For our first #RUKGOW19 Event Partner blog, Chris Willow, Floating Wind Growth Manager at innogy talks about how leading developers are building smart supply chains as offshore wind markets grow across the world.
It is fair to say that offshore wind has never just been about producing electricity. Politics surrounds our industry, and one of the biggest issues has always been about building successful supply chains in both existing and growing markets around the world. What are we going to do locally? How much will we invest? How many jobs are we going to create?
This has certainly been true in the well-established European markets and remains true for all of the new markets emerging around the world.
While it is simple enough to produce positive soundbites championing good intentions, the reality of growing sustainable local supply chain capability, especially in emerging markets is that it is a slow and delicate process. The cutting of the ribbon on a new factory is always the end result of a lot of careful discussion between developers and companies, building confidence and agreeing how to deal with the technical and commercial risks that both sides face.
Furthermore, new supply chain growth needs to be achieved while also meeting other crucial political issues, such as delivering projects at the lowest possible cost and keeping the people involved in the project safe and well.
As a company that has been involved in the offshore wind industry since the early days (we built North Hoyle, the first large, commercial project in the UK), innogy has had lots of experience in working to get this balance right. Over the years, we have made many brave decisions to support promising new companies establishing a foothold with their first offshore wind activity, while helping others invest and grow. We have managed to do this while driving down our cost of energy at the same time as remaining competitive in a very challenging market.
Our experience shows that the key is “smart” supply chain building. When looking at a new growth market, our teams don’t have a standard template that shows what local capability is needed. Our experienced procurement team looks at the opportunity as a whole, and thinks about what makes sense: what supply chain gaps exist in the market and what local capability already exists.
For example, in the UK the team at innogy’s latest and largest offshore wind farm project, the 857MW Triton Knoll, identified the need for additional port capacity for turbine installation on the east coast of the UK. By building a relationship with port owner and operator AbleUK, the team was able to establish a deal which facilitated an investment of £16 million in upgrading facilities at AbleUK Seaton Port in the Tees Valley. In doing so, we are enabling our project to be deployed safely and cost effectively, supporting up to 100 new and local jobs, encouraging further supply activity in the area and helping create infrastructure that can tilt the balance in favour of winning future offshore wind projects. Everybody wins.
Importantly, we are taking this approach with us around the world as we seek and find opportunities in new growth markets and with new partners. UK businesses are already exporting offshore wind goods and services to 22 countries across 5 continents. Through the sector deal, there is potential for those exports to increase five-fold in value to £2.6 billion a year by 2030 as new markets emerge.
Across these growth markets, we understand that politicians are keen to replicate the successes demonstrated in northern Europe; at the same time, we also understand the importance of seeking new suppliers that we can work with, initially within their home markets and then globally.
Successes like AbleUK Seaton Port don’t come easily or quickly, but we do know that with the right, smart approach, we can establish sustainable and successful supply chains around the world.