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Powering up: can offshore wind deliver a renaissance in UK manufacturing?

Louise Bateman
18th February 2010
The UK is positioning itself as one of the biggest offshore wind markets in the world, with the potential to deliver thousands of British jobs, but it still has no major manufacturer investing in it. Louise Bateman reports.

Vestas chief executive officer Ditlev Engel was in London last week trying to present a positive spin to the UK media on sluggish fourth-quarter results. The boss of the world’s largest wind turbine manufacturer also used the opportunity to clarify Vestas’ position on re-entering the UK manufacturing market. The company would not, he said, be investing in production in the UK at least until 2014, at which point it would consider the opportunities being presented by the UK offshore wind sector.

It doesn’t come as any great surprise that Vestas is taking a ‘wait and see’ position on investing here. It was just six months ago the company caused headlines by closing its Vestas Blades UK plant on the Isle of Wight, with the loss of 500 jobs. The company has been focusing on expanding its onshore production in the US and China markets and, as its latest set of results suggest, is still finding the market tough.

But, while its UK intentions could have been forecast, Vestas’ position underscores the difficulties the UK still faces in securing the many thousands of jobs, investment and infrastructure this sector is expected to deliver over the coming years. Investing in offshore wind could cost upwards of £75 billion and only provide a rate of return of around eight per cent, according to the Carbon Trust.

Jobs in the UK offshore industry
Figures vary as to quite how many jobs the offshore wind industry could deliver between now and 2020. The British Wind Energy Association (BWEA) has put it at 45,000, while the Carbon Trust says it could be as many as 70,000. Not all of those jobs would come directly from wind turbine manufacturing; the supply chain in the wind energy sector is varied, encompassing everything from design to logistics. Associated industries such as the professional services are also expected to benefit in terms of new jobs.

But there’s no question that attracting a turbine manufacturer to British shores would be a major coup for the UK in its ambition of being a world leader in the offshore wind sector. The sector will not reach the scale of the car manufacturing industry in the UK in the shorter term, but with the right level of investment, by 2050 it could be creating 220,000 jobs, according to Government estimates.

Following the financial crisis that has caused the world’s worst recession since the Second World War, manufacturing is back in fashion and the ability to produce the giant wind turbines required by the offshore wind sector at factories on UK shores is certainly seen as a political vote winner. Last week, the Liberal Democrats came out with a policy to turn the UK’s old shipyards into manufacturing hubs for wind turbines.

Discussions taking place between Government and wind energy manufacturers
Behind the scenes, discussions are in fact taking place between the UK Government and manufacturers, with sources close to those negotiations saying one or more announcements could be made within a matter of weeks. Likely candidates include Siemens Wind Power, which has won the contract to produce turbines for the London Array offshore wind farm and has already indicated an interest in establishing a manufacturing base in the UK. Other manufacturers thought to be in the frame are Clipper Wind Power, which is developing the world’s longest wind turbine blade in the northeast, and Mitsubishi Heavy Industries.

The Government has certainly touted the Crown Estate's Round Three offshore wind licensing programme, unveiled last month, as presenting a great opportunity for UK PLC by creating one of the biggest offshore wind markets in the world. It is expected to deliver up to 32 gigawatts of renewable energy in British waters – amounting to the deployment of 6,000 wind turbines by 2020.

Prime Minister Gordon Brown has described it as “a substantial new platform for investing in UK industrial capacity.”

But for the moment, the wind energy industry seems more concerned about the challenges being presented by this potential industrial bonanza than the opportunities.

The BWEA has said more Government action is needed to win a manufacturing base in the UK, while the Carbon Trust has outlined the enormous engineering challenges that remain in deploying thousands of offshore wind turbines “faster, cheaper and more safely than before”.

Andrew Mills, ceo of Narec, which is at the forefront of offshore wind energy technology in the UK, says the UK is facing tough competition from existing manufacturing bases abroad and decisions have to made “this year”, if the country is in with a chance of building a sizeable production base in the UK.

