By Rikki Stancich in Paris

WindEnergyUpdate: What has The Crown Estate identified as being the key supply chain issues underlying the large-scale deployment of offshore wind?

Adrian Fox: The main areas that require attention now include new turbines, export cables, vessel supply, skills (which really is a ticking time bomb) and portside and harbour facilities.

With such a rapid expansion of such a small industry currently, there is bound to be a shortage because the capacity simply doesn’t exist – we are looking at installing over 47 GW by 2025.

There are signs that the supply chain is coming together. Last year was a great year in terms of moving in the right direction. From mid-last year, some 3-4 new vessels were ordered and we believe there could be as many as  12-15 new turbines designed for offshore use hitting the market around 2015.

JDR cables opened in the UK last year, which is a step in the right direction to resolving the cable shortage.

With regard to the ports and harbours issues, the government has recently announced a £60 million competition to create new infrastructure around our coastline , which, while certainly not being the whole answer, will go some way toward addressing infrastructure issues, as well as showing the Government’s commitment to this new industry in the UK.

When it comes to skills, there is a clear understanding of the challenge but there is no real focal point as to who will deal with the issue. The government is partly addressing the issue, but there is a need for much greater focus.

We are going to need project managers, electrical engineers, offshore engineering specialists, vessel operators, / master mariners and skilled work hands, in far greater numbers than currently available.

We have to make sure that we have stable growth that reinforces itself continually. Everyone recognizes that the time is now and we are moving in the right direction.

WindEnergyUpdate: The Crown Estate was criticized earlier this year when it became evident that the majority of Round 3 contracts had been allocated to foreign firms, which in turn, subcontracted to foreign firms. Critics said this undermined expectations of offshore wind generating 70,000 UK jobs. What is your response to this?

Adrian Fox: I don’t think the criticism was leveled at The Crown Estate directly. It is more accurate to say that there was a general disappointment that if we are setting about creating an industry, that much of the value is currently going to overseas companies and we have to reverse this.

But if your starting point is with the utilities, how many UK-owned utilities are there? There are only two: Centrica and Scottish and Southern, all the rest are European utilities some of whom have framework agreements with parts of the supply chain that are already established.

So it wasn’t aimed at The Crown Estate, it was more saying that we are starting from the wrong base. It’s a big mountain to climb.

It is the same as UK oil and gas; when North Sea oil first started, 20% of the value remained in the UK, while 80% was going to the Gulf of Mexico, where all the expertise, vessels and technology was based. Eventually, we had to grow our own supply chain in the North Sea, which we did very successfully, in very short order.

Renewable UK’s estimate of 70,000 jobs in the UK generated by the wind industry does depend on the extent to which the UK develops its indigenous supply chain.

WindEnergyUpdate: How viable is it that turbine suppliers can deliver 7000 reliable offshore turbines in 5 years?

Adrian Fox: It’s a big ask, there is no doubt about it. The fact that these are multi-million pound projects and that there will be a need for private finance, there is a requirement on turbine suppliers to deliver more reliable machines.

There is a huge prize for this improvement; enhanced economics from better availability, reduced OPEX costs from reductions in interventions and the built-in  hazard frequency reduction that occurs.

The Crown Estate will be announcing the award of sites for offshore demonstration projects in UK water for these new technologies in about 3 months and this will enable developers and financiers to evaluate the potential performance from a number of manufacturers

WindEnergyUpdate: Is it feasible that suppliers will be able to respond to the pending demand spike for offshore turbine components, services and port facilities?

Adrian Fox: There is already £60 million that is being made available for waterside developments – it has been recognized that new facilities can’t and won’t be undertaken by manufacturers, landowners and port operators alone.

I think its realistic to say that we haven’t quite grasped that to deliver the maximum capacity that could be built will require more than just manufacturing hubs. A lot of the emphasis has been on integrated manufacturing sites  - port side facilities that will have manufacturing facilities to handle manufacture of turbines, towers, blades, foundations, and that has a hinterland that you can supply components from either by road,  rail and sea.

The focus has been on that because that is where a lot of the value and jobs can be created. Even if two or three of those are created, the question is then that some of the wind farm machines may well still come from Denmark or Germany and maybe the foundations only might come from the UK.

