Download Energy industry market forecasts: Renewable

ENERGY INDUSTRY MARKET FORECASTS
Renewable Energy
2009-2014
The Wind Market
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without the prior written permission of Scottish Enterprise.
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Preface
In 2009 the Scottish Government set ambitious targets for the generation of energy from renewable sources. The Climate Change (Scotland) Act 2009 sets a
target of an 80% reduction in greenhouse gas emissions by 2050. Scotland’s Renewables Action Plan aims to provide 50% of Scottish electricity
consumption from renewables by 2020, while the UK Government has committed to deliver 15% of all energy demand from renewable sources by 2020 as
part of its contribution to the EU target of 20%.
Wind energy will play a leading role in achieving these targets. The Crown Estate announced exclusivity zones in 2009 for 10 Scottish Territorial Water sites
(6.4GW) and in early 2010 announced a further 32GW of generating capacity from nine Round 3 zones around the UK. In total, a planned installation of
approximately 47GW of UK offshore wind capacity.
Such developments in the UK Offshore Wind market have made the European wind energy market the most dynamic in the world, presenting an exciting
range of opportunities in the supply chain for Scottish companies. Scottish Enterprise wants to help Scottish companies to make the most of these
opportunities. An important part of our work is raising awareness of growth potential by publishing market intelligence such as contained in this report.
This report updates our previous market forecast produced in 2007. Since then the Scottish, UK and global markets have grown at a rapid rate, both onshore
and offshore, with significant projects in operation, in construction and a pipeline of future projects in development. The report takes into account the views of
market players on the impact of current economic conditions on the wind sector and shows that targets and incentives will continue to drive significant growth.
However these drivers vary from market to market – highlighting the value of the insight that this report provides.
Success in Scottish and UK markets could be a springboard to accessing global markets. We hope this report will help Scottish companies to identify real
opportunities for growth.
I would like to take this opportunity to thank those companies who contributed during the production of this report for their valuable help and assistance.
Adrian Gillespie
Director, Energy and Low Carbon Technologies
Scottish Enterprise
Contents
INTRODUCTION
1 BUSINESS DEVELOPMENT STEPS – HOW TO USE THIS REPORT
2 STEP 1: STATUS AND FORECAST GROWTH OF WIND ENERGY WORLDWIDE
3 STEP 2: THE UK WIND ENERGY MARKET
14 STEP 3: VALUE OF OPPORTUNITIES IN THE UK MARKET
23 STEP 4: UNDERSTANDING THE SCOTTISH SUPPLY CHAIN
27 STEP 5: GAPS IN THE SCOTTISH SUPPLY CHAIN
32 STEP 6: EXPLOITING THE OPPORTUNITIES
44 OFFSHORE WIND ENERGY
55 SMALL AND MICRO WIND ENERGY
68 APPENDIX 1: RENEWABLES OBLIGATION CERTIFICATE (ROC) BANDING 2009
81 APPENDIX 2: FEED IN TARIFFS
82 APPENDIX 3: INSTALLED CAPACITY GROWTH ASSUMPTIONS TO 2014
83 APPENDIX 4: SECTORAL GAP ANALYSIS
87 APPENDIX 5: ACKNOWLEDGEMENTS
103
Introduction
The aim of this report is to highlight the opportunities available to Scottish companies to become part of the wind energy supply chain. The report shows the
forecasted growth of the industry worldwide, in the UK and in Scotland, identifying gaps in the supply chain that are causing a constraint to growth and suggesting
approaches that Scottish companies could use to exploit these opportunities. This report updates an earlier publication, produced by Scottish Enterprise in 2007.
The Need for Renewable Energy
The International Panel on Climate Change’s 4th Report (2007) concluded that the evidence for warming of the climate was unequivocal and the probability that this
warming and associated sea level rise is caused by natural climatic processes is less than 5%. Furthermore, most of observed increase in globally averaged
temperatures since the mid 20th Century is very likely (>90% likelihood) due to the observed increase in man made greenhouse gas concentrations.
In order to mitigate against changes in climate already being observed, and against the production of greenhouse gases, initiatives are being taken globally to
promote low carbon sources of energy. Electricity generation is a major source of greenhouse emissions due to the burning of fossil fuels. However, a range of
renewable (non-fossil fuel) energy generation options have been developed, the most mature of which is wind energy: the UK has some of the best wind resources
worldwide. Onshore wind developments have taken place for several decades. Offshore wind energy is currently receiving increasing focus: it is estimated that the UK
has over 25% of the potential total European offshore wind resource 1 .
Wind energy has become increasingly economically attractive on a global scale and by 2008 the total installed global wind energy capacity was over 120 GW 2 ,
representing an installed equipment value of €36bn. As part of this market forecast, AEA conducted a consultation with key stakeholders in the wind market. This
confirmed that the combined UK and Scottish market is the number one wind market in Europe and presents key opportunities for Scottish suppliers.
This Report
This report follows a stepped approach, considering the growth of the global market, then of the UK market. Constraints to this growth are identified and where
possible, opportunities for the supply chain to address these constraints are identified. The report then focuses on the opportunities available to Scottish companies in
the Scottish and UK large onshore and offshore supply chains, these opportunities are quantified by way of a sectoral gap analysis.
Information used throughout this report was provided by previous market studies, recent global forecast reports and through interviews conducted in late 2008 and
early 2009 with wind energy industry groups, supply chain stakeholders and project developers.
The main body of the report considers the large scale onshore, offshore wind and small and micro-scale generation. Further information on the offshore wind sector is
provided in a standalone chapter following the main text. Although not as mature as the onshore sector, the offshore sector has the greatest potential for growth in the
next four years and provides the best opportunity for the Scottish supply chain. Scottish companies are in a good position to supply operation and maintenance
capability for offshore wind farms, due to their experience and capacity in the marine sector and offshore Oil and Gas.
The small and micro-wind sector is also provided as a standalone chapter. Again, the consenting procedure is separate to that of large wind. However, whereas the
supply chains for large onshore and offshore are closely linked, small and micro-wind has its own distinct supply chain, owing to the differences in technologies.
Therefore, an individual sectoral gap analysis is provided for this sector.
1
2
http://www.bwea.com/offshore/info.html
GigaWatt; 1GW = 1000MegaWatts (MW) = 109 Watts
Page 1 – Introduction
Business Development Steps – How to Use This Report
Business planning, decision making and implementation steps
Step Report section
Business development task
1
Status and forecast growth
of wind energy worldwide
2
The UK Wind Energy
Market
3
Value of Opportunities in the
UK Market
4
Understanding the Scottish
Supply Chain
Understand the market opportunity,
prospects for growth and contexts
Research the target market
Understand the market structure
Understand the company
contribution
Research the accessible market
5
6
Gaps in the Scottish Supply
Chain
Exploiting the Opportunities
Decide positioning in the market
Establish routes to market
Establish the investment required
Assess and manage business risks
Formulate development strategies
Q&A
Should my company enter the wind energy supply chain?
How ambitious should my company be?
What are the wider long-term opportunities to consider?
What is the entry market?
Who are the customers?
What are the near-term market opportunities?
How do products and services fit within the projected
demand?
What is the value of the market for products and services?
What will be my company’s strengths and weaknesses?
How will my company fit in the Scottish supply chain?
What are the gaps in the market for my company’s products
or services?
How accessible are the gaps in the market for my company?
What is the value of gaps in the market that my company can
access?
What is the experience of other companies in the wind
energy supply chain?
Which regional markets should my company target?
What are the barriers to exploiting growth opportunities?
What are the risks to my business and how will they be
managed?
NB. Small and Micro-Wind and Offshore are considered separately to large-scale wind - due to the different nature and scale of the market.
Page 2 - Business Development Steps – How to Use This Report
Step 1: Status and Forecast Growth of Wind Energy Worldwide
Wind energy is a global market, with global installed wind capacity at the end of 2008 standing at over 120 GW 3 , a 28% growth on 2007. In total, 27 GW were
installed throughout 2008, 36% more than in 2007 4 , and the largest cumulative increase in global capacity, as shown in Figure 1. Presently there is rapid
growth of the industry in Europe, the USA and Asia. This provides a massive opportunity for investment and market sector growth including the manufacturing
supply chain.
Figure 1: Top 10 Global Annual Installed Capacity
Figure 2: Top 10 Global Wind Energy Capacity
Capacity (MW)
30,000
0
25,000
20,000
30,000
USA
20,000
MW
10,000
Germany
15,000
Spain
10,000
China
5,000
India
Italy
0
1996
1998
2000
2002
2004
2006
Year
2008
France
UK
Denmark
2007 cumulative capacity
2008 new installed capacity
Portugal
Figure 2 shows global cumulative installed capacity at end 2007 and new capacity installed in 2008 for the top 10 countries according to installed capacity.
The graph clearly shows the large growth China and the USA have experienced in the last year, adding roughly 50% and 100% to their installed capacities
respectively. For the USA, this equates to around 8 GW, four times the current installed wind energy capacity of Scotland.
Rapid growth puts pressure on the existing supply chain, and companies increasingly search on a global scale for products and services. The following
section outlines a range of potential growth scenarios for the global market, broken down to a regional context, as well as detailing recent market
developments and support mechanisms in place for development in selected countries.
3
4
Source: www.gwec.net figure to end 2008
Figures from GWEC www.gwec.net
Page 3 – Step 1: Status and Growth of Wind Energy Worldwide
Installed Capacity to 2030
Each year the Global Wind Energy Council publishes its Global Wind Energy Outlook, this details amongst
other predictions, the future installed capacity under a range of industry growth scenarios – Reference,
Moderate and Advanced 5 . Showing forecasts over a range of growth scenarios is critical to give a range
of views on how the industry could progress.
The Reference scenario is based on existing policies and measures, whereas the Moderate scenario
assumes all targets set by Government will be met and the Advanced scenario can be considered a best
case. At 2020, the Moderate scenario predicts about double the capacity of the Reference and the
Advanced scenario about triple.
Table 1: Prediction of Global Capacity GW
2015
2020
2030
Reference
233
352
497
Moderate
379
709
1,420
Advanced
486
1,081
2,375
600
Figure 3: GWEC Regional Growth Scenarios 2020
Figure 4: GWEC Regional Growth Scenarios 2030
500
400
300
200
100
0
Europe
North America
India
China
Reference
176
92
20
27
Moderate
182
214
69
101
Advanced
213
243
138
201
Installed Capacity (GW)
Installed Capacity (GW)
Growth under the different scenarios suggested by GWEC will not only differ in level of installed capacity but also in the location of that installed capacity.
Figure 3 and Figure 4 show the relative installed capacity under each scenario for Europe, North America, China and India.
600
500
400
300
200
100
0
Europe
North America
India
China
Reference
227
132
27
49
Moderate
306
366
142
201
Advanced
353
520
235
451
5
Reference: This is based on projections from the 2007 IEA World Energy Outlook taking into account only existing policies and measures. The scenario includes market assumptions such as continuing electricity and gas
reform, liberalisation of cross-border energy trade and recent policies to combat pollution. Moderate: This takes into account all policy measures to support renewable energy whether they be implemented or in the planning
stage. It assumes that targets set by Governments will be met. In addition, it assumes investor confidence as a result of successful outcomes of global climate change negotiations. Up to 2012, figures are based on data
available showing orders for wind turbines already committed. Advanced: This scenario predicts the extent to which the industry could potentially grow to achieve in the best-case possibility. On a political level it assumes any
policy option in favour of renewable energy has been selected and will be carried out.
Page 4 – Step 1: Status and Growth of Wind Energy Worldwide
The figures above show that under the Reference scenario, Europe would still dominate the market in terms of installed capacity in 2030, accounting for 46%
of global wind energy capacity, North America comes in second place with 27% of the market, followed by China with 10%.
Under the higher growth scenarios, growth in Europe is increased and even stronger growth is predicted outside of Europe. This means that the European
supply chain would have both greater local opportunities and also considerably greater potential export markets. Under the Moderate scenario, Europe’s
share falls to 23% by 2030, with North America taking the largest share at 27%. Major installations from China (14%) and India (10%) increase market share
of those countries compared to the Reference scenario.
Under the Advanced scenario, China will show even stronger growth of 19% by 2030, although North America still remains the market leader with 22%. India
(10%) shows little change from the Moderate scenario.
Investment Forecasts
Figure 5: Annual Global Investment in Wind Energy 2007-2030
Globally, in 2007, €25.8 bn was invested in the industry. Under the GWEC reference
scenario this would increase to €26.5 bn by 2010, to €39 bn by 2030, peaking at €47 bn in
2050. Under the GWEC moderate scenario this would increase to €40.2 bn by 2010, €89.4
bn by 2030, peaking at €104.4 bn in 2050. Under the GWEC advanced scenario this would
increase to €50.3 bn by 2010, €149.4 bn by 2020, peaking at €169.3 bn in 2030.
Renewable Energy Country Attractiveness Indices
Each quarter, Ernst and Young publishes its Renewable Energy Country Attractiveness
Indices, ranking the renewable energy markets, infrastructure and suitability for individual
technologies in a selection of countries. Two rankings are produced for wind energy, the
Long Term and Near Term indexes. The Long Term Index takes a forward thinking view
and combines two areas, renewables infrastructure index (35%) and the technology factors
(65%). The information in this report is based on the indices published in August 2009.
Page 5 – Step 1: Status and Growth of Wind Energy Worldwide
Reference
€ 160
Investment (Billions)
This is shown graphically in Figure 5.
€ 180
Moderate
€ 140
Advanced
€ 120
€ 100
€ 80
€ 60
€ 40
€ 20
€0
2007
2008
2009
2010
2015
2020
2030
Long-term Wind Index
The UK score is high due to the announcement of a feed-in tariff for small
projects, the new Planning Act and the Renewables Obligation Extension to 2037.
