METHIL, Scotland -- You can see the last century of Scotland's history – and maybe the next one – in a short walk around the Fife Energy Park in Methil.

On a slight rise near the seashore sits a decades-old building. Inside are the showers where miners washed off coal dust and other dirt after long days digging coal from the seams that extended below the seabed.

Turn slightly to the left, and you see the base of a suction platform for an oil derrick. During the North Sea boom, the park employed 2,500 men popping out heavy steel equipment, said Peter Holt, the site manager. Although companies like Ithaca Energy want to drill new fields in the North Sea, the consensus is that the area has passed the halfway point: 38 billion barrels have been extracted from known reserves and perhaps only 25 barrels remain.

But inside the giant (47.5 meters high, 134 meters long) metal works erected to build oil platforms, quiet confidence reigns. Burntisland Fabrications has signed contracts to deliver 44 of the $2 million jacket-style platforms for offshore wind platforms, said, Ian Scrimger, business development manager at Burntisland. The company will expand to 200 units a year in the near future. More

"Eighty percent of the business will be renewables. Now, it is about 10 percent," he said. "We see it quickly turning."

A short walk through the mud leads to a building that's expected to be complete in a few weeks. The building will house the Hydrogen Office, where storage startups like St. Andrews Fuel Cells will develop and demonstrate their products. A 750-kilowatt windmill will provide power for splitting water into hydrogen, says Derek Mitchell, who oversees the project. (St. Andrews is actually developing solid oxide fuel cells.) The roads and other outdoor areas will in part be constructed from buildings – like the showers – that are scheduled to be demolished to make way for new structures.

"Scotland wants to get half of its electricity from renewable resources in 13 years, which is fine in principle, but if you can't store it, you start to impact the efficiency," Mitchell said. "Hydrogen is a renewable storage technology. There are battery technologies, pumped hydro and the like, but hydrogen is very flexible, versatile."

The new energy centers are receiving the bulk of their funding from private investors, with some government support. But feudalism isn't that far away, Holt told me. In 2005, most of the land was still owned by the Earl of Weems.

Like nearly every other industrialized nation, Scotland is trying to transform itself into a green powerhouse. The government has set a goal of getting 31 percent of its power from renewable resources by 2011, up from 20 percent today, and 50 percent by 2020. That's far higher than the U.K.'s overall goal of 15 percent by 2020.

But unlike a number of other nations, Scotland's green industry isn't growing outside of or in opposition to the fossil fuel industry – it is the fossil fuel industry. Companies hoping to build wave or tidal farms are largely staffed by execs and engineers trained in planting large structures out at sea for oil companies (see The Missing Ingredient in Tidal and Wind Power: Standards).

The same goes for wind companies. (Interestingly, oil driller Ithaca Energy partly powers one of its rigs with two wind turbines.) The startups bound for the Hydrogen Office will likely rely heavily on chemical industry know-how from oil and gas companies, as well as the fossil fuel engineering specialists at University of Strathclyde, according to Mitchell.

"Ultimately, we think that the same skill set maps to marine energy," said Allan MacAskill, business development director for SeaEnergy Renewables, which is part of a consortium to build and operate two offshore wind farms (see When Oil Rig Met Wind Turbine). "The opportunity is the know-how."

MacAskill himself tends to epitomize the trend. He worked for oil giant Talisman for years.  A wind project he oversaw for the company became the basis for SeaEnergy.  After the industry develops, SeaEnergy may move into wave and tidal projects, he added.

Even the recent resolution passed by the Scottish Parliament to ban further nuclear production is bound up with the plan to grow a sustainable business out of the oil industry. Jim Mather, the minister for enterprise, energy and tourism, cited the oft-heard complaints about nuclear during an interview: expense, security and waste. But then he turns to jobs.

"We have an industry here that is evolving. We should be proactive and play to our strengths," he said. "The potential of a small land mass is enormous."

If the green industry takes off, it could have strong political implications too. Mather's Scottish National Party that wants to hold a referendum on complete independence around 2011. Public opinion polls show independence versus staying in the U.K. tied at around 40 percent. Rising employment figures never hurt.

England could go from having "a sullen tenant to a good neighbor," Mather said.

Start With the Weather

If geography is destiny, a renewables industry seems inevitable. The weather is terrible: Wave trains and wind gusts cross the entire Atlantic before crashing into Scotland. The outline of the coasts and islands have also created strong tides in places like the Pentland Firth, often called the Saudi Arabia of tidal power.

Scotland has an estimated potential of 36.5 gigawatts of wind and 7.5 gigawatts of tidal power, or about 25 percent of the estimated total capacity for the European Union, and up to 14 gigawatts of wave power potential, or 10 percent of the capacity in the E.U.

Layered on top of that is the human capital. Besides willing politicians and oil industry alumni, the universities in the area have extensive backgrounds in renewables. Stephen Salter conducted some of the earliest experiments in wave energy at the University of Edinburgh. A new tank that can analyze both wind and tidal interaction is currently under construction. The European Marine Energy Centre in Stromness' Orkney Islands boasts both a wave energy testing center and a tidal testing center where companies can experiment with prototypes in the field.

The wave center has five grid connections and the tidal one has four, said Edwina Cook, business development officer at EMEC. The center feeds the nominal amount of power from the prototypes to the grid and also provides third party validation of performance.

Services will also likely be an export along with equipment. "We lead in subsea engineering here," said Tom Lamb, head of the energy office for Scottish Development International. "If you go to offshore oil developments anywhere in the world, you will find a Scottish company in there."

The oil platforms that collapsed during Hurricane Katrina were not built to North Sea specs, he noted. 

Still, hurdles lay ahead. For one thing, the major names in wind power are chasing the same goal. Scotland might have the wind, but the contract to build and run many of the offshore parks could go to companies based in Denmark, Norway and Germany.

And, unlike the North Sea, the lion's share of the energy may not be exported. It will be consumed locally. The Scottish economy will benefit, but the boom may be less exuberant than when barrels of oil were gushing out of Aberdeen.

Despite the potential, wave and tidal power – where Scotland arguably has a bigger lead over other nations – still remain in the experimental phase. Pelamis Wave Power has only completed one commercial installation and it's one of the oldest companies (see Photos: Wave Power in Action). Most, like tidal expert ScotRenewables, are still raising money to build prototypes (see Tidal Power on the Cheap).

"It's like the early days of the Wright Brothers," Ian Bryden, professor of renewable energy at the University of Edinburgh, who analogizes the current situation to the early days of aeronautics. "They had biplanes, triplanes. It took a long time to evolve."

The U.K. also has a somewhat dismal record when it comes to commercializing laboratory technology, according to U.S. VCs and others.  Israeli start-ups gather more venture funds.

Then there are the infrastructure issues too. Despite the plunge in oil prices, exploration continues, so the wind industry has to compete with fossil fuel power for ships, cranes and employees. Wave and tidal companies face even a bigger hurdle.

But Cook asks skeptics to think about Burgar Hill in the Orkneys. Back in the early ‘80s, some of the first large-scale wind turbines were tested there. It also served as an early experiment for the once crazy concept of community wind service.

The prototypes and power service at Burgar failed, she admitted. But when you drive around Scotland, it's tough not to notice the wind farms.

Tags: coal, emec, greentech, oil, oilrigs, pelamis, scotland, scotrenewables, seaenergyrenewables, tidal, wind