One region that is positioning itself to take advantage of these opportunities is the northeast. As well as being the base for Narec, the region is also set to be the home for the world’s largest open access offshore wind turbine test facility, and Clipper Windpower has just announced that it will go ahead with its planned factory on the Tyne River to build its prototype 100 metre blade, creating 60 new jobs by the end of the year and the potential of 1500 new jobs down the road if production gets to full capacity.

Mark Pearson, Innovation and Business Development manager One North East, the regional development agency that is funding the new test facility, says the UK is well positioned to attract investment into its offshore wind energy sector. “The Government has put in place the market and regulatory and fiscal framework that will allow the private sector to invest significantly,” he says.

Mabey Bridge and other companies investing in UK wind energy
New investment certainly appears to be starting to flow into the sector. Last month, Mabey Bridge, a manufacturer of bridges and towers, announced a £38 million investment in a new facility in South Wales to manufacture wind turbine towers, creating 240 new skilled jobs. Meanwhile, Welcon, in Campbeltown in Scotland, which makes towers for onshore turbines, announced it is expanding the plant to produce larger offshore wind towers. 

And there are companies already operating in the UK wind energy sector. JDR Cables, which produces subsea inter array cables, is another. It has won contracts recently for the Greater Gabbard and London Array offshore wind farms and also for the Wave Hub marine test centre, resulting in a new factory in Hartlepool with the creation of 100 new jobs.

Converteam UK, one of the companies bidding for the wind turbine test facility contract, already supplies power converters to wind turbine manufacturers, and is a major supplier to Siemens.

Other players include shipping company Seajacks, which owns and operates two offshore installation vessels in the North Sea. Previously operating only in the oil and gas sector, Seajacks is now growing the business into the offshore wind farm market and looking at expanding its operating fleet.

Biggest investment decision concerns suitable sites
According to Pearson, the biggest issue when it comes to investment decisions is around suitable sites and key site access and port facilities.

In terms of speeding up the planning process for establishing manufacturing sites, the Government says it has created a new Infrastructure Planning Commission to take consent decisions in 12 months of the receipt of an application.

“We’re also supporting infrastructure development, such as port facilities for offshore wind – for example we launched the UK Ports Prospectus, which sets out the UK port offer for potential manufacturers,” says a DECC spokesperson.

Wind energy industry needs skills base
Other key considerations of any manufacturer thinking of investing in the UK will be the UK skills base and cost. So how confident is the Government that the UK can address both of these?

“The increased need for skills is a challenge,” admits a DECC spokesperson, “but it is also an opportunity. For the first time in a generation, the energy sector will be a major player in the recruitment market, offering skilled and rewarding jobs to young people and mature recruits alike.”

Among the measures being taken, says the Government, is the creation of a National Skills Academy for Power to provide the electrical skills for renewable energy and apprenticeships for the wind sector, with first apprentice ready start in the new academic year.

“On costs, it’s important to remember that we’ve created one of the biggest offshore wind markets in the world – together with a clear, stable regulatory environment for companies to facilitate further investment offshore,” says the DECC spokesperson. A key part of this was extending the Renewables Obligation to 2037 and increasing support level for offshore wind.

There are also measures being taken to bring down the costs of offshore wind installation through innovation. Last year, the Carbon Trust launched the Offshore Wind Accelerator Foundation Design competition, which aims to cut the cost of offshore wind by 10 per cent.

So there is plenty of activity to secure the UK's position as the number one market for offshore wind, the question is it enough to generate adequate levels of private investment to take it to the next stage speedily enough. 

According to Pearson, there is “positive engagement” with a number of investors interested in the UK, but he’s not counting his chickens yet. “There is no inherent reason why wind turbines can’t be manufactured elsewhere,” he admits. “What the UK needs to do is to put forward a compelling proposition that this is best place to invest.”

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Powering up: can offshore wind deliver a renaissance in UK manufacturing?
The UK offshore wind market has no major manufacturing investment yet
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