In our latest #RUKGOW19 blog Julian Brown, Vice President and UK Country Manager at MHI Vestas Offshore Wind, sets that the UK’s leadership in offshore wind is well documented and is a success story that many now look to as an important economic opportunity within the decarbonisation agenda. Julian will be speaking in the Sector Deal session at Global Offshore Wind 2019.
Where We Stand Today
The UK has fashioned an ambitious blueprint for offshore wind deployment building on the success of operational projects along with cost digression which has confirmed offshore wind as the most competitive source for large-scale deployment.
In 2018, UK offshore wind installations represented 49% of Europe’s entire gross capacity brought online during the year. Not only is the UK home to the world’s largest operational offshore wind farm, Walney Extension, and the world’s most powerful operational turbine, the V164-8.8 MW from MHI Vestas, but the offshore wind sector is on track to hit the long-term target of 50% local contracts by 2020 – up from 43% in 2015.
And I’m proud that MHI Vestas now employs more than 600 people on the Isle of Wight, manufacturing blades for offshore wind projects in the UK and around the world. We’re breathing new economic life into a part of the country that needs new job opportunities.
By all accounts, the industry is flourishing, and the Offshore Wind Sector Deal announced in March reinforced UK Government’s commitment to its future.
In 2018, UK offshore wind installations represented 49% of Europe’s entire gross capacity brought online during the year.
For wind turbine OEM’s and their supply chain, the success of offshore wind has been built on expertise developed in the onshore wind market over the last 20 years. Supply chain businesses have built expertise in manufacturing large wind turbine components in a serial production environment. Moving production lines, lean manufacturing and automated process controls are more akin to automotive manufacturing but with much larger components.
Players compete on performance (safety, quality, delivery, capability) and price at the point of delivery. Physical location of the manufacturing site can make a material difference to competitiveness. Managing supply chain risk is critical to project delivery, so supplier credibility and track record are highly valued.
UK businesses wishing to enter this space will quite rightly be excited by the prospect of a large volume of complex products; however, to compete in this space they will have to leverage every tool in their kit to find their place. That is where the Sector Deal provides an opportunity.
UK Offshore Wind Sector Deal
To compete against larger, global players in a market that is rapidly moving beyond Europe, the transition required for some UK suppliers will not be easy, and any change in strategy will take time to bear fruit. The Offshore Wind Sector Deal sets aside a large pot of money (£250m), funded by the developers, to support UK businesses in innovation, product development, process improvements and skills development - all addressed at improving productivity and competitiveness.
Regional clusters will provide additional focus for UK businesses to engage and access these funds which will be managed by the Offshore Wind Growth Partnership. This will help address the challenge of where supply chain capacity should be located.
The Sector Deal is a unique chance for UK entrants to be supported to step up to the mark and grasp a place in this market. Noting of course that established players will continue to relentlessly pursue their own improvements in performance and cost reduction.
Move Quickly
It’s worth noting that the catalysts behind industrial progress in offshore wind have always been, fundamentally, a relentless commitment to innovate, an openness to expanding the service scope, and an unwavering drive to deliver optimal value – the same characteristics that define today’s leading companies.
We urge aspiring UK supply chain players to move quickly, engage and take advantage of the Sector Deal to find their path to a place in the offshore wind supply chain. Recognise the scale of the prize, the hurdles to be overcome and be ready to dig in for the long term.
The UK’s leadership in deployment will soon be under challenge – offshore wind is on the move. Massive volume in Asia and North America is already taking shape. Governments around the world are taking notice and adding offshore wind to their energy agendas. Those countries also want a slice of local content. The industry is projected to grow at no less than 15-20% per year for the foreseeable future.
The time is now for UK suppliers to re-think their value proposition, to develop an inimitable product portfolio and to secure their place in the burgeoning offshore wind sector in the UK and beyond.