Scapa Deep Water Quay Business Case Review, Orkney (2023-24)

Highlands and Islands Enterprise (HIE) commissioned Hall Aitken to review the Outline Business Case for Scapa Deep Water Quay, a proposed port development in Orkney intended to support the fixed and floating offshore wind sectors.

Hall Aitken led the review with specialist input from BVG Associates and Grangeston Economics.

The review examined the business case against HM Treasury’s Five Case Model, covering the Strategic, Economic, Commercial, Financial and Management Cases. It was designed to give HIE, Orkney Islands Council and prospective investors a stronger evidence base for their investment decisions and for the subsequent Full Business Case.

Approach

Reviewing the Five Case Model. Hall Aitken reviewed the existing Outline Business Case against HM Treasury’s Five Case Model, examining the strategic, economic, commercial, financial and management cases. This tested the rationale for the proposed investment, clarified the decisions the business case needed to support and identified the key assumptions underpinning it.
Evidence gathering and baseline assessment. Alongside this, the team reviewed supporting technical studies and market evidence and consulted with offshore wind developers, public bodies and supply-chain businesses. This provided an evidence-based assessment of port capacity, offshore wind demand and the competitive landscape in the UK and internationally.
Options appraisal and economic assessment. Hall Aitken examined a range of deployment and investment scenarios, considering different combinations of port infrastructure, market conditions and project pipelines. The team applied independent challenge to assumptions concerning additionality, displacement, leakage and the likely counterfactual. This helped identify the most credible scenarios for detailed assessment rather than relying on a single forecast.
Assessing local impacts and benefits. The analysis distinguished between national and local impacts, examining housing pressures, labour displacement, supply-chain opportunities and the effects of a temporary construction workforce. Reflecting the characteristics of Orkney’s island economy, the team recommended a benefits realisation approach focused on securing local jobs, skills and supply-chain benefits rather than assuming they would occur automatically.
Preferred option and deliverability testing. The team tested the robustness of the preferred option against a range of demand, market share and delivery assumptions. This included modelling both fixed-bottom and floating offshore wind opportunities, alongside scenarios involving continuous project delivery and a one-year gap between projects. Sensitivity testing was used to assess uncertainty and risk.
Business case assessment and recommendations. The findings were brought together in a revised assessment of the five cases, providing decision-makers with a stronger evidence base on strategic fit, deliverability, risk and value for money. The recommendations presented transparent assumptions, realistic estimates of economic impact and implications for future investment decisions.

Outcomes

The review confirmed the strategic case for additional offshore wind port capacity while identifying areas where the evidence needed to be strengthened. These included the market counterfactual, funding arrangements, demand assumptions and the assessment of carbon impacts.

Revised modelling indicated that Scapa Deep Water Quay could support 5–8 GW of offshore wind deployment capacity by 2040. The review strengthened the evidence available for subsequent planning and investment decisions, including HIE’s approval of £5 million for pre-construction activity. It also demonstrated the importance of challenging assumptions, using robust market evidence and credible counterfactuals, and applying place-based analysis to assess both the opportunity and readiness for investment.