By Helen Campbell, UK correspondent

The UK sector is bracing itself for tightness across the wind supply chain. Among the exhaustive list of potential chokepoints feature turbines themselves; blades; bearings; export cables; the specialised cement used to anchor turbine tower foundation structures; supply and maintenance vessels; not to mention up to 70,000 skilled people needed to work in the sector if the UK is to get anywhere near meeting its renewable energy targets. 

The Carbon Trust, a non-profit organisation set up by the UK government, estimates that £75bn of investment  (£2.6m per MW)  will be needed to generate 29GW of wind power by 2020. The steepness of the challenge’s curve is evident in the Carbon Trust’s figures: between 2003 and 2009, 350 new turbines, (one turbine every 11 days), were installed – producing a total of just 1GW of electricity.

To achieve the 29GW by 2020 target, a further 6,000 turbines must be built at the rate of one a day from 2010 to 2016, rising to 2.5 a day from 2017 to 2020. Noting that these future turbines will be bigger and more complicated to install, the Carbon Trust equates the challenge to building eight Channel Tunnels in the next decade.

“There are significant concerns that the current short-term bottlenecks in the offshore wind supply chain will hinder the delivery of significant offshore wind capacity by 2020,” the Trust says. “These bottlenecks are a symptom of a supply/demand imbalance across all the markets the supply chain delivers to (onshore wind, mining, infrastructure) and offshore wind being de-prioritised given uncertain/lower returns.”

Keeping costs in check

With bottlenecks come price spikes. According to figures in its 2009 report, ‘UK Offshore Wind, Charting The Right Course’, trade association RenewableUK says the current capital cost of offshore wind is £3m/MW, having risen from an average of between £1.7m-2m seen in the last five years.

Supply chain confidence is a key factor in future costs, the association says. In what it terms the ‘low supply chain confidence’ scenario, costs would rise to £3.5m/MW by 2015, while the ‘high supply chain confidence’ scenario would see unit prices retract back to just over £2.5m/MW in the same timescale.

“We need to see a lot more [to know costs are not going to go sky-high] but, like so many parts of the renewable sector, and not just wind, it really is a chicken and egg situation and, at the moment, the impetus isn’t there,” said one industry commentator who preferred to remain anonymous.

“We have to hope it is just around the corner and we will see the supply chain improve and some of the shortages and long lead times we have seen in Europe start to balance out. But it needs to happen pretty quickly, or the sector will miss its own boat.”

Reduced supplier numbers, reduced competition, and the devaluation of sterling over the last three years, have helped to drive UK project costs up. Key to costs coming down would be a decoupling of the offshore wind sector from other industries, in particular onshore wind and oil and gas.

However, RenewableUK warns even extensive measures implemented now by government and industry to advance decoupling would not have any downward impact on project costs for 4-6 years, due to new facility lead-time.

Could niche markets prove pivotal?

Without that stimulation, suppliers are nervous of over-committing and tightness is inevitable.

Peter Gørlitz, divisional manager of Densit, one of only half a dozen manufacturers of the specialised high-performance grout needed for those foundations, says 75% of all offshore capacity installed uses mono-pile foundations, but these structures are expected to give share over to jackets and tri-piles as turbines are installed in deeper waters.

The performance requirements, and therefore the costs, of different grout grades change depending on the stress on the foundation, which varies with each type of structure. With grout accounting for 0.5-1% of total average foundation cost, suppliers need to be sure they are making the right decisions.

“We currently make four different types of grout for offshore use, and are looking to introduce new different products but only if the sector demand is there,” Gørlitz says. “With jackets and tri-piles, you can use a lower performance grout because the forces are not the same. Mono-piles need, in many cases, a very high-performance grout.

“Mono-piles can be used in up to about 30 m of water, and [most] water depths in Round 3 zones range from 25 m to about 40m, so the sector needs to move towards other foundations types. We think that mono-piles will account for 50% of all foundations by 2025, possibly even just 30%.”

At this niche end of the supply chain, there have been small signs of new entrants. For example, BASF the German chemicals maker, has recently joined the grout market. But the overall mood is muted while would-be investors await clearer signs and incentives.

“Round Three being announced might see talk of new investment. But with manufacturers, and particularly the sub-suppliers and those for whom wind is not their sole business, it really is a wait-and-see approach,” says Gouri Kumar, renewable energy analyst at Frost and Sullivan.

“Things are looking a lot healthier in terms of blades, but there is tightness with generators, bearings and gearbox manufacturers, and we definitely don’t have the capacity needed in terms of foundations.”

RenewableUK maintains that good progress on the supply chain confidence front ‘would see capital costs reduced by 15-20% in five years’ time, and on a strongly reducing trajectory.’ As such, confidence remains key.

To respond to this article, please write to:

Helen Campbell: cblhelen@yahoo.co.uk

Or write to the editor:

Rikki Stancich: rstancich@gmail.com