The UK has a strong offshore index and had the world’s highest offshore
megawatt capacity at the end of 2008. However, increasing costs, difficulty in
accessing debt/capital and falling wholesale electricity prices threaten to stretch
project economics for offshore wind. Addressing concerns regarding these issues,
in its December 2009 pre budget report, the Government announced that it will
make available 2 ROCs per Megawatt Hour (MWh) generated to all projects
accredited by Ofgem between April 2010 and March 2014.
Although the USA and China are at the top of the index, there are issues in both
markets. In the USA Production Tax Credit (PTC) for wind was extended to 2012
giving limited security of support. However, the US Treasury has now enacted a
temporary replacement for the PTC. In China, there are concerns over the
dependence on imported components and turbines, therefore subsidies are being
introduced for developers and manufacturers to set up bases locally.
Table 2: Ernst and Young Long Term Wind Index 6
Rank
1
2
3
4
5
5
7
8
8
10
Country
USA
China
Germany
India
UK
Spain
Canada
Italy
France
Ireland
Wind (all)
71
69
67
63
61
61
60
59
59
57
Onshore
75
73
66
70
59
66
64
64
60
58
Near-term Wind Index
The near term index focuses on factors of more immediate concern and provides
a two year view. The USA stands with a lead of 5 points, however, this is down
significantly over the past year from a lead of 14 points at quarter 3 2008. In this
period both China in particular and also the USA have increased their index
scores. India also shows a high rate of installation, though not as rapid as China.
Both the UK and Germany have fallen in the index, as the offshore sector has not
proceeded as rapidly as predicted for the reasons described above in the longterm index.
6
Issue 22, August 2009.
Page 6 – Step 1: Status and Growth of Wind Energy Worldwide
Table 3: Ernst and Young Near Term Index
Rank
1
2
3
4
5
6
7
7
9
10
Country
USA
China
India
Spain
Germany
UK
France
Italy
Canada
Portugal
Score
83
78
56
51
51
49
47
47
46
42
Offshore
59
59
71
42
66
46
46
46
54
57
Country Focuses
The following sections give a detailed breakdown of recent market activity in the six countries ranked top in the Long Term Index.
USA
Figure 6: USA wind energy capacity installed by state
The highest ranked states in the USA for wind energy (by installed capacity) are:
Texas
Iowa
California
(7.1 GW)
(2.8 GW)
(2.5 GW)
Minnesota
Washington
(1.7GW)
(1.4GW)
In addition, a number of states are climbing rapidly. For example the following
capacity is under construction:
New York
Indiana
Oregon
(0.46GW)
(0.40GW)
(0.25GW)
The key constraint to development in the USA at the present time is the volatility
in global financial markets. Half of the large institutions that invested in
renewable energy in the USA in the last two years have dropped out of the
market. In the year to August 2009, approximately 25% fewer new projects were
undertaken.
In spite of this development is still pressing forward, in Q3 2008, FPL Energy
announced plans to build a 1,000MW wind farm in North Dakota costing $2bn, a formal application is expected in July 2009; construction has started on a
150MW farm in SE North Dakota costing $300million and Lone Star has allocated $4.9bn towards the construction of new transmission lines to run wind
energy from its rural location to urban demand centres such as Dallas. The upgrade would provide for an extra 18 GW of wind energy on top of the 7.1 GW
currently installed.
China
The National Development and Reform Commission (NDRC) released its ‘Medium and Long-Term Development Plan for Renewable Energy’ in August 2007.
The plan sets a specific target of 30GW installed capacity from wind power by 2020, However, the Chinese wind market has continued to accelerate following
the recent stimulus announcements and officials have stated that a revised new goal for wind energy for 2020 could amount to as much as 100GW installed
capacity 7 .To reduce dependence on imports, the Chinese Government has announced financial subsidies for turbine manufacturers and developers.
Moreover, a policy implemented by the NDRC in July 2005 requires that 70% of the equipment for any wind farm project is produced in China. To support the
additional capacity planned, China is planning to improve its grid infrastructure.
7
Renewable Energy World Magazine, Volume 12, Issue 5, September/October 2009
Page 7 – Step 1: Status and Growth of Wind Energy Worldwide
Strong progress has been made in the offshore sector with Dutch developer Econcern announcing four offshore developments totalling 720MW and €863
million in a Joint Venture with Chinese developers CNOOC and Sinohydro. Turbine construction has begun at the Donghai Bridge offshore wind farm. Once
completed the windfarm is expected to generate approximately 270GWh per annum using 34 3MW Sinovel turbines.
Wind developments in China include work on the huge Jiuquan wind project, with over 5GW to be installed by the end of 2010 and a target of 40GW by 2020.
Vestas has received two new orders from a large Chinese independent power producer (CIPP). In addition the Asian Development Bank (ADB) has
announced it will finance up to $24m of a $73m wind farm in Inner Mongolia.
Germany
After the UK, Germany is the second largest wind market in Europe. Having already achieved a strong base of onshore wind, Germany is looking to develop
offshore to meet a target of 25GW from offshore wind energy by 2030. One example is the 288MW Butendiek offshore wind farm that is being developed by
SSE renewables and has secured the supply of 80 turbines from Siemens. The project is expected to be commissioned in 2012.
At the end of 2008, Germany had a total installed capacity of 23.9GW for both onshore and offshore wind. As of January 2009, Germany had 12MW of
offshore installed capacity with a further 732.5MW under construction. Germany’s first offshore wind park, Alpha Ventus, 8 was completed in November 2009.
India
In the financial year from April 2008 to March 2009 the installed wind capacity in India increased by almost 1.5 GW 9 . The Ministry of New and Renewable
Energy (MNRE) reports that, from the start of the 2009-10 fiscal year until the 31st July 2009, 222 MW of new installed wind capacity was built. The total
installed wind capacity in India as at 31st July 2009 was 10,464 MW 10 .
MNRE has stated that the country’s wind energy potential is 45GW, more than four times the present installed capacity. To support this, the Government is
considering renewable energy zones to facilitate integrated development and has also announced a generation-based incentive for wind of Rs 500 ($10) per
MWh for the next 10 years. In Q3 2008, CLP Group announced plans to develop a 114MW wind farm in the Maharashtra region.
Wind turbine manufacturer RRB Energy India Ltd. will invest US$20m in the next 18 months to expand its production capacity to 900 turbines (600kW)
including the related blades. Shriram EPC, the Chennai-based company involved in turnkey projects in renewable energy, is looking at manufacturing nearly
250 wind turbine generators this fiscal year through its joint venture with Italian firm Leitner Technologies. ONGC is planning to invest around US$120m in the
wind energy sector. It is setting up its second wind energy project of 50MW in Gujarat. NTPC plans to spend US$1,2b to set up two wind power projects of
500MW each in Karnataka and Maharashtra by 2012.
UK
The United Kingdom has one of the best wind resources in Europe and has significant potential for development of both onshore and offshore wind. The UK
Government has put in place a range of measures to enable the successful development of that potential resource, and it is committed to ensuring the further
growth of wind generation in the UK. The EU target of 15% of the UK’s energy to come from renewable sources could lead to almost a ten-fold increase in
8
9
www.alpha-ventus.de/index.php?id=80
Wind Power India
Ministry of New and Renewable Energy, Government of India
10
Page 8 – Step 1: Status and Growth of Wind Energy Worldwide
use of renewable energy by 2020. This is likely to mean a very significant increase in the contribution from wind energy – both on and offshore – to the UK’s
overall energy mix.
The UK has strong potential for offshore wind and recent feedback 11 indicates that the industry views the UK as the number one offshore wind market.
The Crown Estate has made areas of the seabed available for offshore wind installations through several rounds of development:
•
Round 1 projects are currently being finalised with a number already operational.
•
Contracts are being finalised for the construction of the early Round 2 projects including the 300MW Thanet wind farm worth £50 - £100 million.
•
In January 2010 the Crown Estate announced the successful bidders for each of the nine Round 3 offshore wind zones within UK waters. Round 3
offshore wind energy generation aims to deliver a quarter of the UK’s total electricity needs by 2020.
•
In summary, a maximum of 8.6GW of installed capacity is planned for Round 1 and Round 2 projects. Round 2 extensions amount to 1GW of installed
capacity. Round 3 bids aim to deliver a further 32GW of installed capacity and the Scottish Territorial Waters development targets an additional 6.4GW of
installed capacity. Therefore, for offshore wind this currently gives the UK a maximum potential of approximately 47GW of installed capacity. This
represents a third of the UK’s electricity demand.
The Energy Act 2008 gave the Government the power to establish a feed-in tariff (FIT) for projects under 5MW, the consultation for which closed in October
2009. The Government plans to implement FITs by April 2010. Planning delay issues are being addressed in Scotland with the announcement by the Scottish
Government to reduce Section 36 determination time to less than 9 months. In England and Wales the Government is in the process of establishing the
Infrastructure Planning Commission (IPC) with the same objective of reducing planning delays for major projects.
Changes to the system of allocating grid to offshore projects continue. It is likely that the revised process of allocating licenses for the grid connections will
remove the pressure on developers’ capital by facilitating construction of the connections by offshore transmission license holders. In the near term, a
program of reshuffling the onshore grid connection queue is to provide revised connection offers to projects which are developing well.
Further details of the current status of wind energy in the UK can be found in Step 2. For more information on the status of projects see BWEA UK Wind
Energy Database www.bwea.com.
Spain
Spain has an ambitious target of 20 GW wind energy by 2010. The Extremadura region has awarded contracts to 10 developers to build 22 wind farms
totalling 470MW worth an estimated €500 million. Previous to this announcement, Extremadura had no installed wind capacity. In offshore wind, Spain is
expected to open a tendering process for 3GW of offshore wind sites. This is the start of a process which could see wind farms coming online by 2013.
11
Towards Round 3: Building the Offshore Wind Supply Chain, BVG Associates
Page 9 – Step 1: Status and Growth of Wind Energy Worldwide
Support Mechanisms and Targets
Renewable energy is dependent on support mechanisms to create an investment market. These support mechanisms are put in place by Government and
reviewed and updated regularly, usually in line with the Retail Price Index but also reflecting the maturity of the technology and hence commercial viability.
These support mechanisms are linked to targets for percentage generation from renewables or for a given level of installed capacity. The text below outlines
the support mechanisms and targets currently in place, for renewables or wind energy in countries with a high level of installed capacity of wind energy.
European Union
Installed Capacity = 64.9GW (end 2008) 12
A Kyoto-led global target of 22% electricity supply from renewables by 2010 encourages wind energy development in the EU. Individual support measures
were encouraged by individual country in 2001 with the EU Renewable Energy Directive. The EU has also introduced an extended binding target of 20% of all
energy (including heat and transport) from renewables by 2020 specifically for EU member states (MS), (The 20% is the total for the EU with some MS having
a target higher and some lower than this)
Germany
Installed Capacity = 23.9 GW (end 2008) 13
A 1991 law, the Renewable Energy Resources Act (EEG), introduced guaranteed feed-in tariffs for all renewable power generators to support development of
renewables. Grid operators must pay €80.3 per MWh (2008) for at least 5 years, this amount decreases every year, the level in 2007 was €81.9, in 2006,
€83.6. After 5 years, the tariff is dependent on local wind conditions but will reduce. For example, a wind farm installed in 2007 would have a feed-in tariff
varying from €81.9 to €60 over 20 years. 14 Germany has a target of 25–30% electricity from renewables by 2020. To put this in context, as of 2007, Germany
generates approximately 595,000 GWh of electricity per annum 15 , or 68 GW on average (neglecting capacity factors and peak load).
Special tariffs are in place for repowering and offshore wind energy. According to the German Wind Energy Association 16 , the offshore tariff will be €140 per
MWh for the first 12 years.
12
Data from EWEA
Data from GWEC
Information from IEA Annual Report (2007)
15
CIA World Factbook www.cia.gov/library/publications/the-world-factbook/geos/gm.html
16
www.wind-energie.de
13
14
Page 10 – Step 1: Status and Growth of Wind Energy Worldwide
Spain
Installed Capacity = 16.7 GW (end 2008) 17
Spain has a Government target of 20,155MW of wind energy installation by 2010 (implied share of 12% renewable energy target). Since a new regulation
was published in June 2007, payment for wind energy generated has been on a feed-in tariff scheme; for 2008 the value was €75.68 per MWh. The feed-in
tariff will remain in place until the 2010 target has been met. 18
Italy
Installed Capacity = 3.7 GW (end 2008) 19
Italy has a national target of 12,000MW of wind energy by 2020. To deliver this, a 2007 financial law set a requirement for individual regions to produce a
share of their consumption from renewable energy sources. Tradable Green Certificates (TGCs) certify fulfilment of this obligation, which has been in place
since 2003. One TGC is equivalent to 50MWh of generation and is available for 12 years.
The 2007 law also put in place a new equivalent generation for TGCs; for plants that come online from January 1st 2008; one TGC will be worth 1MWh but will
be given for an extended period of 15 years. Additionally, there is now a technology multiplier; this is 1 for onshore wind and 1.1 for offshore wind.
