A STORM is brewing in the offshore energy industry.
UK waters have the highest concentration of wind turbines anywhere in the world. Of the 211 built in Europe during the first half of this year, 158 were installed off the UK coast.
But only a tiny share of the contracts to build the British offshore wind industry is going to British businesses.
Eon reported that ten per cent of the work for the London Array offshore scheme, the world’s biggest, had gone to British contractors. The company behind the Thanet wind farm, near Kent, admitted that less than 20 per cent of the £900m contracts had gone to British firms.
The UK has more than 60 per cent of the European Union’s offshore wind capacity – three times greater than that of Denmark, the next largest. But the lion’s share of contracts to build UK sites have been snaffled up by German, Dutch, Swedish and Norwegian suppliers.
In the 12 years since the country’s first wind farm was built off the coast of Blyth, in Northumberland, 14 have sprung up around the country.
Another six are under construction, including a site 1.5km from Redcar.
Developer EDF Energy Renewables rejected a bid for work from Tag Energy Solutions, based in nearby Billingham, and instead handed the contract to a Belgian rival.
Developers have argued that the bidding process is fair and contracts are awarded according to sound criteria, such as price and track record.
But North-East suppliers want the Government to put pressure on lead contractors to guarantee a certain proportion of work will be passed on to local businesses.
New factories are springing up across the North-East in the hope that this region can take advantage of a billion pound industry capable of creating thousands of jobs.
Last month, Tata Steel opened a £2m facility in Hartlepool that will build parts for wind turbines. Tag Energy Solution‘ s state-of-the-art £23m wind turbine foundations plant could eventually employ 400 workers.
Offshore Group Newcastle (OGN) has won planning permission to convert a Wallsend shipyard into a turbine foundations plant. The project could support up to 1,000 jobs.
Further up the coast is Narec (The National Renewable Energy Centre) at Blyth, a £150m world-class research and testing centre. It will be a key resource as the industry bids to become more cost-efficient.
The region also possesses expertise, through firms such as Darlington-based DeepOcean and Modus Seabed Intervention, Reef Subsea Power and Umbilical, in Stockton, and JDR Cable Systems, of Hartlepool, to dig trenches on the seabed and to connect wind farms to the mainland.
North-East firms have banded together to form the representative group Energi Coast, which promotes the region worldwide. Its membership expects to create about 1,000 jobs this year alone.
Alex Dawson, chief executive of Tag Energy Solutions and chairman of Energi Coast, said: “One of the reasons we formed Energi Coast was this misunderstanding that there is no capability in the UK. But it is there and it’s growing.
“The North-East is certainly the most powerful region in the country when it comes to renewables.”
He called on the Government to give a “consistent and supportive message” to encourage further investment.
Joanne Leng, NOF Energy’s director of business development and deputy chairwoman of Energi Coast, said: “We have in recent months seen delays to some projects which has made people nervous. But there is plenty of activity out there and an enormous amount of potential.
We must ensure we don’t miss the opportunity.”
Offshore wind is still one of the most expensive forms of renewable power, costing up to three times more than onshore windfarms. It is likely to remain more expensive than other forms of power, and in need of taxpayer support to encourage investors.
Andrew Jamieson, chairman of the Government-appointed Offshore Wind Cost Reduction Task Force, warns of rising costs and a supply chain that lacks the confidence to increase capacity. But he is optimistic that there is “an opportunity not seen in the UK for many years” to create a sustainable and competitive industry, employing thousands of people in its construction and operation over decades to come.
The industry is now into the third round of contracts which are on a much bigger scale than either of the previous rounds.
Developers are looking for clarity from the Government because it can take five years to build a wind farm and up to 15 years to recoup their outlay.
There is growing fear that a Government rift over wind energy is deterring private investors.
Ministers, including Chancellor George Osborne, favour investment in gas power.
Some industry leaders and green campaigners were dismayed when last month’s Cabinet reshuffle saw John Hayes, previously an opponent of wind energy, replace Charles Hendry as Energy Minister.
In 2009, Mr Hayes said that “renewable energy needs to pass the twin tests of environmental and economic sustainability and wind power fails on both counts”.
The industry hopes that his stance has changed and he will help to lead the bid for up to 18 per cent of UK electricity to come from offshore wind by 2020.
Onshore wind farms continue to draw furious objections from some people. The offshore version has proven to be much less controversial, although fishermen have voiced fears that the towers will disrupt their traditional fishing grounds.
They appear to be in the minority.
A recent survey shows that 85 per cent of people want to see an increase in the use of renewable energy. Only seven per cent said they wanted their electricity supplied from fossil fuels*.
Maf Smith, deputy chief executive of Renewable UK, said the report showed there was a “huge public appetite” for more of our electricity to be generated from wind rather than fossil fuels.
“The overwhelming majority of consumers are demanding more wind energy and that can be a driving force for change, powering our economy and tackling climate change,” he added.
* Source: The Global Consumer Wind Study, conducted by TNS Gallup for the turbine manufacturer Vestas, surveyed 24,000 people in 20 countries.
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