The UK has consistently failed to secure manufacturing capacity for offshore wind projects. As the intensity of projects ramps up, this will expand from a missed economic opportunity to endangering the broader aspirations for renewable energy.

The scale of the challenge is stark. A recent report from the Institute for Public Policy Research (IPPR) reported that the UK had only 1.4% of Europe’s wind turbine manufacturing by volume. It based these on the period from 2008 to 2022, at a time when the UK installed 15.2% of turbines.

The Offshore Wind Sector Deal, of 2020, attempted to codify some ambitions for the country. This set the aim of reaching 60% UK content by 2030, while also aiming to scale exports fivefold, to £2.6 billion. Current UK content in the broad sector is around 42%.

The challenge is to find a way to maximise local content, while also controlling costs. “Inflation is difficult. Government is starting to recognise that. We’re trying to predict what the CfD and the market price will be, it’s not necessarily a drag but it’s a volatile world,” said David Hinshelwood, Muir Mhòr project director.

Economic incentives

And there is an economic opportunity that is being lost through this failure. The two major parties have made manifesto commitments around this.

The Labour Party has said it would provide a British Jobs Bonus to clean energy developers. This, it said, provides up to £500 million from 2026. The aim is to “incentivise firms who offer good jobs, terms and conditions and build their manufacturing supply chains in our industrial heartlands, coastal areas, and energy communities”.

Meanwhile the Conservatives have said they would offer a bonus for energy companies investing in manufacturing. The reward is available to those “that invest in manufacturing in the most disadvantaged places in the UK or invest in more sustainable supply chains”.

Policy moves are already under way in this regard, to try and encourage local manufacturing. ScotWind, for instance, required developers to submit supply chain proposals on what may be achievable.

Schneider Electric UK&I president Kelly Becker said the UK was well placed to claim its place in the green economy.

“The UK also has some of the best universities and researchers in the world, which positions it at the forefront of the AI and digital transformation, both critical to the energy transition. Taking advantage of these new technologies in accelerating the energy transition has the potential to supercharge local economies across the UK and maximise the UK’s competitive advantage globally by recognising local expertise, growing skills, and creating new opportunities.”

Becker said manufacturing was “at the heart” of the energy transition. “Long term investment in the manufacturing industry will be critical to driving continued growth and prosperity, to help the UK reach its net zero goals and set the standard for climate and sustainability standards globally.”

“We welcome the government’s recognition of the UK manufacturing sector and recent policies such as full expensing which help the UK to attract more investment. We recently decided to expand our Leeds site as we strongly believe in the UK as an investment destination. To further increase the UK’s competitive advantage, we would encourage the Government to develop a comprehensive industrial strategy to set the long-term direction of policy.”

Sounding it out

One project working under this offering is the Muir Mhòr offshore wind farm. The floating project aims to generate around 1 GW of power – with the aim of reaching this by 2030.

Fred. Olsen Seawind and Vattenfall are working on the project via a joint venture. It won seabed rights in January 2022, under the ScotWind auction.

“We’re working to improve our understanding through week-to-week engagement with the supply chain,” said Muir Mhòr procurement manager Stephen Kennedy. “We want to understand what technology is available and what will become available.”

The project has already invested £14.5 million, to assess the site and acquire crucial data. Of this, it has spent just over £5mn in Scotland.

Kennedy was optimistic about industry in the UK, noting the broad experience in the country.

“If there were only a few projects we could achieve a high level” of local content. “Given that there are so many projects in this window, that puts pressure on the supply chain. It has to scale to cope with demand – and that’s a big challenge.”

Company collaboration

Working together is alien to competing projects. But to support the supply chain in the way that is needed, it is necessary.

Hinshelwood said there was a huge opportunity, for the industry and Scotland.

“It’s a brave new world where developers are – and have to be – more open than they have been in the past, even while the CfD process puts us into competition. No one’s got a solution to that.”

Ports are one area where co-operation will be needed. “Turbine integration and marshalling is a key local opportunity, that’s a priority, for us and other developers. Ports will need project certainty and clarity over timelines.”

Muir Mhòr is involved in the Strategic Investment Model (SIM), with a view to targeting areas for expansion. “Ports is one good example for the need to expand.”

Kennedy also noted the challenge around ports. “There’s a scale and magnitude involved, with large land areas. Many of these ports will need to expand. There’s a longer-term consideration, of what happens after this frenzy. Projects may take place over the next 10-15 years, while port investors may need visibility of 25-30 years.”

*Port of Nigg completes the first phase of the Moray West Offshore Wind Farm. June 13, 2024.*

Making the match

There is a fundamental mismatch between offshore wind developers’ timeframes and that of ports, though. Developers aim to secure short-term leases, to build out their infrastructure, after which their needs change.

Ports, on the other hand, must think in the longer term. To justify expansion, they must win continuing work – or a clear sequence of contracts.

“In Scotland, there’s a huge focus on construction and fabrication. But, in terms of longevity, the bigger prize will be in O&M. If you bring in repowering of offshore wind assets, that can run even longer,” said a Muir Mhòr spokesperson.

There is an opportunity up for grabs, that could go beyond the local content goals and extend to exports, even.

“Scotland has a lot of port plans. Where we can get it right, we can export to further afield. Where projects might have gone to Dubai or the Mediterranean, they can come here for work. We could lead the way globally, when those ports have got the experience. Fixed bottom wind is constrained by water depth – but floating isn’t, the pie is much larger.”

The IPPR report highlighted the retrofit of existing ports as a key area. It highlighted the need to manage the large size of offshore wind manufacturing sites. The UK Infrastructure Bank “could expand its programme for ports renovation, by providing subsidised loans to both local authorities and private developers”.

Beyond cost

The Muir Mhòr spokesperson went on to say that price was not the only factor that should be considered. “There may be cost savings in getting kit closer to home, by mitigating factors such as quality, transport and risk. Where transport is lower, risk is lower.”

Local businesses can become more competitive, for instance via automation. “We find it easier to work with local businesses as we can visit. We have to look at the holistic view of what we’re getting, rather than just the cost per unit,” the Muir Mhòr official said.

Of all the opportunities of the energy transition, that of offshore wind for the UK is the strongest. There are clear plans for growth, companies are supportive – Allocation Round 5 notwithstanding – and the government keen.

There are plans moving ahead. Vestas, for instance, confirmed this week it was working on plans for a wind turbine factory in the Port of Leith.

Companies will need to find ways of working together in order to create the long-term support for growth the sector requires. This cannot be impossible.

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