Smaller installations can also take advantage of a feed-in tariff, for wind plants under 200kW this is 30.00€c per kWh. 20
France
Installed Capacity = 3.4 GW (end 2008) 21
France has a national target of 25,000MW of wind energy (including offshore) by 2020. A feed-in tariff to support this was implemented in 2001. Each MWh
produced will be bought by EDF for €82 for the first 10 years and between €28 and €82 per MWh for the next 5 years according to the productivity of the wind
farm. 22
UK
Installed Capacity = 3.9 GW (Nov 2009) 23
Under the EU Renewable Energy Directive the UK has been set a target of 15% of all its energy, including heat and transport, to come from renewables by
2020. To achieve this will require a much higher percentage of electricity to be source from renewable sources, possibly as high as 30% to 40%. In the UK
17
Data from GWEC
Information from IEA Annual Report (2007)
Data from GWEC
20
Information from IEA Annual Report (2007)
21
Data from GWEC
22
Information from France Energie Eolienne http://fee.asso.fr
23
Data from British Wind Energy Association
18
19
Page 11 – Step 1: Status and Growth of Wind Energy Worldwide
the main measures to stimulate the uptake of renewable energy are the Renewables Obligation and Feed in Tariffs. The RO requires licensed electricity
suppliers to source an increasing percentage of their electricity generation from renewable sources; from 3% in 2002/2003 to 14.4% in 2014/2015. Further
details are given on page 16. Feed in Tariffs will be introduced for small-scale low-carbon electricity generation, from April 2010. More details are given in the
chapter on Small and Micro Wind Energy, on page 71.
USA
Installed Capacity = 25.2 GW (Feb 2009) 24
Wind energy development in the USA has been supported for the past three years by the Production Tax Credit (PTC) initiative. The PTC provides $21 per
MWh tax credit over the first 10 years of the project’s operation. In December 2008, PTC for wind energy was extended to end in December 2009. With the
passing of the American Recovery and Reinvestment Bill into Federal Law in February 2009, the PTC was extended a further three years to December 2012.
State level support is also provided in some areas. By the end of 2007, 25 States and the District of Columbia had adopted a target for mandatory generation
of electricity from renewables. Targets range from 4% in Massachusetts to 40% to Maine. If it is assumed that all State policies remain in place, an extra
60GW approximately of new renewable energy will be required by 2025. Other State programs include feed-in tariffs, grants, loans, production incentives and
utility resource planning. 25
In July 2009, the US Treasury enacted the long-awaited grant system designed to temporarily extend the Production Tax Credit (PTC), which had played a
major role in both wind projects. The value of this support is expected to be around $3b, supporting $10-14b of project investments. However, as there is no
cap this could be exceeded.
India
Installed Capacity = 10.5 GW (Jul 2009)
In June 2008, a countrywide support mechanism was announced for wind energy development. The Indian Ministry of New and Renewable Energy has
issued guidelines to all state Governments on how to create an attractive environment for wind energy generation. In addition, State Electricity Regulatory
Commissions have been set up in most states with a mandate of promoting renewables by the introduction of preferential tariffs and a requirement for a
percentage of energy to come from renewables. Ten of the twenty-nine Indian states have so far adopted a requirement for utility companies to source 10%
of their energy from renewable sources.
24
25
Data from American Wind Energy Association
Information from IEA Annual Report (2007)
Page 12 – Step 1: Status and Growth of Wind Energy Worldwide
Australia
Installed Capacity = 1.3 GW (end 2008) 26
The Government change in 2007 has revitalised the wind energy industry in Australia, the Kyoto protocol was ratified within hours of the new Prime Minister
being sworn in. The Australian Government’s Mandatory Renewable Energy Target (MRET) was established on 1 April 2001 to encourage additional
generation of electricity from renewable energy sources and achieve reductions in greenhouse gas emissions. A national Renewable Energy Target (RET)
scheme is being established which will expand MRET over four times to achieve a target of 45,000 GWh generated in 2020, to deliver on the Government's
goal of 20 percent renewable energy in Australia's electricity supply by 2020.
An Emissions Trading Scheme to financially support the market was also in development and was expected to become law in 2009. However, in December
2009, this was voted down for the second time, winning an early election trigger.
Key Points: Step 1
This review of a selection of key markets shows that:
•
Wind is a global opportunity, with growth in all major markets.
•
Renewable energy policy in each market will drive growth through the setting of targets and the financial incentives used to support these targets.
•
It is important to understand the details of these financial incentives, as they drive the growth rates and timing of market opportunities – particularly as
incentives can and will change, with potential impacts on each market.
The advantages of accessing global markets include:
•
Reduced risk to business from inconsistencies in the build rate of UK wind farms.
•
Maximised economies of scale.
•
Demonstrating competitive performance and costs both to UK and global customers.
26
Data from GWEC
Page 13 – Step 1: Status and Growth of Wind Energy Worldwide
Step 2: The UK Wind Energy Market
Past Development Trends
At the time of writing, the UK has 3.9GW of installed wind energy capacity, 83% onshore and 17% offshore making up approximately 2% of the current UK
energy mix. As can be seen from Figure 7, the introduction of the Renewables Obligation and ROCs in 2002 had a significant impact on the number of
projects submitted through to 2004. From 2005 to 2006 a relative stabilisation of the market took place, with proposed new capacity submitted to the planning
system at approximately 2.5GW each year. The high number of submissions before 2006 was due to a rush to obtain consent and connection agreements
before more restrictive Grid Code conditions for wind generation came into effect. A large drop in submissions was recorded in 2007 to 1.7GW, similar to
2002 levels; this was mirrored in 2008 with 1.7GW again being submitted.
At the time of writing there were 727MW of onshore wind capacity under construction with a further 774MW offshore. Furthermore, there is 3.3GW of
consented capacity onshore and 4GW offshore yet to start construction, a backlog caused by the surge in submissions to 2006. This is illustrated in Figures 8
and 9 28 . Details of major (>50MW) UK projects under construction, consented or in planning at the time of writing can be found in Appendix 3.
Figure 7: Wind Energy Capacity Submitted and Consented 1989-2008 27
27
28
Figure from BWEA (2008). 2008 figures may differ from actual due to report being published before year-end.
Data from BWEA as of 10/02/09
Page 14 – Step 2: The UK Wind Energy Market
Figure 8: Current Onshore Capacity by Planning Status
Figure 9: Current Offshore Capacity by Planning Status
Figure 8 and Figure 9 also show the level of opportunity available to the supply chain. Scotland dominates onshore development with the highest levels of
projects both in planning and consented. Offshore wind is relatively new to Scotland – supply chains will be developed as part of rounds 1 and 2 with larger
scale opportunities being developed under Round 3. Moreover, on the 16th of February 2009, the Crown Estate announced it would be offering exclusivity
agreements to companies and consortia for 10 sites for development of offshore wind farms within Scottish territorial waters, with a potential installed capacity
in excess of 6GW. Further information is provided in the later section, ‘Offshore Wind Energy’.
Meeting the UK’s Renewable Energy Targets
Since the setting of the Government’s target of 10% electricity generation from renewables by 2010, it has been accepted that 6% would need to come from
wind energy, due to its position as a commercially attractive and relatively mature industry. When the 2003 Energy White Paper was published it was believed
that there would be a 50/50 split between offshore and onshore i.e. 4GW of each, however, by the time the Energy Review (2006) was published, it had
become clear that offshore wind would not be able to make this target and a longer-term target of 20% by 2020 was proposed. This was due to delays in the
consenting regime and bottlenecks in the supply chain. Therefore, the expectation for onshore wind has now been increased to 6GW; an ambitious number
considering current installed capacity onshore is only 2.7GW. In 2008, the Government signed up to deliver 15% of all energy, including transport and heat,
from renewables by 2020 as part of its contribution to the EU target of 20%. To achieve this, a much higher percentage, possibly as high as 40%, will be
required from the electricity generation sector.
Page 15 – Step 2: The UK Wind Energy Market
The Government held a consultation on its Renewable Energy Strategy 29 between 26th June 2008 and 26th September 2008. It sought views on how to drive
up the use of renewable energy in the UK, as part of the Government’s overall strategy for tackling climate change and to meet the UK share of the EU target.
Responses to this consultation helped to shape the UK Renewable Energy Strategy, which was published in July 2009. This sets out in detail how the
Government proposes to achieve this target.
The increasing level of UK targets illustrates a trajectory of growth in the ambitions for the renewables sector, similar patterns can be seen in the development
of increased targets in other global markets. In parallel with the development of increased targets has been a process of introducing financial incentives to
support the policy objectives along with actions to address constraints and barriers to market development such as delays in planning or access to grid
connections.
The two key measures are: the renewables obligation (RO) and feed-in tariffs (FITs).
•
Renewable Obligation Certificates (ROCs)
Licensed electrcity suppliers can meet the Obligation by either presenting Renewables Obligation Certificates (ROCs) or by paying a buy-out that rises
each year in line with the retail prices index. ROCs are issued to generators for every MWh of electricity generated and can be sold on to electricity
suppliers. ROCs are banded by technology, thus providing a greater level of support for emerging technologies and to a lesser extent for more
commercially viable, mature technologies. A table showing ROC bandings is included as Appendix 1. The Government has confirmed that the ROC
regime will stay in place until 2037.
Recently the Government has announced increased ROCs for Offshore Wind: eligible offshore wind projects will receive 2 ROCs per MWh generated
30.
between April 2010 and March 2014. This is expected to provide an additional £400m of support to the offshore industry over the period There will be
another Banding Review beginning in April 2013 which will decide upon the level of support provided through the RO for offshore wind from April 2014.
A table of ROC bandings is given in Appendix 1.
•
Feed in Tariffs
Feed-in tariffs (FITs) will be introduced for small-scale low-carbon electricity generation, up to a maximum limit of 5 megawatts (MW) through changes to
electricity distribution and supply licences. They are intended to encourage the uptake of small-scale low-carbon energy technologies while the
Renewables Obligation continues to be the main support mechanism for large scale renewables deployment. More details are given in the chapter on
Small and Micro Wind Energy, on page 71.
The 2009 Budget also announced that UK renewable and energy projects stand to benefit from up to £4 billion of new capital from the EIB through direct
lending to energy projects and intermediated lending to banks. The Government is bringing together the EIB, banks and developers to ensure this new
framework lending and other products deliver rapid and sustained investment for UK renewable energy. The Government believes that this initiative can bring
forward £1 billion of consented small and medium-sized UK renewables projects to deployment. The Government is also consulting on whether to introduce,
at a later date, a mechanism to reduce or remove the risk of fluctuations in the wholesale price of power (and possibly the ROC price).
29
30
http://www.decc.gov.uk/en/content/cms/consultations/cons_res/cons_res.aspx
Pre-Budget Report, Wednesday 9th December 2009
Page 16 – Step 2: The UK Wind Energy Market
Meeting the Scottish 50% of electricity by 2020 Target
In October 2008, the Scottish Government consulted on its framework for the development and deployment of renewables in Scotland, including heat and
transport. This stated that “The Scottish Government is committed to work towards the achievement of 20% of total Scottish energy use coming from
renewable sources by 2020, in line with EU targets”. On 1st July 2009, the Scottish Government published its Renewables Action Plan 31 , setting out what
needs to happen, and by when, to meet the Scottish Government's Renewable Energy targets, with a focus on the next 24-36 months.
The Scottish Government set a target of 50% of electricity coming from renewable sources by 2020, with 31% by 2011. Currently, energy generated by
renewable installations accounts for 20% of Scotland’s demand, with generation capacity around 3,010MW 32 . Therefore, to reach the target of 31%,
approximately 5,000MW of generation capacity is required. If all wind projects currently under construction are included, this would total 3,486MW; there is
also 2,241MW of consented onshore capacity, bringing the total to 5,727MW. The majority of the capacity consented but not yet under construction is
awaiting the commissioning of the Beauly-Denny grid upgrade. As of January 2010, Scottish Ministers confirmed that the upgrade would go ahead, greatly
boosting the grid capacity.
The impact of the Global Economic Crisis 33
The 2009 global economic crisis has had a major impact on a number of previously prosperous industries and companies. As input to this report,
stakeholders, developers and supply chain players, were asked for their views on how the wind energy industry was faring in the current economic climate.
The following summarises their responses in relation both to their own organisations and the industry as a whole.
A number of stakeholders expressed a view that the wind industry and renewable energy in general would remain an ‘island of prosperity’ in the face of
challenging economic circumstances. It was felt that growth and investment would continue on an upward trend, spurred on, and supported by ambitious
Government targets and financial mechanisms. However, this is not to say that these circumstances will have no impact on the industry or market.
A key difference was that smaller developers are experiencing different impacts compared to larger, utility developers. This is due to access to finance; larger
developers, often linked to major utility companies, fund projects on their balance sheet therefore not requiring external finance. Whereas smaller developers,
for example, on a community scale may have difficulty financing projects due to an increased cost of borrowing and a reduction in grants available. One major
developer reported smaller developers selling sites with planning permission to larger developers.
In relation to the supply chain, developers stated that turbines were becoming available at a shorter lead-time due to some companies looking to delay their
investment in projects, therefore leaving manufacturers/suppliers with a surplus of pre-ordered turbines. Supply chain companies stated the recession was
having little impact on the wind industry stream of their business. Individual companies reported turbine manufacturers being more cautious in their
investments leading to less attractive terms of agreement and increased costs.
31
32
33
http://www.scotland.gov.uk/Resource/Doc/278424/0083663.pdf
Data from BWEA and SRF
NB. Views presented in this section are those of industry bodies, developers and supply chain stakeholders interviewed in the process of compiling this report.
Page 17 – Step 2: The UK Wind Energy Market
Onshore Development Constraints
The aim of this report is to provide a realistic view of the wind energy market as it currently stands and the predicted trends for its future growth. As such, it is
worthwhile looking at the potential constraints on the growth of the market. Many of these constraints are extremely dynamic and their impact on projected
levels of installed capacity cannot accurately be predicted.
The result is that the projections of market scale and value can only be estimates not predictions. Constraints may delay rather than prevent implementation
of projects – a key example being availability of grid connection capacity. Hence opportunities in project development may be less sensitive to these
constraints – whereas the construction and turbines supply projections and market opportunities will be directly affected.
However, as well as limiting the market, constraints can also provide opportunity; for example, gaps in the supply chain and shortages in skilled labour are
currently holding back growth. Scottish companies with the necessary capabilities have the chance to address these constraints and drive forward
development of projects.
