In the renewables sector, there are—believe it or not—a lot of similarities. Scotland also has a world-leading renewables sector and, given that climate change is a global issue, a lot of other countries with similarly strong levels of natural resource are looking to catch up with us. Our first opportunity, therefore, is that we already have a world-leading industry and strong and abundant natural resources.
Our second opportunity—which, again, is similar to the situation in health and life sciences that we have just heard about—is that we have been able to develop innovation in the laboratory to commercialisation. It is a long journey, but we have managed it in Scotland, and the renewables industry represents a really strong part of that picture. We need to be clear about the importance of that capability, given that we have such a strong university sector.
With regard to risks for future growth, the UK Government does not currently allow onshore wind, which is our cheapest form of energy, to compete under its revenue stabilisation mechanisms, which is certainly hampering the market. We have a lot of estate in Scotland and we are looking to develop a lot more, and that route to market is critically important for the renewables sector.
In our sector, we are also thinking a lot about the supply chain. The contracts for difference mechanism is an options process that continually drives cost reductions. We are mindful that those reductions can come from various places, and we are looking at costs across the whole system to ensure that we drive efficiencies without driving out value in terms of the wages that we pay and the investments that we want to make.
Our investment timelines are long and very risk heavy. The contracts for difference mechanism unlocks investment and allows it to happen, which brings me back to my point about the route to market.
I turn to the positive opportunities. Digital and smart systems, as we have just discussed, will be a huge part of the future. Scotland has taken a leading role in developing electric vehicles, which will drive some of the new smart-system innovation in which, as has been mentioned, investment is needed. We also need to think about turning our weaknesses into strengths. For example, the grid in Scotland has particular constraints, and a lot of people are off grid. The constraints on the grid in Scotland’s remote and rural areas have led us to be more innovative earlier, so we have a particular strength in that area that we can demonstrate and use around the globe.