Offshore wind – the Made in Britain challenge

The UK offshore wind sector is expanding rapidly, buoyed by the government’s target of a threefold increase in capacity by 2030 to 40 GW and the prospect of a fourth round of contract for differences awards later this year, in which offshore wind has a designated ‘pot’ of support to draw on. The sector’s expansion is creating new employment – by 2019 the sector was already supporting about 11,000 long-term, skilled jobs, and this could grow to as many as 27,000 by 2030. Moreover, as with any major industry, benefits in terms of indirect employment flow throughout the chain of companies which supply the services and equipment to offshore wind projects. Estimates suggest the sector could support as many as 69,800 direct and indirect jobs by 2026.

Made in Britain

A central aim of the government’s industrial strategy is to maximise those benefits by boosting the percentage of content sourced from companies operating in the UK. The intention is to build up an industry which can support the domestic sector and export goods and services as the global offshore wind industry expands. This ambition is in tune with the sector’s own needs. If it is to meet the ambitious 40 GW by 2030 objective, its supply chain must grow to support a more rapid rate of construction. Other European countries have ambitious expansion targets, which means UK suppliers will also have opportunities for exports.

In 2019, the Offshore Wind Sector deal was agreed with the government setting a target of 60% UK content over the life time of a wind farm commissioned from 2030 on the basis of the then target of 30 GW capacity by 2030. Already major developers, such as RWE Renewables, are targeting 50% UK content in their current projects, but doing so does not come without challenges.

Raising the 2030 capacity target from 30 GW to 40 GW provides more demand certainty for UK supply companies hoping to move into the sector and grab a slice of the action, but also means that the supply chain must expand even faster than originally envisaged. The UK is a world leader in offshore wind with more operational capacity than any other country. Current projects are already contributing billions of pounds of investment to the UK economy. However, many major components – wind turbine generators, foundations, substations, export and array cables – have historically come from countries like Denmark and Germany, where manufacturers of onshore machines successfully diversified into the newer offshore market.

To achieve the 60% target, and, more importantly, the jobs and investment the target implies, suppliers and developers need to develop new skills, competencies and partnerships. Clear capacity targets, funding support and investment in infrastructure, such as ports, all help to reduce the investment risk this entails.

Attracting equipment manufacturers

UK content is defined under the government’s content reporting methodology as the total undiscounted expenditure by the owner on a wind farm ultimately spent through contracts awarded to companies operating in the UK. This means that if major developers and equipment suppliers set up UK subsidiaries this adds to UK content, but it does not if a UK company wins work but contracts out to other companies or its own subsidiaries abroad.

As such, a first critical step in supply chain growth and increased UK content is attracting the established offshore wind equipment manufacturers, and, with certainty building around the UK’s offshore wind ambitions in recent years, successes are already stacking up. In 2017, MHI Vestas announced the repurposing of a decommissioned oil plant in Fawley, Hampshire as a new painting and logistics facility for its 80 metre blades. RWE’s Triton Knoll offshore wind farm is one of the first projects to be installing blades finished at this new plant.

Prysmian has won a contract to supply the submarine and land export cables for RWE’s Sofia wind farm, but the UK doesn’t yet have the capacity to make these state-of-the-art products. However, Prysmian is building the first UK submarine array cable core manufacturing facility in Wrexham to supply the Hornsea 2 wind farm project, an example of the growing opportunities in this area. An expansion of the Siemens Gamesa blade factory in Hull is also on the cards. In February, the company applied for planning consent to enlarge its manufacturing plant so that it can build longer blades for the latest generation of larger offshore wind turbines.

And then, in March, GE Renewables confirmed that it would build a blade factory at Teesside to make the world’s largest turbine blades, the Haliade X, for the giant Dogger Bank wind farm. The factory will be a huge boost for Teesside and is expected to employ 750 people directly and generate another 1,500 supply chain jobs.

Infrastructure support

Any supply chain needs infrastructure and for an offshore industry ports are critical. RWE has a history of investing in ports not only to support construction, but to leave an infrastructure legacy which can encourage future long-term industry growth. Through the Triton Knoll wind farm development and its turbine partner MHI Vestas, RWE helped establish new turbine-handling capabilities at Able UK’s Seaton Port in Teesside. Seaton has since gone on to further success, winning a major turbine handling contract for the Dogger Bank A & B wind farms.

RWE has also been resident in the Port of Mostyn in North Wales since the construction of North Hoyle, the UK’s first commercial wind farm. The company invested in a new ten-berth pontoon enhancing the port’s capabilities, as well as establishing a major new operations and maintenance base there, creating a 100 long-term jobs. More recently, the government in October 2020 pledged £160 million to develop ports and factories for the offshore wind sector and to establish two new offshore wind hubs. In March, the government announced £75 million for the Able Marine Energy Park on Humberside, while the Teesworks Offshore Manufacturing Centre will get up to £25 million.

Knowledge base

In addition to these investments, the UK has much to build upon as its offshore wind sector grows. It has civil engineering contractors which can deliver the onshore construction elements of an offshore wind farm, while offshore topside structures for the conversion of turbine power prior to transmission to shore are often made in UK fabrication yards such as Heerema Hartlepool, Burntisland Fabricators and Harland and Wolff. Harland and Wolff also signed a letter of intent in December to build two new state-of-the-art offshore wind development vessels for UK-registered company Triumph Subsea Services.

In addition, the UK boasts some notable specialist suppliers such as FT Technologies, which supplies sensors for 70% of the world’s offshore wind turbines and Granada, which supplies Davit cranes fitted to offshore wind turbines’ foundations. Davit cranes were given their first ‘break’ into offshore wind through RWE’s Gwynt y Môr project. There are growing opportunities in offshore field assembly, maintenance and operations supply, particularly after initial service and warranty periods end. These services cover everything from unexploded ordinance detection and removal to offshore installation, crew transfer and service operations vessels.

Another intriguing possibility are the potential synergies with the UK oil and gas sector, which not only has long experience of operating offshore, but of building expertise and intellectual property which has been exported around the world. Oil majors BP and Shell’s recent entry into offshore wind may see parts of the UK oil and gas supply chain follow their lead to seek new opportunities in the sector as energy transition policies limit growth in their traditional business.

Innovation mission

Building a globally competitive supply chain is not just about attracting manufacturing, but creating a complex ecology of businesses and organisations in which innovation can thrive, from universities and industry bodies to equipment manufacturers and wind farm developers. This is why the industry has focused on hubs and regional industrial clusters, including the Offshore Energy Alliance in North Wales and North West, of which RWE is a founding member.

The Offshore Wind Industry Council has highlighted the need for UK companies to build intellectual property to allow them to compete effectively in export markets. It has also, as part of the Offshore Wind Sector Deal, established a long-term business transformation programme with £100 million of funding, which over the next decade will focus on direct support to supply chain companies, including grant funding. Moreover, in its 2021 budget, the government announced the creation of a National Infrastructure Bank, based in Leeds, which will be capitalised by £12 billion. £20 million in funding was announced for a competition to develop floating offshore wind technology, while, more broadly, £375 million is to be allocated to a ‘Future Fund: Breakthrough’ scheme designed to support innovation across the UK economy.

So, the scene is set and the starting pistol has been fired; clear targets for capacity, a funding mechanism that provides investment certainty and government and industry support for innovation and infrastructure.

The UK content target is ambitious, but there is no question that the offshore wind sector is already delivering growing opportunities for an expanded UK supply chain and is set to create tens of thousands of direct and indirect jobs over the next decade.