This section is specific to onshore wind energy; offshore constraints are discussed in the dedicated offshore wind chapter.
There are four key constraints to the deployment of wind energy in the UK – supply chain, skills shortage, grid connection and the planning system.
Supply Chain
Global market conditions have lead to a shortfall in the availability of turbines due to increased demand around the world with the consequence being an
increased lead-time for turbine supply. Countries such as China have addressed this by investing in and providing incentives for manufacturing. Given the
availability of ports, the UK would be well placed to invest in and develop infrastructure to enable the manufacture, assembly and construction of wind
turbines.
Currently, the UK supply chain is limited with respect to wind turbine components, balance of plant and services. There are also difficulties for new UK
suppliers breaking into continental supply chains. There are, however, examples of strong UK competence and manufacturing for the wind industry. These
include:
•
Converteam who supply power converters and generators to the wind industry and have an annual turnover of the order of £100m
•
Skykon A/S and BiFab who manufacture towers and offshore support structures in the UK
The size of the UK market and exchange rate risks are strong factors pointing to a need for increased manufacturing in the UK. In particular Scotland has
globally recognised expertise in offshore engineering and in depth knowledge of North Sea conditions.
Developers can also overcome the increased lead-time by buying in bulk in expectation of project consent (a high risk option); setting up framework
agreements with suppliers; entering into joint ventures with companies that already have a framework agreement; or by purchasing from the second hand
market.
Supply chain status and potential is analysed and discussed further in Steps 4 through 6.
Page 18 – Step 2: The UK Wind Energy Market
Skills Shortage
Employment within the wind energy industry falls into eight main categories:
Turbine manufacturing
Component manufacturing
Wind farm development
Installation and Operations and Maintenance (O&M)
Independent Power Producers /Utilities
Consultancy
R&D/Universities
Financial
According to research conducted in 2008 34 , approximately 4,000 people are directly employed in the wind energy industry in the UK. Countries with strong
connections to turbine manufacturers and suppliers record much higher levels of employment, for example, Spain (20,500), Germany (38,000) and Denmark
(23,500).
However, there is still an acute skills shortage, specifically for engineers, O&M technicians and site/project managers. With the UK’s strong background in
engineering, especially marine, gas and oil, it is well positioned to fill many of these skill gaps and export skills overseas. At an educational level, specialist
further education courses are required and the benefits of a career in wind energy should be marketed to those on generic engineering or
environmental/physical sciences degrees.
Grid Connection
A lack of capacity on the electricity supply network is increasing grid connection times. Currently grid companies will only connect a new generator if there is
sufficient grid capacity to cope with all generators connected to be operating at full capacity at one time. Clearly this is not the case for UK wind projects,
which generally will have a capacity factor of less than 30%, and so there is scope for connecting more wind to the grid, without additional investment, than is
allowed under current rules. Grid companies, the Government and the regulator are working towards addressing this issue.
The short-term approach favoured by the industry and by BWEA is called ‘connect and manage’ which acknowledges that not all generation will operate at full
capacity at any one time. Generators would be able to bid for generation by the hour, day, month or year, or would be able to enter into agreements with other
generators to share their grid export allowance.
In January 2010, the Scottish Government announced a proposed upgrade to the Scottish transmission network from Beauly to Denny would go ahead,
upgrading the current line to 400kV. It is expected the work will commence in 2010 and be completed within 4 years.
In the long-term major planning and investment is required to reinforce the current grid infrastructure and build new infrastructure to accommodate the
growing requirement for renewable energy. It is further complicated by the fact that the best areas for wind energy generation are rural, exposed areas away
from major transmission networks and large demand centres.
34
EWEA (2008)
Page 19 – Step 2: The UK Wind Energy Market
Planning
At the time of writing, since January 2006, only 67% of UK applications assessed at Local Planning Authority level have been approved, previously this was
72% (as averaged since 1991). Of the 33 Section 36 applications 35 submitted to the end of 2005 the approval rate was 85%, however, since January 2006
this has also fallen, to 70%. For Section 36 applications, an increased staffing resource, meaning more projects are assessed, and results in more refusals,
could explain this.
The number of appeals is also high: 25% of the 167 applications assessed under the Town and Country Planning Act, i.e. Local Planning Authority (LPA)
level, were decided at appeal with approximately 12% (of the original 167) being granted consent.
All National and Local planning policies are set in support of renewables in principle, however, elected committee members often find it difficult to uphold
these policies when faced with opposition from their own ward. In addition, statutory and non-statutory stakeholders are becoming more interested in
developments and hence conditions are becoming more onerous and Section 106 Agreements 36 are becoming more common.
It is not just the rate of planning approval that is an issue but also the amount of time a project takes to get from submission to consent. If projects are refused
and then progress to the appeal process, the planning system is slowed further due to the expense and time required. To help address this, the Scottish
Government in 2007 promised changes to the Section 36 decision making process and also made a voluntary pledge to decide all proposals with 9 months of
submission. In November 2008, new advice for planning authorities on wind farms was published by the Scottish Government. The Planning Advice Note
(PAN) aimed to help councils and national park authorities prepare their own guidance for considering wind farm applications. The Scottish Government’s
Renewables Action Plan, published in 2009 aspires to a robust planning framework supporting timely processing of consents applications and ensuring wind
farms are consented where they are environmentally acceptable.
In England and Wales the Government is in the process of setting up the IPC to consider consents for large (section 36) projects. The IPC is currently
expected to begin making decisions in 2010.
Issues with delays and uncertainty in the planning system are also impacting confidence of investors in the UK market. After a peak in applications in 2004,
there was a slow decline through 2005/06 and a large decrease in 2007 which levelled off in 2008.
Future Development Predictions
The United Kingdom has one of the best wind resources in Europe and has significant potential for development of both onshore and offshore wind.
The 4th GW of UK wind capacity is expected to be commissioned by the end of 2009, within 12 months of the 3rd GW: this is an encouraging signal for
meeting 2010 renewables targets. The 5th GW of installed capacity is likely to be commissioned in Spring 2010 given current projects under construction and
in pre-construction 37 . BWEA state it is not possible to accurately predict when the 6th and 7th GW of installed capacity will be commissioned; over 2GW is
lined up for construction in 2010 but constraints on the supply chain, grid and labour skills could push this back.
35
Applications for wind farms over 50MW in capacity, decided under the Section 36 of the Electricity Act and Electricity Act (Scotland) by the Secretary of State and the Scottish Government respectively for England and Wales
and Scotland.
36
Section 106 of the Town and Country Planning Act 1990 allows the LPA and other interested parties to agree contributions, arrangements and restrictions as agreements or obligations attached to planning permission.
Monies paid can help to offset costs of external effects of the development.
37
Predictions from BWEA (2008)
Page 20 – Step 2: The UK Wind Energy Market
In 2008, two separate bodies published results of forecast modelling of installed capacity to 2020, the Renewables Advisory Board (RAB) and DouglasWestwood (DWL). Their predictions of cumulative installed capacity of wind energy; both offshore and onshore, are shown in Figure 10 and Figure 11.
Figure 10: UK Predicted Onshore Installed Capacity to 2020 (RAB and
DWL)
Figure 11: UK Predicted Offshore Installed Capacity to 2020 (RAB and
DWL)
20,000
18,000
18,000
16,000
16,000
14,000
12,000
RAB
10,000
DWL
8,000
6,000
4,000
Installed Capacity (MW)
14,000
12,000
10,000
RAB
8,000
DWL
6,000
4,000
2,000
2,000
0
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
0
Year
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
Installed Capacity (MW)
20,000
Year
Predictions made by both RAB and DWL follow the same trend for onshore wind, suggesting 13-14GW of installed capacity by 2020 and both models
considered the main constraint to be grid connection, particularly for Scottish projects. However, the predictions only follow the same trend for offshore wind
to 2011 and then deviate with DWL predicting 7.6GW less offshore capacity in 2020 than RAB. DWL state this is due to their model putting more emphasis on
constraints such as increasing costs, increasing development timeframes and the supply chain. Both DWL and RAB, however, expect significant levels of
installed offshore capacity by 2020. DWL predicts that by 2020 there will be ~10GW of offshore installed capacity, while RAB predicts there will be ~18GW by
2020.
It is expected that projects from Round 3 of UK offshore wind farm leasing will begin to become operational from 2018 and will then begin to feed into and
increase these figures. The Crown Estate announced 32 GW for Round 3. In addition, nine different developers and consortia have been awarded
exclusivity agreements for 10 sites in Scottish territorial waters which could have a maximum installed capacity in excess of 6.4 GW. Although these potential
projects are at a very early stage in their development, the potential exists therefore to have, an offshore installed capacity of up to 40GW.
Page 21 – Step 2: The UK Wind Energy Market
Key Points: Step 2
Currently the UK has 3.9GW of installed wind energy capacity, 83% onshore and 17% offshore making up approximately 2% of the current UK energy mix.
Both the UK and Scottish Government have set ambitious targets for the generation of energy from renewable sources – and electricity generation will be vital
to this. The UK Government has signed up to deliver 15% of all energy demand from renewable sources by 2020 as part of its contribution to the EU target of
20%. To achieve this, possibly as much as 40% of all electricity generated will need to come from renewable sources. Action has therefore been taken to put
in place mechanisms to provide financial incentives to drive this forward in the form of Renewable Obligation Certificates and Feed in Tariffs, the latter due to
commence in April 2010.
There are four key constraints to the deployment of wind energy in the UK
• Supply chain
The UK supply chain is stronger in some areas than others – Scotland has globally recognised strengths in offshore engineering. This is discussed in
depth in Steps 4 through 6.
• Skills shortage
There is a skills shortage globally. There are relatively few employed in the wind energy industry in the UK compared to in countries with strong
connections to turbine manufacture. UK’s strong offshore engineering background provides a good basis to develop and export skills.
• Grid connection
There is a lack of capacity in the system which is increasing grid connection times. The decision of the Scottish Government to upgrade the Scottish
transmission network from Beauly to Denny will improve this situation, although in the long term further planning and investment will be needed.
• The planning system
Delays in the planning system have slowed the deployment of wind. The Governments in both the UK and Scotland are however committed to address
this.
Nevertheless, despite these constraints, the UK has one of the best wind resources in Europe and predictions of installed suggest sizeable increases in
installed capacity both on and offshore. Offshore wind has particularly strong potential, as will be discussed further in the following Steps.
Page 22 – Step 2: The UK Wind Energy Market
Step 3: Value of Opportunities in the UK Market
As part of this market forecast, AEA conducted a consultation with key stakeholders in the wind market. This confirmed that the combined UK and Scottish
market is the number one wind market in Europe and presents key opportunities for Scottish suppliers.
The UK has plans to install approximately 47GW of offshore wind capacity around the UK. Furthermore, success in UK and Scottish markets will be a
precursor to entering global markets. Therefore in our further analysis, this section is focussed on the value of the potential opportunities to supply goods and
services to Scottish and UK wind projects. Subsequent sections then consider the capabilities of Scottish companies to serve and compete in Scottish, UK
and global markets, providing a detailed analysis of the value of the market in Scotland and the UK that is accessible to Scottish companies.
Exploitation of targeted overseas markets will depend upon the specific attributes of each company, such as links with the target market, which will affect their
ability to establish a presence and compete in global markets. Hence, specific company attributes, rather than the size of the global market, will constrain
business growth. Companies should undertake their own market research of target markets to investigate the size of global markets that are accessible to
them.
The price/MW installed varies globally and the value of project developments and the associated turbine supply and wind farm construction contracts will be
constrained by revenues offered by the project. Hence, Scotland with its excellent wind resource (25% of Europe’s) and high wind energy prices provides a
lucrative market for wind project developers and the supply chain. International project values will differ from the UK model, predominantly with reduced
labour costs in Eastern Europe, India and the Far East, reducing the likely obtainable value of the construction stage. Wind turbine supply costs may also
reduce if turbine manufacturing is established on a large scale in these countries.
This section provides detailed estimates of the onshore and offshore large scale wind market. These estimates are based on published data on wind farms in
construction, consented and in planning. The estimates apply previous experience in planning success rates and build timelines to assess the potential
market by 2014. These estimates will be affected by the constraints described in Step 2 and the issues in the offshore wind energy section – and as
highlighted earlier this will have a greater impact on the scale of opportunities to construct and supply turbines – where as the market for development
services will be less sensitive to these constraints.
The charts in this section give a projection of the value for the main wind energy supply sectors from UK project developments, as a cumulative value for
38
developments from 2009 to 2014. These include current and planned developments, consistent with the growth projections as detailed in Appendix 3 . Of
the current and planned developments included in the forecast the majority are yet to be constructed.
38
In previous sections of this report, projections of installed wind capacity were presented from RAB and DWL, it was not possible to utilise those figures for supply chain analysis, as the figures are not broken down by
devolved administration. Therefore, a simplified growth scenario was used, the assumptions of which are presented in Appendix 2.
Page 23 – Step 3: Value of Opportunities in the UK Market
Figure 12: Cumulative Value of Capital Investment in Current and Planned UK Large-Scale Wind Projects to 2014 39
Onshore – Scotland (£5.3b)
[Based on 3.8GW installed 2009-2014]
Onshore – Rest of UK (£2.9b)
[Based on 2.1GW installed 2009-2014]
C o n s tr u c tio n
D e ta il D e s ig n
L e g a l a n d F in a n c i a l
Offshore – UK (£17.1b)
[Based on 5.7GW installed 2009-2014]
T u r b i n e S u p p l y
P r o je c t M a n a g e m e n t
P r o je c t D e v e l o p m e n t
Major increases in the projected number of current and planned projects has led to step changes in the projected value of capital investment required to
develop these sites, compared to the analysis carried out in 2007. This includes a doubling in value for Onshore Rest of UK. The installed cost of an onshore
wind farm, per MW, is now £1.4m, and for offshore, £3m. Further analysis shows this is due to an increase in proportion of 8% on 2007 figures for turbine
supply, 8.5% for offshore. Other values have broadly increased in line with projected installed capacity increase, with the exception of Legal and Financial,
which has halved for onshore and decreased from 5% to 3% offshore; onshore project management has also halved.
