore and offshore wind, but also with investment in thermal generation to create security, with it still being the cheapest way of generating power.

He said: "We need to look at future investment in nuclear power, which is currently providing about 25% of the energy. There is carbon capture and storage, which has huge potential benefits, but also massive challenges in the technology and costs. When you view our energy future, we will continue to look at gas generation as being an underlying part of our portfolio, and we will continue to compete in the world economy for gas."

What was needed was a consensus in public and government opinion - as regards what the public wants and expects in terms of energy and what the politicians are asking for, what the regulator wants and what ScottishPower needed as an or4ganisation.

He concluded: That is a debate that needs to go on, for right now there is a lot of rhetoric in the media and politically around the energy sector - around prices, around the cost of renewables, around the profits to be made as an organisation. We need to get beyond that and start investing and rebuilding."

Glasgow Chamber chief executive Stuart Patrick said: "This was a marvellous and very open session with the top man in one of Scotland's most important companies in a real growth industry. Keith Anderson emphasised through his talk that Glasgow is on the cusp of a wonderful opportunity in the renewables sector, and that we must firmly grasp this opportunity both at private sector and at government level."