And there will be other facilities – perhaps for assembly, for substructures, cable manufacture and deployment, and those may be at other locations, rather than located around the clusters. So there is a whole second-tier of portside facilities, which just for the sheer volume of Round 3 will need to be developed.

But the question is still there : How much support will those guys need from  government and private investors? I don’t know the answer to that, but I do know that there will be a requirement.

Skills development is something we also need to watch carefully, given that it requires a large cost and a significant investment of time. We need to tackle it now so that it doesn’t catch us out later. Its not just the offshore wind industry that needs more good people– its other renewables and the power industry generally so we should be  looking at how we can cooperate on skills training and knowledge sharing .

WindEnergyUpdate: In terms of ‘balanced growth’, we are looking at a massive build out of wind farms over the next ten years. But what happens next, after Round 3 - how do you envisage the offshore industry being sustained?

Adrian Fox: The targets we are looking at focus on 2020-25 as the medium-term, but the long-term EU targets are 2050 for Europe to become a low carbon energy society.

In terms of new capacity, there is a long way to go beyond 2020. Then there will be re-powering, which could require full-scale replacement of turbines, operations and maintenance, replacement of turbine components and blades. 

Also, the UK really has set a precedent and you now see China and other European countries setting more ambitious goals for building offshore wind capacity.

In terms of capacity if you just look at the UK, there is a certain upper limit that trigger people to say “no more” due to the intermittency of wind and all the potential issues that surround grid stability, if the penetration is up around 40%.

So in the long-term if we are to utilise the North Sea resources in the UK, Norway, Germany and the Netherands, there does need to be an integrated electricity network that utitilises renewable energy in a much more efficient way. In other words, linking up regional resources such as Norway’s hydro, North Sea wind, Mediterranean sun to make them more demand responsive in aggregate. 

We also need alternatives, such as biomass, nuclear, renewable heat, so that the UK has a diversity of low carbon energy supply.

WindEnergyUpdate: To what extent has the permitting and approval process delayed offshore wind energy developments? Could (and should) the process be sped up?

Adrian Fox: To some degree it has slowed progress in the past. We need to see what happens at the general election, however, it is unlikely that the main parties  would change the fundamentals of the new IPC (Infrastructure Planning Commission), which is a streamlined planning process, based on national need, early and comprehensive stakeholder consultation and its very quick.  Everyone recognizes we need to make these important decisions quicker

The ‘national need’ argument has been a strong driver.

The IPC is now operational and that should streamline business. They have had clear guidance as to what is required, and I am confident that will be able to turn around applications within a year.

As long as projects have carried out mitigation analysis thoughtfully, there shouldn’t be a problem. Project location flexibility in Round 3 Zones will allow developers to accommodate a number of other stakeholders with conflicting requirements.

Moving forward, when it comes to offshore assets, I am optimistic that we’ll find a better way than previously experienced.

The onshore grid reinforcements could prove harder to consent than offshore, given that it could run into more localised opposition.

WindEnergyUpdate: What kind of support is needed to ensure that the envisaged
offshore wind capacity is brought online, in time to meet the 2020 renewable energy targets?

Adrian Fox: Development of offshore wind in North Europe requires cooperation, skills and knowledge sharing.

When it comes to the growth of resources and development of the supply chain we cannot build Round 3 from the UK or Europe alone; it should become a global supply chain for offshore wind based on a strong UK/North European industry.

Governments have to continually provide a stable framework of subsidies, consistent energy policies and a stable regulatory regime, which the UK has been doing over the last few years and what currently makes the UK so attractive for offshore wind development.

Both developers and supply chain need to commit to programs, timescales, stakeholder engagement, they need to be open, transparent, with procurement procedures and standards, with clear packaging of contractual obligations.

There needs to be more sharing within the commercial limits; if we are going to grow an industry, we cannot grow on secrecy. People talk about learning from mistakes, but few actually do it. Well, the OEMs don’t; the developers and contractors to some degree do. Costs could then come down and the risks could be reduced.

Finance will not be an issue in the long-term (although it is now), because it’s green technology, its new, it’s the future. But first, investors want to see risks reduced and they want to see the costs come down.

To respond to this article, please write to the Editor:

Rikki Stancich: rstancich@gmail.com