39
Source data for current and planned projects from BWEA 2009 used to project expected capacity (MW) to 2014 using assumptions given in Appendix 2. Installed cost of £1,400,000/MW assumed for onshore wind,
£3,000,000 assumed for offshore wind.
Page 24 – Step 3: Value of Opportunities in the UK Market
The market values for Operation and Maintenance (O&M) opportunities in the UK, shown in Figure 13, are cumulative values of O&M contracts up to 2014.
As existing capacity accumulates, the value of the operations and maintenance market will continue to increase and become greater in proportion to the initial
project build activities (such as turbine supply and construction).
Figure 13: Cumulative Value of Operation and Maintenance Activities Supporting Current and Planned UK Large-Scale Wind Projects to 2014 40
Onshore – Scotland (£285m)
Onshore – Rest of UK (£158m)
Offshore – UK (£809m)
[Based on 3.8GW installed 2009-2014]
[Based on 2.1GW installed 2009-2014]
[Based on 5.7GW installed 2009-2014]
Service and Maintenance
Insurance
Grid Supply
Management and Consultancy
Land Related Costs
Vessel and Support Costs
Other
As projected capacity has increased, so has the value of O&M contracts. A major change in onshore projections since 2007 has been the increased
percentage take of Service and Maintenance, from 26 to 48% for Scotland and for the Rest of the UK. In terms of value, this has meant an increase of 103%
for Scotland and an increase of 142% for the Rest of the UK compared to total O&M value increases of 11% and 32% respectively. Other significant changes
40
Source data for current and planned projects from BWEA 2009 used to project expected capacity (MW) to 2014 using assumptions given in Appendix 2. Annual O&M cost breakdown derived from Avayl Engineering 2009.
Page 25 – Step 3: Value of Opportunities in the UK Market
include a 60% reduction in the percentage take for Grid Supply, both onshore and offshore, and a decrease in value of 67% for Insurance in Scotland. All
other values have changed roughly in-line with the total increase, with the decrease in percentage take for grid supply split as a small increase for both
Service & Maintenance and Management & Consultancy. The total value of offshore contracts has increased by 53% from £529m to £809m.
Key Points: Step 3
•
Scotland with its excellent wind resource and high wind energy prices provides a lucrative market for wind project developers and the supply chain.
Success in UK and Scottish markets can be a precursor to entering global markets.
•
Exploitation of targeted overseas markets will depend upon the specific attributes of each company, which will affect their ability to establish a presence
and compete in global markets. Specific company attributes, rather than the size of the global market, will constrain business growth.
•
The estimated cumulative value of capital investment for current and planned large-scale wind projects to 2014 in the Scottish onshore market is
£5.3 billion, the rest of the UK onshore £2.9 billion and offshore UK £17.1 billion.
•
The estimated cumulative value of operation and maintenance activities over the same period is £285 million for Scottish onshore wind, £158 million for
the rest of the UK and £809 million for offshore wind.
Page 26 – Step 3: Value of Opportunities in the UK Market
Step 4: Understanding the Scottish Supply Chain
Step 4 briefly considers the current status of Scottish supply to the wind energy market, both the home market and global market and the potential for Scottish
industry and Scottish companies to diversify into the wind market or expand to exploit the opportunities. This leads to a detailed analysis in the subsequent
section of the size of the market that is accessible to Scottish companies.
Status of Scottish Companies
Onshore project developers and construction companies currently dominate the wind industry supply chain in Scotland. For manufacturers entering the
market, it has been difficult to compete with imported wind turbines from the established suppliers, predominantly from Denmark, Germany and lately, Spain.
Scottish suppliers provide some electrical and electronic equipment, towers and monopiles but the vast majority of high value components are still imported.
This is mainly due to the dominance of German, Danish, Spanish and US owned wind turbine manufacturers and their associated supply chains. Hence, the
current level of material and equipment supply by companies in Scotland to the wind market is low and will require major investment if opportunities arising in
the UK are to be exploited. Currently there is one major wind manufacturing facility in Scotland.
Siemens (formerly Bonus), Nordex and Vestas continue to dominate sales in the UK market. There are signs of increased penetration by other turbine
manufacturers such as GE Wind, RePower, Enercon and Gamesa. New production capacity has been added in the USA by Gamesa and in South America
by Enercon and there have been several announcements of joint venture or licensing arrangements between the main European manufacturers and
companies in China and India. In the UK, Danish manufacturing company Skykon secured the take-over of the Vestas facility in Campbeltown in March 2009.
The plant will continue to manufacture towers and nacelles for the UK and European market as part of the Welcon steel component supply chain.
Inward investment in major Scottish utilities and manufacturing companies is increasing, examples include the take-over of Scottish Power by the Spanish
company Iberdrola, and in December 2009, German steel EEW Group, which manufactures steel tubes for wind turbines, announced its intention to invest up
to 30 million (£27m) in a Scottish plant, with an expectation that 150 jobs will be created.
There are also signs of business seizing the opportunities presented by offshore wind and in some cases changing their business focus to address this –
such as the decision of Ramco Energy to change its name to SeaEnergy and to focus on the marine renewables industry, and immediately address the
opportunity of UK offshore wind. Scottish construction contractors build most of the wind farms in Scotland; some being active partners in the development of
major wind farms. Many of these construction contractors are part of large construction groups active in many countries worldwide.
Page 27 – Step 4: Understanding the Scottish Supply Chain
Figure 14 shows the number of Scottish companies currently providing relevant goods and services to the wind industry compared to the total potential
numbers. The total potential numbers include companies that have relevant capability, but have not as yet engaged in the wind industry. Analysis by the
number of suppliers does not take into account the varying value of contracts between different companies. However, it does give some indication as to the
composition of the current Scottish supplier base.
Figure 14: Scottish Skill/Supplier Base by number of Scottish companies 41
Existing and Potential Scottish Supply Base
17
2
25
30
R&D
32
Development
24
3
35
30
84
Operations
Consultancy
Constructor / Installer
33
96
Manufacturer
61
Existing Companies
Material / Equipment Supplier
85
Potential Total Companies
Potential of Scottish Companies
The ability to exploit potential opportunities depends upon the availability of resources to establish supply capacity and a position in the market, together with
demonstrated competitive advantage to achieve sales. The capabilities and capacities of Scottish companies to exploit wind market opportunities are
considered in this section.
Capital investment:
Scotland has a number of large utilities and engineering companies with ambitious growth targets and increasing inward investment. This has the potential to
provide the substantial investment required to establish further wind turbine supply capacity. Such investment would provide a market for smaller companies
in the supply chain. However, large companies will only invest if it is necessary for them to achieve their business objectives. The growth ambitions of major
Scottish utilities and parent companies, combined with the influence of the Renewable Obligation on their business may provide such a rationale for this
investment.
41
Source Data: Avayl Engineering
Page 28 – Step 4: Understanding the Scottish Supply Chain
Technical capability:
The energy capture performance, quality of power delivery, and reliability of wind turbines are all critical to the revenue from power generation. If they are to
be successful in the market, these are therefore critical factors to achieving good returns on investments in wind power projects. Technological innovations
and manufactured/assembled products must therefore be demonstrated as meeting or exceeding global benchmarks. This requires proven technical
capability together with investment in proving new technologies and products. There are a number of companies in Scotland with innovative capability and the
ability to demonstrate product performance.
Suppliers to the Oil and Gas sector provide the most obvious match of technical capability for the wind market, especially for offshore wind. There is also
commercial drive for oil and gas suppliers to move into offshore wind as capital costs and taxes have increased in the oil and gas sector, while investment
has fallen in the face of the global financial crisis. A move into offshore renewables by oil and gas companies is seen as an effective way to add value to their
existing portfolios.
Intellectual property legislation is rigorously applied in the wind supply market, partly due to the recent development of the technology. Some suppliers have
been prevented from supplying turbines in countries where other suppliers have successfully claimed intellectual property rights. This issue therefore needs to
be considered in the early stages of business planning.
Industrial capacity:
This includes capacity that may be used for wind and non-wind work, and specialised facilities or plant dedicated for use on wind projects. The latter requires
sufficient and consistent utilisation on wind projects to repay the capital investment. There must be a visible market with a high level of certainty of high
utilisation being achieved before investments into new facilities or plant will be made. Examples of facilities and plant used in the wind supply chain include:
•
General engineering or manufacturing capacity. Scotland has a range of companies with this capacity.
•
Composite materials production facilities and composite structures fabrication facilities. Scotland has a number of companies with this capacity, as
composites are employed in the Oil and Gas sector.
•
Large-scale steel fabrication facilities. Scotland has a number of companies with this capacity, primarily in the Oil and Gas sector, although there are
some gaps, for example in the capacity to produce large flange castings.
•
Transportation and logistics plant including specialist wind turbine blade carriers and large craneage. Scotland has a number of large transportation and
logistics companies. At least one company has invested in specialist wind turbine transportation plant that is being used for projects across the UK.
•
Construction plant, including specialist monopile installation plant for offshore wind farms. There is at present limited capacity to install wind turbine
monopiles due to a lack of dedicated plant retained in Scotland.
•
Marine installation, servicing and maintenance vessels, which may or may not be dedicated for use on offshore wind farms. Scotland has many
companies in the marine civil engineering construction and Oil and Gas sectors, with vessels that have the capability to assist in construction, servicing
and maintenance of wind farms. A wider range of vessels may come into play as offshore wind projects are sited in deeper water. However, vessels
designed for use on major Oil and Gas projects may be too expensive to use on wind projects.
Page 29 – Step 4: Understanding the Scottish Supply Chain
Case Study: Burntisland Fabrications: Ormonde Offshore Windfarm
Burntisland Fabrications (BiFab) recently won a £50m contract to work on a new offshore windfarm off the Cumbrian coast. The contract for the Ormonde
offshore windfarm was awarded by Vattenfall Wind Power. The contract will secure employment for 200 of BiFab’s 740-strong workforce, particularly in
plating, welding, scaffolding and mechanical trades, as well as providing opportunities for new apprentices to join the company. It will also provide significant
work for subcontractors in Scotland.
BiFab’s background has mainly been in the oil & gas sector, but, following a management buyout in 2001, the decision was made to diversify into renewables.
BiFab’s jacket sub-structures, first used in the oil & gas industry, provide foundations for deep-water turbines and the Ormonde project will be the world’s first
full-scale windfarm project to deploy the design.
The impact on the business of the renewables orders has been significant. In 2008, 80% of its workload was in the oil and gas sector and the remaining 20%
in renewables. In 2009 the split will be even and forecasts for 2010 suggest it will be 75% renewables and 25% oil and gas.
Presence in regional markets:
Presence in the locality provides major competitive advantage; this will often be the deciding factor on whether a specific market is accessible to a company.
Examples include:
•
Project developers and service companies such as environmental consultants have a competitive advantage due to their knowledge of the planning
regime in the region. Local project development expertise may be sourced through parent group companies, by alliances with other companies, or
bought in.
•
Construction contractors have a competitive advantage both from their experience of operating a business in the region and the skilled staff they have in
the region. However, major construction groups active in wind projects in Scotland also operate in many countries overseas.
•
When production facilities and installation plant are located close to the wind project, this provides some reduction in transport costs. However, since
bulk-shipping costs are relatively low this can easily be outweighed by higher labour rates or investment costs in new facilities or plant.
•
Maintenance companies providing regular servicing of wind turbines will have a cost advantage when located close to the wind project. However, this
may only be realised once initial warranty and service agreements with the turbine manufacturers have expired and will be subject to agreement of new
service contracts with wind farm owners and bankers. Given existing offshore expertise and capacity, Scotland should be well placed to exploit this
opportunity for offshore wind farms in the more exposed locations.
Page 30 – Step 4: Understanding the Scottish Supply Chain
Business capability:
Scottish companies demonstrate business development expertise and capabilities in a range of areas relevant to the wind market. Examples include:
•
Commercial exploitation of innovations in technology: Scotland has a good institutional base and companies across a range of sectors that have been
successful in taking forward innovations in technology. Institutions and companies are targeting wind energy as a fruitful area for technology
development.
•
Investment in, and successful commercial exploitation of, production facilities, plant and marine vessels, for example operation of production facilities,
plant hire and leasing of marine vessels:
•
Operation of construction contracting businesses, including overseas: major construction groups active in wind projects in Scotland also operate in many
overseas markets.
Key Points: Step 4
Onshore project developers and construction companies currently dominate the wind industry supply chain in Scotland. For manufacturers entering the
market, it has been difficult to compete with imported wind turbines from the established suppliers.
The capability of Scottish companies to exploit wind market opportunities will depend on:
•
Capital investment
Scotland has a number of large utilities and engineering companies with ambitious growth targets and increasing inward investment, who are capable of
responding to financial incentives.
•
Technical capability
There are a number of companies in Scotland with high degree of technical skills and the ability to innovate. Many suppliers to the oil and gas sector are
well placed to move into offshore renewables.
•
Industrial capacity
Scotland has capacity in engineering, composite materials, steel fabrication, transportation and logistics, construction and marine civil engineering. Areas
where there are gaps include the capacity to produce large flange castings, and there is limited capacity to install large monopiles. Further some oil and
gas facilities (such as transport) may be too expensive for wind developments.
•
Presence in their local market
This is advantageous for project developers, maintenance providers, and construction contractors.
•
Business capability
Scotland has an excellent history of innovation – wind presents an opportunity and a challenge to exploit this commercially.
