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Offshore opportunities

Rhys Thomas, Supply Chain Policy Officer at RenewableUK, explains how the industry is developing

With approximately 48GW of offshore wind capacity already operating, under construction, consented or with commercial rights allocated, the offshore wind industry’s growth is opening up new opportunities within the supply chain.

“The timeline for construction according to the report “UK Offshore Wind: Building an Industry” extends from now to 2027 for its healthy industry scenario,” says Rhys Thomas of RenewableUK. “The scale of the UK’s ambition and the increased size of the equipment as it is deployed in deeper waters further offshore means that there will be many supply chain opportunities. The UK market is some 50 percent of the European market going forward.”
Opportunities, he says, exist across the whole supply chain as companies are investing in new facilities for foundations (eg TAG) and array cables (e.g. JDR cables). There have recently been announcements from Siemens, GE and Gamesa as well as Clipper that they will be establishing manufacturing facilities in the UK; companies are also just beginning to invest in new vessels for turbine installation - an area that has been highlighted as a pinch point in the past.

“The announcement in January 2010 of the Round 3 zone awards has seen a step change in supply chain investments,” explains Thomas. “However, the scale of the challenge means that we will need to see many more investments - the ‘Building an Industry’ report highlighted that for its ‘healthy industry’ scenario (which sees 23GW capacity installed by 2020) some 22 new factory equivalents would be needed for turbines, cables and foundations alone. Whilst we are seeing investments in many areas, one area that stands out where we would like to see more announcements of new capacity is in export cables.”

Opportunities, it seems, will arise in component or system supply as well as through service based demands. The greatest change relating to the supply chain seen in 2010 was the announcements from turbine manufacturers that they intend to set up manufacturing facilities in the UK for offshore wind. The large scale turbine industry for onshore wind has built up in Denmark, Germany and Spain, meaning fewer opportunities for turbine component suppliers to break into the supply chains. 2011, though, promises new opportunities in addition to those ‘outside’ the turbine such as foundations and cables.

Although the UK undoubtedly plays an important role in the sector, it’s difficult to pinpoint to what percentage this is a UK or European based supply chain. “There have been various figures reported on the percentage of UK content on offshore wind projects and it depends on how the sums are put together,” says Thomas. “We’ve seen figures reported of just 10 percent UK project for the London Array project, and more recently circa 20 percent for the Thanet Windfarm recently commissioned. It’s not surprising that we’re starting from a low base, given that the current powerhouses of the wind industry are Germany, Denmark and Spain. However, as more UK based companies invest in capacity and gain experience supplying projects, joining the likes of BiFab and JDR Cables, we will see the UK content percentages increase.”

In addition to the established offshore wind players, potential new tier 1 entrants to the UK market include many companies who are developing offshore turbines such as Clipper, Mitsubishi, Samsung, Alstom, GE, Hyundai, Goldwind, Sinovel, Doosan, Daewoo and Nordex. This year has also seen announcements from TAG Energy and TaTa Steel (Corus) on their intention to supply foundations as well as Prysmian cables picking up an export cable contract for the Gwynt-y-Mor project.

Any company wanting to work in offshore wind, advises Thomas, should “get to know the industry and put in the legwork promoting your offerings. Don’t wait for the wind industry to come to you, and don’t think it’s all about Round 3. Yes, the opportunities for Round 3 are huge, but your customers will be looking for experience gained already in offshore wind or similar sectors. There are some 16GW of projects in Round 2, Scottish Territorial Waters and the Round 1 and 2 extensions that are to be built in addition to round 3. Some of the Round 2 projects yet to be built are bigger than some of the Round 3 zones. “

Although supply chain relationships are already in place, Thomas suggests there will be ample opportunity to break into doing business with the offshore wind industry. “The scale of the challenge will mean that new supply chain relationships will need to be created,” he points out. “We are seeing examples of UK companies, such as TAG Energy, investing in capacity before forming formal relationships. The need to engage early with the industry is crucial - get to know how it works, how it is structured and who your customers will be. Events like the Crown Estate Supply chain ones are great opportunities to learn about the industry and there are major conferences and exhibitions of which RenewableUK’s annual offshore conference this year, to be held in Liverpool on 29-30 June, is a prime event to get to know the industry better. It’s about putting in the legwork.”

The Crown Estate supply chain events of 2010 enjoyed a high attendance and played a large role in raising awareness of the scale of the opportunities arising. Thomas adds: “I think the 2011 conferences will build on the success of the 2010 events and will have a greater focus on the opportunities with tier 1 suppliers such as the turbine manufacturers. Remember that when the 2010 events kicked off in February 2010, we were yet to see the announcements from Mitsubishi, Siemens, GE and Gamesa, about turbine R&D and manufacturing in the UK.“

The UK currently plays a leading role in the offshore wind industry and Thomas indicates that the potential exists to create a world-class industry. However, the offshore sector is rapidly experiencing global interest and the UK would also benefit from becoming a leading exporter.

“The Douglas Westwood report commissioned by RenewableUK ‘Building and Industry’ estimated that in Europe, the UK will stay ahead in terms of capacity installed until about 2023, after which the rest of Europe will become a larger market that a UK based industry can export into,” Thomas comments. “The key for the UK is to build a healthy, sustainable industry - decisions on investments need to start to be taken in the next couple of years.”



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