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Offshore Wind Sector Update

Offshore Wind Sector Update

By Alastair Lang, Business Relationship Manager

Headlines

  • Dramatic growth needed from currently 1.9GW to at least 18GW by 2020
  • UK - joint top of Country Attractiveness Index for offshore wind investment
  • Cost reduction essential, Task Force established
  • "Production line" manufacture philosophy
  • Target of 50% UK content
  • Skills shortages
  • Grants available
  • Free reports available for download

At the Crown Estate event held at Newcastle United’s ground, the presentations gave a clear indication on the current situation in the offshore wind market. So far the UK is producing 1.9GW of electricity by offshore wind equivalent to 1.5 percent of the UK’s electricity supply and is now producing more electricity by offshore wind than the rest of Europe put together. The target for the Government is 18GW from offshore wind by 2020 to meet the 15 percent renewable power obligation and aims to cut the cost of wind power to £100 per megawatt hour. Developers have registered their interest in 46GW. The investment required for 18GW is estimated at £50 billion and investors are looking at the preferred countries for investment.

One of the requirements to achieve the Government targets is the attraction of investors.  According to the Ernst & Young report on Country Attractiveness Indices for Renewable Energy, the UK rates highest along with Germany for offshore wind.  But this industry still has to be seen to be profitable for investors and this will require additional funding which is provided by Renewable Obligation Certificates, for which the banding is currently under review. Despite this, several turbine manufacturers are well down the route of establishing manufacturing facilities in the UK including Siemens (Hull), Mitsubishi (tba), Gamesa (Leith), Vestas (Sheerness), Samsung (Fife) and others.

Offshore Wind Sector Update One of the major issues is the cost of the electricity produced which is currently higher than the cost of electricity from other types of power generation. Much of the focus of the Government and The Crown Estate is on how costs can be reduced. Another concern is the connectivity to the UK’s National Grid.

For those interested in supplying products for the manufacture of the foundations, towers and nacelles, this means a commitment to providing their products at highly competitive prices and a commitment to continuous efforts to reduce costs further.  It was stated that costs have reduced by 40 percent over the last 10 years but this cost reduction needs to be accelerated. For the volumes required, companies need to be looking at establishing production lines for manufacturing the components required.  Cost reduction is achieved by using larger turbines and by producing higher volumes according to The Crown Estate. The issue is being investigated by the Offshore Wind Cost Reduction Task Force set up as part of the Governments Renewable Energy Roadmap. Details are on the DECC website.

One such example of the production line concept is the plan for OGN to produce wind turbine foundations (jackets) at their Hadrian yard in Newcastle. They have produced two designs – Triton with three legs and Atlas with 4 legs.  The huge building when constructed will contain areas for assembly, robotic welding, and blasting/painting in a production line.  The plan is to manufacture 3 jackets a week each weighing 600-900 tonnes.  The facility will also be able to produce other designs of jacket and also transformer platforms which can weigh up to 10,000 tonnes. OGN are investing £50 million in the yard which will be in operation in 2014.

The target is to reach a UK content of 50 percent from the current level of 32 percent. The foundations represent around 20 percent of the Capex and the turbine about 40 percent. In 2010, the Government made available £60 million for port infrastructure development which so far remains unspent. In addition funding through the Regional Development Fund Round 1 went to David Brown, OGN, OSBIT and NGenTec for offshore wind projects and there is further funding of £5 million available in Round 2.  Round 3 will provide £1 billion, some of which could be for renewable energy projects. Funding through the TSB Catapults has included £50 million for the Offshore Renewable Energy Catapult including Narec and Glasgow bases including offshore wind developments. The Advanced Manufacturing Supply Chain Initiative (AMSCI) managed by the TSB will provide £100 million in two tracts, the first of £69 million closing on 13 th June 2012.

As with other sectors, there is a shortage of skilled personnel in design, technology, engineering, project management – the Crown Estate website has a downloadable document detailing career opportunities.

Further information about offshore wind can be obtained free of charge from the websites of DECC, The Crown Estate and Ernst and Young.

Offshore Wind Sector Update

The National Metals Technology Centre has recently completed a review of the Opportunities and Challenges for Energy Materials in Attaining the UK’s 20

20 Targets for Offshore Wind on behalf of the Materials KTN Metals and Alloys Group.

Offshore wind is the UK’s fastest growing energy sector with around 18GW predicted to be installed by 2020, achieved by a rate of installation of up to around 600 turbines per year. Offshore wind therefore offers significant challenges and opportunities for the UK's metals and manufacturing industries. This review was written in co-ordination with the Materials UK Energy Materials Working Group and highlights opportunities and challenges in three main areas:

  • Availability of raw materials
  • Manufacturing and supply chain
  • Installation and maintenance

The review, which was written by Dr Kathryn Jackson, is available to download for free by members of the Materials KTN Metals and Alloys Group here.  It is also free to register for the Metals and Alloys Group.  Members must be signed in to the website to gain access to the report.

The review is the first in a series of three reviews, with the second review on ‘Opportunities and Challenges for Energy Materials in Attaining the UK’s 2020 Targets for Combined Cycle Gas Turbine Power Generation’ due to be released shortly, and a third review on materials for nuclear to follow.  If you would like to find out more about how NAMTEC can help to support companies in the materials supply chains for power generation, please contact Graham Small ( graham.small@namtec.co.uk , 01709 723958).


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