Page 31 – Step 4: Understanding the Scottish Supply Chain
Step 5: Gaps in the Scottish Supply Chain
This section identifies and quantifies specific market opportunities by the activity performed or goods and services provided. It also considers how accessible
these markets are to Scottish companies, taking into account the status and potential of Scottish companies in the wind supply sectors. Hence an estimate is
made of the value of the market from Scottish and UK wind project developments that Scottish companies have the realistic potential to access. Accordingly,
the accessible market values, or supply gap values presented in this section are therefore lower than the UK total market values previously presented under
Step 3.
Methodology
This section presents the market opportunity for Scottish companies in each sector between 2009 and 2014. Detailed analysis of the UK market is provided,
as this is likely to be the entry market for most companies:
•
•
•
•
•
•
Headline figures for the total market opportunity, based on the projected build of onshore and offshore wind farms in Scotland and the UK to 2014, are
presented in the previous sections Figure 12 and Figure 13. This was determined from the projected future build of onshore and offshore wind farms over
the period 2009 to 2014, The new installed capacity being the projected cumulative capacity in 2014, less the existing capacity at the end of 2008.
The analysis of supply chain opportunities is based on a detailed breakdown of the supply chain industry and service sectors and the activities they
perform in wind energy developments.
The maximum supply gap (£m) for each supply chain activity is the difference between the market value and existing supply by Scottish companies.
The realisable supply gap, or gap value (£m) as stated in this report is that which is accessible to Scottish companies diversifying or expanding in the UK
wind energy market. This is calculated using the market value factored by the estimated potential supply (%) by Scottish companies. Specific potential
market share factors pertain to each supply chain activity for projects in Scotland and the UK.
Highlighted supply chain opportunities are identified in the tables in this section. These are the high priority areas where access to market is recognised
as most feasible.
The full supply chain analysis incorporating all of the above aspects is presented in Appendix 4.
Scottish companies who have demonstrated success in the wind supply market, or have good potential to diversify or expand in the wind energy sector have
been identified. Selected companies from this group have participated in the market forecast project, advising on the prospects they see for development of
the supply chain and how business development could be managed.
The gap analysis is presented under the following headings:
•
•
•
•
Project Developers and Services
Turbine Manufacturers and their Suppliers
Construction Companies and their Suppliers
Operation and Maintenance
Page 32 – Step 5: Gaps in the Scottish Supply Chain
Project Developers and Services
Project Development
Legal & Financial
Project Management
Design
Turbine Supply
Construction
Operation &
Grid Connections
Maintenance
The supply gap in this sector that is accessible to
companies in Scotland has been estimated and broken
down into sub-sectors and activities as shown in the pie
charts below. The gap data is shown in more detail in
Appendix 4:
Figure 15: Cumulative Accessible Value of Supply Gaps for Scottish and UK Projects to 2014 for Scottish Companies - Project Developers and Services 42
Onshore – Scotland (£183m)
[Based on 3.8GW installed 2009-2014]
Onshore – Rest of UK (£16m)
[Based on 2.1GW installed 2009-2014]
Offshore – UK (£169m)
[Based on 5.7GW installed 2009-2014]
Feasibility Study
Mast Installation
Environmental Studies
Development Project Management
Public and Community Liaison
Outline Design
Site Access Survey
Site Conditions Survey
Land Purchase/Agents
Insurance
Bank Fees and Interest
Project Management
42
Source Data: Avayl Engineering. Market value projections presented in previous sections of this report are factored by the estimated potential Scottish supply, and the existing Scottish supply deducted. Details of the existing
supply based on historical achievement, and potential supply estimates for each supply chain activity are given in Appendix 3.
Page 33 – Step 5: Gaps in the Scottish Supply Chain
The supply gap value for Project Developers and Services has increased by 6% from 2007 for Scottish onshore, by 33% for onshore Rest of UK and by 3%
for offshore. For Scottish onshore developments, there has been a significant decrease in percentage take for Land Purchase/Agents, from 14% to 2%,
representing a value decrease of 83%.
However, Bank Fees and Interest values have increased by 38% for Scotland and 75% for the Rest of the UK. For onshore Rest of UK, there were changes
in almost all sectors. The offshore sector remained relatively static aside from a 100% increase in value of Project Management.
High priority opportunities have been identified for Scottish companies, as shown in Table 4:
Table 4: Opportunities with High Accessibility for Scottish Companies - Project Developers and Services
Total
Scotland
(Onshore)
Rest of UK
(Onshore)
Total UK
(Offshore)
Scotland
(Onshore)
Rest of UK
(Onshore)
Total UK
(Offshore)
Scotland
(Onshore)
Rest of UK
(Onshore)
Total UK
(Offshore)
Total
Supply gap (£m)
2009 - 2014
Total UK
(Offshore)
Potential supply (%)
2009 - 2014
Rest of UK
(Onshore)
Existing supply (%)
Scotland
(Onshore)
Market value (£m)
2009 - 2014
Environmental studies 43
50
28
217
295
42
5
5
80
15
15
37
3
31
71
Mast installation
8
4
175
187
42
5
5
80
15
15
6
1
25
32
Outline design
17
9
80
106
42
5
5
80
15
15
13
1
12
26
Feasibility studies
12
7
58
77
42
5
5
80
15
15
9
1
8
18
8
5
32
45
42
5
5
80
15
15
6
0
5
11
95
53
562
710
71
6
81
158
Product/Service
Site surveys
44
Environmental studies should be considered a high priority market for the Scottish skill base as they represent the second highest value to developers across
both onshore and offshore projects. This market is also accessible to the strong Scottish consultancy base, though extra capacity is likely to be required to
take advantage of UK wide and overseas projects. The same applies to outline design and in both cases transferable skills from the Oil and Gas sector will be
an advantage for offshore projects.
Specific contracts for feasibility studies and mast installations are likely to decline over time as developers provide more in-house services. Site access
surveys for onshore projects may present opportunities to specialist engineering/transport companies.
43
44
Environmental studies include environmental impact assessments, wildlife and bird surveys and marine studies
Includes access and conditions surveys, noise studies and archaeology studies for onshore developments
Page 34 – Step 5: Gaps in the Scottish Supply Chain
Turbine Manufacturers and their Suppliers
Project Development
Legal & Financial
Project Management
Design
Turbine Supply
Construction
Operation &
Grid Connections
Maintenance
The supply gap in this sector that is accessible to
companies in Scotland has been estimated and broken
down into sub-sectors and activities as shown in the pie
charts below. The gap data is shown in more detail in
Appendix 4:
Figure 16: Cumulative Accessible Value of Supply Gaps for Scottish and UK Projects to 2014 for Scottish Companies - Turbine Manufacturers and their Suppliers 45
Onshore – Scotland (£1.1b)
[Based on 3.8GW installed 2009-2014]
Onshore – Rest of UK (£465m)
[Based on 2.1GW installed 2009-2014]
Offshore – UK (£1.46b)
[Based on 5.7GW installed 2009-2014]
Tower Structure
Detail Design
Blades
Nac elle Cover
Hub Assembly
Yaw Assembly
Pitch Control
Control System
Main Shaft
Gearboxes
Generators
Cooling System
Bed Plate
Other
Assembly Time
High priority opportunities have been identified for Scottish companies and are highlighted below in Table 5:
45
Source Data: Avayl Engineering. Market value projections presented in previous sections of this report are factored by the estimated potential Scottish supply, and the existing Scottish supply deducted. Details of the existing
supply based on historical achievement, and potential supply estimates for each supply chain activity are given in Appendix 4.
Page 35 – Step 5: Gaps in the Scottish Supply Chain
Table 5: Opportunities with High Accessibility for Scottish companies – Turbine Manufacturers and their Suppliers
Total
Scotland
(Onshore)
Rest of UK
(Onshore)
Total UK
(Offshore)
Scotland
(Onshore)
Rest of UK
(Onshore)
Total UK
(Offshore)
Scotland
(Onshore)
Rest of UK
(Onshore)
Total UK
(Offshore)
Total
Supply gap (£m)
2009 - 2014
Total UK
(Offshore)
Potential supply (%)
2009 - 2014
Rest of UK
(Onshore)
Existing supply (%)
Scotland
(Onshore)
Market value (£m)
2009 – 2014
Blades
712
394
1387
2493
0
0
0
25
25
20
178
98
277
507
Gearboxes
407
225
793
1425
0
0
0
25
25
20
102
56
159
317
Generators
305
169
594
1068
3
0
0
25
25
20
75
42
119
236
Yaw Assembly
294
162
573
1029
0
0
0
25
25
20
74
41
115
210
Nacelle Cover
138
76
269
483
8
4
0
50
25
20
68
17
54
130
Tower – Forged Flanges
101
56
240
397
10
4
10
50
25
25
49
12
57
108
Bed Plate
104
57
202
363
5
3
0
50
25
20
51
13
40
104
Main Shaft
132
73
258
463
0
0
0
25
25
20
33
18
52
103
Hub Assembly
104
57
202
363
0
0
0
25
25
20
26
14
40
74
Labour
69
38
135
242
5
5
0
50
25
20
34
8
27
69
Cooling system
68
37
132
237
0
0
0
25
25
20
17
9
26
52
Tower – Bolts
20
11
48
79
10
4
10
50
25
25
10
3
12
23
Tower – Access Platforms
18
10
43
71
10
4
10
50
25
25
9
2
10
20
Tower – Ladders
15
8
36
59
10
4
10
50
25
25
7
2
9
16
Tower – Galvanised
Brackets
10
6
24
40
10
4
10
50
25
25
5
1
6
11
2497
1379
4936
8812
738
336
1003
1980
Product/Service
Total
Owing to the increase in the cost of installing a wind energy project – from £900,000 to £1,400,000 per MW onshore and from £1,800,000 to £3,000,000 per
MW offshore, Scottish onshore developments have seen a value increase of £575m, the Rest of the UK £256m and offshore £834m for turbine manufacturers
and their suppliers. The increase in turbine cost is reflected in increases in market values for many of the key components.
Page 36 – Step 5: Gaps in the Scottish Supply Chain
In all cases, a significant decrease in the percentage take of Detailed Design is seen, from 4.5% to 2.5% for Scotland onshore, from 0.95% to 0.4% for
onshore Rest of UK and from 3% to 1.7% for offshore.
Slight percentage take increases were seen for Scottish onshore developments for Towers and Generators. For onshore Rest of UK, significant increases are
seen for the Tower, Blades, Yaw and Pitch Control, with smaller increases in Control System, Shaft, Gearboxes and Generators. Significant decreases are
seen for Nacelle and Bed Plate as well as a smaller decrease for Assembly Time. In the offshore sector, Detailed Design was the only significant change, all
other values and percentage takes remained relatively static and increased in line with the overall value increase.
For both onshore and offshore projects, the heavy fabrication of tower structures represents a large fraction of the market value projected for turbine
manufacturers and their suppliers. High value opportunities exist for: forged flanges (as for forged yaw-rings); access platforms; galvanised ladders; and bolts,
although exploiting these opportunities will depend on local manufacture and assembly capacity. Supplying paint, power/control cables and lighting also
present good value opportunities that are also likely to depend on proximity to assembly location. Rolled steel cans represent a large fraction of the tower
fabrication value.
Manufacture of turbine blades is another high value area of turbine manufacture and represents approximately 14% of total project CAPEX. The assembly of
the nacelle components and manufacture of towers and blades represents approximately 35% of total project CAPEX. Material will be sourced from a range
of suppliers and it is likely that much of it will be sourced from outside Scotland, although carbon-fibre manufacturing capability exists in Muir of Ord. Further
capacity for high value materials supply may develop in Scotland. Nacelle covers also represent high value opportunities for fabricators, with Scottish
suppliers achieving some penetration, although local assembly opportunities will influence future contracts.
Hub assembly represents a good opportunity, with a global shortfall in the supply of bearings and castings. Based on existing capability it would take some
time for Scottish companies to gear up to exploit these opportunities and the cost of capital investment to enter the market is high.
Other high value opportunities in turbine manufacture include: gearboxes; generators; cooling systems; and bedplates. Further opportunities with a less acute
supply gap include: pitch controls; control systems; and assembly activities. Exploitation of all of these opportunities will depend to some extent on the
establishment of local manufacturing and assembly facilities.
For offshore wind turbines, low reliability of existing turbine components due to insufficient marinisation, together with the costs of accessing offshore wind
turbines for repair, now provides opportunities for turbine component supply through technology development. Examples include gearboxes with improved
corrosion and fatigue resistance.
Although relatively small at the moment, the manufacturing skills base in Scotland that work on related projects could expand significantly to take advantage
of these opportunities.
Page 37 – Step 5: Gaps in the Scottish Supply Chain
Construction Companies and their Suppliers
Project Development
Legal & Financial
Project Management
Design
Turbine Supply
Construction
Operation &
Grid Connections
Maintenance
The supply gap in this sector that is accessible to
companies in Scotland has been estimated and
broken down into sub-sectors and activities as shown
in the pie charts below. The gap data is shown in
more detail in Appendix 4:
Figure 17: Cumulative Accessible Value of Supply Gaps for Scottish and UK Projects to 2014 for Scottish Companies - Construction Companies and Suppliers 46
Onshore – Scotland (£1.04bn)
[Based on 3.8GW installed 2009-2014]
Onshore – Rest of UK (£93m)
[Based on 2.1GW installed 2009-2014]
Offshore – UK (£1.42bn)
[Based on 5.7GW installed 2009-2014]
Project Management
Site Set Up
Management Costs
Roadworks
Substation Buildings
Hardstandings
Turbine Foundations
Rock Anchors
Landscaping/Forestry/Fencing
Transportation and Installation
MEI Installation
Main Connection
46
Source Data: Avayl Engineering. Market value projections presented in previous sections of this report are factored by the estimated potential Scottish supply, and the existing Scottish supply deducted. Details of the existing
supply based on historical achievement, and potential supply estimates for each supply chain activity are given in Appendix 3.
Page 38 – Step 5: Gaps in the Scottish Supply Chain
The value of the supply gap for construction has increased significantly, £449m for Scotland onshore, £44m for Rest of UK onshore and £622m for offshore.
This could be due, in part, to the significant increase in levels of turbine construction since 2007. For the onshore sector, in both Scotland and the Rest of the
UK there have been significant changes in all areas of Construction. For Scotland, the values have decreased significantly for Project Management, Site Set
Up, Management Costs, Sub Stations, Hard Standings, Landscaping, Transportation/Installation, MEI Installation and Mains Connection. Significant
increases are seen in Roadworks, Turbine Foundations and Rock Anchors. For Rest of UK developments, significant decreases are seen for Project
Management, Site Set Up, Management Costs, Roadworks, Sub Station Buildings, Hard Standings, Landscaping, Transportation/Installation and MEI
Installation. Significant increases are seen for Turbine Foundations, Rock Anchors and Mains Connection. For offshore, an increase is seen for Turbine
Foundations, but decreases are seen for Transportation/Installation and MEI Installation.
High priority opportunities have been identified for Scottish companies and are highlighted below in table 6:
Table 6: Opportunities with High Accessibility for Scottish companies – Construction Companies and their Suppliers 47
Total
Scotland
(Onshore)
Rest of UK
(Onshore)
Total UK
(Offshore)
Scotland
(Onshore)
Rest of UK
(Onshore)
Total UK
(Offshore)
Scotland
(Onshore)
Rest of UK
(Onshore)
Total UK
(Offshore)
Total
Supply gap (£m)
2009 - 2014
Total UK
(Offshore)
Potential supply (%)
2009 - 2014
Rest of UK
(Onshore)
Existing supply (%)
Scotland
(Onshore)
Market value (£m)
2007 - 2014
-
-
2678
2678
-
-
0
-
-
25
-
-
636
636
Mains Connections
536
296
1077
1909
42
5
0
60
15
5
289
34
54
377
MEI Installation – Electrical
125
69
-
194
46
2
-
60
10
-
67
6
-
73
MEI Installation –
Transformers
55
31
353
439
46
2
0
60
10
10
30
3
35
68
Erect Tower
80
44
-
124
13
3
-
70
10
-
54
3
-
57
Heavy Haulage
40
22
-
62
13
3
-
70
10
-
27
2
-
29
MEI Installation – Substation
28
15
-
43
46
2
-
60
10
-
15
1
-
16
General Haulage
13
7
-
20
13
3
-
70
10
-
9
1
-
10
484
4108
5469
491
50
725
1266
Product/Service
Turbine Foundations
Total
877
47
Source data: Avayl Engineering. In the analysis the existing supply is expressed as a proportion (%) of the estimated value (£m) of supply on projects completed up to 2006. In calculating the supply gap the baseline
supply is taken as this absolute value (£m) rather than extrapolating the existing supply as a proportion (%) of the recent market value to the future market value. For details see Appendix 3
Page 39 – Step 5: Gaps in the Scottish Supply Chain
In the construction phase, transport services (general/heavy haulage) can be seen as a high priority area of opportunity for onshore projects, although it is
expected that an increase in heavy haulage capacity is required for Scottish companies to fully benefit. The same pattern applies to tower erection
opportunities.
Transport and lifting opportunities for offshore projects differ from onshore due to the location of the planned projects, the different transport routes and
associated logistics and the obvious differences in erecting turbines offshore. Transferable skills from marine construction and the Oil & Gas sectors will be an
advantage. However, there is a predicted deficit in the availability of installation vessels to complete the planned projects, especially with the capability to
install wind farms in deeper water. Therefore there will be opportunities in the provision of suitable vessels, provided that the planned growth of offshore wind
and expansion into deeper water is realised. There have been some signs of activity in the market – for example in June 2009, DONG Energy purchased
A2SEA to enable it to improve the efficiency with which it could install offshore wind turbines.
Offshore turbine foundations represent a high value opportunity, specifically rolled steel, paint and access platforms, though location will again be an issue.
There are opportunities to develop and supply lighter weight foundation structures and transition pieces, especially for deeper water where tripod or jacket
foundations will be more cost effective than monopiles. Indeed, this will be necessary if the potential growth of offshore wind at the deeper water sites off
Scotland and Ireland is to be realised.
Mechanical and electrical installation presents other opportunities such as the manufacture and supply of transformers that also have a high global export
potential.
For both onshore and offshore projects there are high value opportunities related to mains connections, though there is some uncertainty regarding
equipment sourcing and capacity.
Scottish companies are in a good position to supply offshore construction services due to their experience and capacity in marine civil engineering and
offshore Oil and Gas.
Page 40 – Step 5: Gaps in the Scottish Supply Chain
Operation and Maintenance
Project Development
Legal & Financial
Project Management
Design
Turbine Supply
Construction
Operation &
Grid Connections
Maintenance
The supply gap in this sector that is accessible to
companies in Scotland has been estimated and
broken down into sub-sectors and activities as
shown in the pie charts below. The gap data is
shown in more detail in Appendix 3:
Figure 18: Cumulative Accessible Value of Supply Gaps for Scottish and UK Projects to 2014 for Scottish Companies - Operation and Maintenance 48
Onshore – Scotland (£156m)
[Based on 3.8GW installed 2009-2014]
Onshore – Rest of UK (£29m)
[Based on 2.1GW installed 2009-2014]
Offshore – UK (£56m)
[Based on 5.7GW installed 2009-2014]
Service and Maintenance
Insurance
Grid Supply
Management and Consultancy
Land Related Costs
Other
48
Source Data: Avayl Engineering. Market value projections presented in previous sections of this report are factored by the estimated potential Scottish supply, and the existing Scottish supply deducted. Details of the existing
supply based on historical achievement, and potential supply estimates for each supply chain activity are given in Appendix 3.
Page 41 – Step 5: Gaps in the Scottish Supply Chain
As projected capacity has increased so has the value of O&M contracts. A major change in onshore since 2007 projections has been the increased
percentage take of Service and Maintenance, from 21 to 40% for Scotland and from 44% to 62% for the Rest of the UK. In terms of value, this has meant an
increase of 103% for Scotland and an increase of 125% for the Rest of the UK compared to total O&M value increases of 4.7% and 61% respectively. Other
significant changes include a 64% reduction in share for Grid Supply onshore, a 33% reduction for grid supply offshore, and a decrease in value of 60% for
Insurance in Scotland. All other values have changed roughly in-line with the total increase. The decrease in percentage take for grid supply split as a small
increase for both Service & Maintenance and Management & Consultancy. The total value of offshore contracts has increased by 51% from £37m to £56m.
High priority opportunities have been identified for Scottish companies and are highlighted below in Table 7:
Table 7: Opportunities with High Accessibility for Scottish companies – Operation and Maintenance 49
Total
Scotland
(Onshore)
Rest of UK
(Onshore)
Total UK
(Offshore)
Scotland
(Onshore)
Rest of UK
(Onshore)
Total UK
(Offshore)
Scotland
(Onshore)
Rest of UK
(Onshore)
Total UK
(Offshore)
Total
Supply gap (£m)
2009 - 2014
Total UK
(Offshore)
Potential supply (%)
2009 - 2014
Rest of UK
(Onshore)
Existing supply (%)
Scotland
(Onshore)
Market value (£m)
2009 - 2014
Management & Consultancy
50
27
-
77
50
10
-
75
25
-
34
6
-
42
Service & Maintenance
136
75
-
211
25
5
-
50
25
-
63
18
-
39
Total
186
102
-
288
97
24
-
81
Product/Service
With the major developments in turbine size and performance that have been achieved, many wind farms have been upgraded with new turbines before the
initial service contracts under warranty have expired. As wind design reaches maturity and turbine size stabilises, replanting will reduce and long-term service
and maintenance contracts will increase. However, these contracts may only become open once initial warranty and service agreements with the turbine
manufacturers have expired and will be subject to agreement of new service contracts with wind farm owners and bankers. Given its offshore expertise and
capacity, Scotland should be well placed to exploit this opportunity for offshore wind farms in the more exposed locations.
Scottish companies are in a good position to supply operation and maintenance capability for offshore wind farms, due to their experience and capacity in the
marine sector and offshore Oil and Gas. This will include both the provision of plant and vessels and personnel with relevant expertise. Capabilities and
capacity in fisheries, aquaculture and other marine operations such as dredging may be utilised.
49
Source data: Avayl Engineering. In the analysis the existing supply is expressed as a proportion (%) of the estimated value (£m) of supply on projects completed up to 2006. In calculating the supply gap the baseline
supply is taken as this absolute value (£m) rather than extrapolating the existing supply as a proportion (%) of the recent market value to the future market value. For details see Appendix 3
Page 42 – Step 5: Gaps in the Scottish Supply Chain
Key Points: Step 5
Estimated cumulative accessible value of supply gaps for Scottish companies arising from Scottish and UK Projects to 2014.
Project Developers and Services
Overall Supply Gap
Onshore Scotland
Onshore – for the rest of the UK.
Offshore.
£368 million
£183 million.
£16 million.
£169 million.
Turbine Manufactures and their suppliers
Overall Supply Gap
Onshore Scotland
Onshore – for the rest of the UK.
Offshore.
Construction
Overall Supply Gap
Onshore Scotland
Onshore – for the rest of the UK.
Offshore.
Operation and Maintenance
Overall Supply Gap
Onshore Scotland
Onshore – for the rest of the UK.
Offshore.
5 Highest Value Opportunities
Environmental studies
Mast installation
Outline design
Feasibility studies
Site surveys
71 million
32 million
26 million
18 million
11 million
£3 billion
£1.1 billion
£465 million
£1.46 billion
5 Highest Value Opportunities
Blades
Gearboxes
Generators
Yaw assembly
Nacelle Covers
507 million
317 million
236 million
210 million
130 million
£2.5 billion
£1.0 billion
£93 million
£1.42 billion
5 Highest Value Opportunities
Turbine foundations
Mains connection
MEI installation – electrical
MEI installation – transformers
Erect Tower
636 million
377 million
73 million
68 million
57 million
£241 million
£156 million
£29 million
£56 million
Page 43 – Step 5: Gaps in the Scottish Supply Chain
Highest Value Opportunities
Management and Consultancy
Service and maintenance
£42 million
£39 million
Step 6: Exploiting the Opportunities
This section is intended to assist companies in strategic planning for business development in the wind sector. Pointers for strategic business development
are based on the experience of companies in the wind supply sectors.
Background
The wind energy supply chain is in a period of growth as the scale of wind project developments ramps up, new markets and suppliers emerge globally, with
demand for wind turbines outstripping supply. This presents major business opportunities for Scottish companies, general pointers including:
•
Previous business successes and failures in the wind energy supply market show the importance of well-informed strategic business development.
•
Given the projected growth of wind energy globally and in the UK, growth in wind supply chain businesses is likely to be constrained by their capacity and
ability to compete rather than the size of the market.
Consultation with existing and potential Scottish supply chain companies highlights those business development strategies which maximise the prospects of
success, based on experience of successful business ventures, and those that have not succeeded. Consultation has been undertaken with selected
companies across the wind energy supply sector, as part of the wind market forecast project, from those identified by the gap analysis.
This section comments on previous experience in the global wind energy market and for each of the main accessible opportunities identifies how companies
could expand into global markets.
Specific pointers for the supply sectors are presented under the following headings:
•
Project Development and Services.
•
Turbine Technology and Manufacture.
•
Wind Farm Construction, Operation and Maintenance.
Page 44 – Step 6: Exploiting the Opportunities – Strategic Business Development
Project Development and Services
Table 8: Expansion of Project Development and Associated Services into Global Markets
Product/Service
Rationale for expansion
Achieving competitive advantage
Project
development
High penetration of UK
market by UK project
developers.
Utilise wind project experience.
Environmental
studies
Limited due to the
buoyant demand in the
UK for all types of
project, and associated
skills shortages.
Utilise wind project experience
under demanding UK planning
regime.
Constraints on growth in supply
Availability of skilled personnel,
especially with experience of project
development and planning regimes in
target countries.
Availability of turbines.
Strategy for expansion into global markets
Availability of skilled personnel.
Low priority for this sector.
Buy in knowledge of infrastructure
developments in target countries or form
alliances with established infrastructure
project developers in target countries.
Supply Sector Characteristics
Despite the delays faced by wind projects in planning, independent power project developers and utilities in the UK and Scotland have been very successful.
This reflects the high attractiveness of the UK market and particularly the Scottish wind market in worldwide terms.
Scottish companies have been successful in providing support services, especially in the area of environmental assessment and planning advice, where there
is a shortage of qualified and experienced people.
Globally there has been a shift to larger-scale projects commissioned by major independent power project developers and utilities, with proportionately less
development by private investors. That said, there is still a thriving market for developers who focus on development prospects smaller than those that utility
firms would investigate.
There has been relatively low penetration by foreign project developers in UK and Scottish project development services, although major project developers
from Europe are now growing a presence in the Scottish market. This reflects the fact that knowledge and experience of infrastructure development in the UK
is more critical to success than specific company experience in wind energy (which may be bought in).
Many companies interviewed reported that their long-term vision for their role in the market was to move towards the offshore sector, with some already
heavily involved in the Scottish Territorial Waters and Round 3 developments.
Page 45 – Step 6: Exploiting the Opportunities – Strategic Business Development
Positioning in the Market
Few project developers or other project development service companies in the UK are exploiting overseas markets. However, SSE Renewables, is active in
Europe, providing a useful example. The US division of BP is another example of a major project developer in the USA, where the company has links to the
UK.
Companies such as Gamesa of Spain are expanding their project development services to become major wind project developers in other countries, such as
Portugal and Italy and to a lesser extent in other attractive markets including Scotland. Clearly, the countries into which such expansion is most successful
have broad similarities with the initial home market, so that much of the necessary skills and experience will be transferable.
Routes to Market
The main route to market is through established infrastructure project developers in the target country, which may include energy utilities.
Companies with specific wind project development expertise will have a competitive edge especially in mature markets, as planning constraints to growth
become increasingly important and for technically challenging projects such as offshore wind.
Business Risks and Development Strategies
Business risks in the project development area have been offset by the high growth of wind energy in Scotland and also the UK as a whole over this decade.
Given the projected growth rates, this protection against shortfalls in business should remain for the foreseeable future. However, the blockage of projects in
planning has been a major contributor to business failures in other sectors, especially for establishing turbine supply in Scotland. Better management of the
flow of projects by project developers through planning could therefore substantially reduce risks for the supply chain.
The Scottish Government recognises that urgent steps need to be taken to streamline the consenting process to ensure that appropriate renewable energy
developments can proceed in a reasonable timeframe. The Scottish Government now works to an objective of having new applications determined within
nine months where there is no public inquiry. In June 2009, Scotland’s second National Planning Framework (NPF2) was published. The NPF2 is concerned
with Scotland’s development over the next 25 years and the actions needed to bring about that development.
The NPF2 sets out:
•
The Scottish Government’s commitment to develop Scotland’s renewable energy potential
•
A different planning process for projects deemed to be of national significance
•
The potential for the development of a sub-sea transmission grid
Industry should also adopt strategies to manage variations in the flow of projects through planning. Companies across the supply chain should identify
sufficient projects to meet their business turnover needs as early as practicable. In practice this means identifying projects at commencement of the planning
process, or preferably through building relationships with project developers.
Page 46 – Step 6: Exploiting the Opportunities – Strategic Business Development
Companies in the project development sector, and other sectors of the supply chain, report significant variation between project developers in their
effectiveness in taking projects through the planning process. Companies in the supply chain should target project developers who have a good track record
in taking projects through planning consent to construction and hence projects that have good prospects of being implemented. The quality of environmental
assessments, the existence and handling of significant environmental issues and responses from public consultations are good indicators of the prospects for
success or failure. Better education of wind project developers on environmental and planning aspects could lead to significantly increased implementation of
wind projects and overcome some of the widespread problems caused by developments blocked by planning.
For longer term expansion in Scotland, the Beauly-Denny inter-connector is critical, and beyond this, firm UK Renewable Obligation targets and visible
projections for wind developments are required to meet these targets.
Page 47 – Step 6: Exploiting the Opportunities – Strategic Business Development
Turbine Technology and Manufacture
Table 9: Turbine Technology and Manufacture Expansion into Global Markets
Product /Service
Rationale for expansion
Achieving competitive advantage
Constraints on growth in supply
Strategy for expansion into global markets
Turbine
technology
development
Global recognition and
competitiveness.
Use Scottish research and academic
institutions.
Utilise test environment.
Access to major turbine suppliers
who have in-house expertise.
Target emerging turbine manufacturers.
Turbine general
component
supply
Value of global wind
market and economies of
scale.
Low labour rates elsewhere will make it
challenging for Scottish companies to
achieve a competitive advantage.
Demonstrating cost-effectiveness
of product.
Accessing major turbine
suppliers who have established
procurement routes.
Pursue opportunities piggy-backed on
specialised component supply.
Specialised
component
supply
Turbine
composite
materials and
fabrications
Turbine major
steel
fabrications
Turbine
assembly
Low labour rates and production facilities
established elsewhere which have paid off
their investment costs are disadvantages
for Scottish companies.
Value of global wind
market and economies of
scale.
Global market provides
more consistent demand to
repay investment in
production facilities,
reducing business risks
from delay in UK projects
through planning.
Hence there should be a demonstrable
technological or design advantage to
turbine suppliers from use of products from
Scottish suppliers, in order for Scottish
companies to compete.
Investment to establish
production capacity for specialist
components and prove product
reliability in the marketplace.
Utilise suitable available capacity in the
Oil & Gas sector.
Build supply chain partnerships with
utilities and / or major project developers,
who need more turbines than the existing
production capacity can supply, in order to
meet their business objectives.
Low labour rates elsewhere and production
facilities established elsewhere which have
paid off their investment costs are
disadvantages for Scottish companies.
Technological opportunities to achieve
competitive advantage are less than with
specialised components.
Transport distances will be a factor.
The combination of the above may prevent
expansion into global markets although
nearby markets such as Ireland should
provide similar transport cost advantages
as Scottish projects.
Page 48 – Step 6: Exploiting the Opportunities – Strategic Business Development
Investment to establish
production capacity.
Cost-competitiveness in target
markets, comparing differences
in production and transport costs.
Investigate partnerships with utilities and /
or major project developers should enable
demonstration of the advantages and
proving of the reliability of the product.
Turbines Supply Sector Characteristics
Turbines can be transported from the lowest cost production locations to wind farm developments globally. Low cost production is achieved through high
utilisation of efficient production facilities, or potentially through low labour rates. The dominance of the large German, Spanish and US wind turbine
manufacturers shows the advantage of having established dedicated production facilities serving the global market and that this can outweigh the advantage
of low labour rates.
With the current rapid growth of wind energy globally and the undersupply of turbines, new turbine manufacturers have established a growing market share
and are emerging in various markets worldwide, for example the Spanish developer and manufacturer Gamesa, who has become a major manufacturer of
turbines globally, as well as a developer of wind farms across Europe and the US.
With the continued increase in size of wind turbine units, and the deployment of wind turbines on exposed and remote offshore wind sites, technology-led
opportunities are opening up for the next generations of turbines, both onshore and offshore, and for their transport, erection and maintenance.
Turbines: Positioning in the Market
The Danish wind turbine manufacturers established a lead through serving different markets at different stages in the commercialisation of wind energy.
Whilst early turbine manufacture was based upon domestic support for wind energy in Denmark, exploitation of the market opportunity in California in the
early 1980s was essential to the establishment of both technological and production capacity. The development of larger turbines and economies of scale
were supported by subsequent phases of high wind energy growth in Denmark and Germany. Since 2000, the Danish wind turbine manufacturing industry
has consolidated its lead by supplying other major emerging markets such as Spain and the UK. However, the emerging production of wind turbines in Spain
shows that this is not unassailable and need not be based in very low wage economies.
Scottish sites may be more representative of future global developments in terms of wind speed and especially terrain, than Danish/German sites. This
provides competitive advantage for technologies developed and demonstrated in Scotland and particularly for the use of Scottish test facilities.
It is necessary to pursue global emerging markets in order to compete on economies of scale, maintain and demonstrate competitive technical capability and
to be able to provide competitive value for money.
Turbines: Routes to Market
The supply of components to the major wind turbine manufacturers is generally through well-established procurement routes that have been found difficult to
access. For example, major wind turbine manufacturers source many items through bundled supply, where sub-assemblies or groups of components within a
wind turbine are sourced through contracts with a few suppliers. These existing suppliers have established links to gain and perform these contracts both
upstream and downstream in the supply chain.
Page 49 – Step 6: Exploiting the Opportunities – Strategic Business Development
As a result, the main opportunity is through specialist high value component supply, where a technological advantage can be demonstrated:
•
There is a technology development route to global markets for components or advanced composite materials critical to performance, reliability, or
operating and maintenance costs.
•
Specific emerging technology opportunities for onshore wind turbines are associated with the increase in size of wind turbines and designs to ease
transport to site, erection on site, serviceability and maintenance.
•
Specific technology opportunities for offshore wind turbines are associated with designs suitable for exposed marine environments, increasing reliability,
service intervals and accessibility for service and maintenance. All of these improvements should demonstrate reductions in the life costs of wind turbines
in order to be accepted in the marketplace.
•
Other specific opportunities are associated with improved power take-off and quality of power delivered to grid networks.
However, project developers, financiers and turnkey suppliers demand that the reliability of turbines and turbine components has been demonstrated. In
practice this often means supplying components to the major established turbine manufacturers, which may only be possible for a new entrant where a
uniquely effective solution to a clear deficiency is offered. Failure of turbines produced by the established turbine suppliers shows that such high value
opportunities do exist. However, new solutions need opportunities to demonstrate their effectiveness before the wider market will accept them.
By supplying market-leading technology for critical components to the major wind turbine markets, companies may gain access to non-critical component
procurement chains.
In an under-supplied market, new manufacturers of wind turbines are emerging overseas. There are technology opportunities in assisting these companies
that have not yet established comprehensive technical capability.
To establish further whole turbine production capability in Scotland would require major investment, firstly to establish the production facilities and then to
demonstrate to the market that the turbines were reliable. This could only be undertaken by a large company, preferably in partnership with a large utility to
provide an early firm market in which to demonstrate the product. Evidence of inward investment interest has been seen by the takeover of the Vestas
Campbeltown tower and nacelle manufacturing facility by Skykon in March 2009.
Key to market acceptance in all cases is demonstrating product quality and performance, delivery timescales and costs which are competitive in the global
marketplace and meet customers’ requirements.
Page 50 – Step 6: Exploiting the Opportunities – Strategic Business Development
Turbines: Business Risks and Development Strategies
As stated above, establishing new production capacity requires major capital investment. Establishing new technological capabilities and new technologies in
the marketplace also requires commitment, although the magnitude of the financial investment may be less than for establishing production capacity. From
this the following risk management strategies are appropriate:
•
To finance investments, companies should be able to fund committed expenditure from a combination of their balance sheet and returns from firm orders.
This generally means that companies entering a mature sector must have sufficient financial reserves.
•
To finance continuing costs of gaining market acceptance, companies should have a reasonable level of certainty of gaining further orders and sufficient
returns. These should be from identified projects factored by the likely success rate in securing sales. This generally means that companies must offer a
definite advantage over the established industry leaders at an early stage, either through the quality of the technology, cost, or timescales for delivery.
•
In practice strategic partnerships with major customers in the supply chain are necessary, offering solutions to supply problems which cannot be solved
by other means, which cost less, or which involve less risk to the customers. With the current shortage in turbine supply, and potential technological
developments, such opportunities may exist with major utilities or independent project developers.
Page 51 – Step 6: Exploiting the Opportunities – Strategic Business Development
Wind Farm Construction, Operation and Maintenance
Table 10: Wind Farm Construction, Operation and Maintenance, Expansion into Global Markets
Product/Service
Construction
contractors
Rationale for expansion
Achieving competitive advantage
Constraints on growth in supply
Strategy for expansion into global markets
Value of global wind
market.
Utilise the presence of the parent
company, experience of doing
business and conducting
infrastructure development projects
in target markets.
Availability of suitably qualified and
experienced personnel.
Diversify into wind projects and contribute
wind expertise to overseas divisions of
major construction groups.
Transportation
and logistics
Provision of
offshore
construction
plant
Provision of
offshore
installation,
servicing and
maintenance
vessels
Value of global wind
market.
Global market provides
more consistent demand to
repay investment in
specialist plant or vessels,
reducing business risks
from delay in UK projects.
Utilise Scottish company
experience, especially offshore.
Provision of specialist plant
required to install service and
maintain the new generation of
larger scale turbines onshore and
offshore.
Investment in specialist heavy plant
or vessels. Cost of utilising Oil &
Gas installation and service
vessels may be too high.
Utilise plant or vessels in non-wind projects
or in European wind projects.
Wind Farm Construction, Operation and Maintenance: Supply Sector Characteristics
Wind farm construction, operation and maintenance are characterised by on-site activity at the project location:
•
Most of the capability and capacity is shared with other infrastructure projects in the region, for example highways civil engineering and construction, civil
engineering and construction of marine projects.
•
Construction contractors or operation and maintenance contractors will often be part of major international or UK construction groups, providing expertise
and heavy plant capacity for a wide range of projects.
Page 52 – Step 6: Exploiting the Opportunities – Strategic Business Development
A range of specialist plant is needed for the installation and maintenance of onshore and offshore wind farms.
•
for transport of large-scale turbines.
•
for erection and overhaul of the new generation of wind turbines above 2.5 MW unit size.
•
for installation and overhaul of offshore turbines.
•
for installation of offshore turbine monopoles or jacket substructures.
Wind Farm Construction, Operation and Maintenance: Positioning in the Market
Successful construction companies generally include wind projects as one of several markets they service, for example along with highway construction
projects. One company has invested in specialist plant for transport of large-scale turbines. The plant has been employed in projects across the UK, providing
the high utilisation rates necessary for returns from the investment to be competitive.
In the offshore wind installation and servicing sector, it is possible to access a diverse range of markets including general marine construction projects,
dredging and aquaculture, using vessels which are designed for flexible use. These are usually smaller scale developments than mainstream oil and gas and
involve using lower cost, smaller or shallower draft vessels.
One company invested in specialist plant for construction of offshore wind turbine monopiles. This company has withdrawn from the wind energy market, as
the plant stood idle whilst offshore projects in the UK awaited approval. The company understand that this problem could be overcome by entering the
European market but were not interested in pursuing this market.
Wind Farm Construction, Operation and Maintenance: Routes to Market
Success is dependent on proactive researching of project opportunities to meet required business turnover and building relationships with targeted project
developers, combined with demonstrable experience and expertise to meet project developer needs - namely delivery of installations on time. Growth is
presently constrained by availability of suitably qualified and experienced Civil Engineers, not projects.
Wind Farm Construction, Operation and Maintenance: Business Risks and Development Strategies
Companies should consider the following risk management strategies, especially before undertaking major investment in specialised plant or vessels:
•
Targeting markets and projects well within the anticipated build rate of wind farms provides a hedge against inconsistencies in projects coming through
the planning process and enables business growth targets to be achieved.
•
Servicing both wind and non-wind projects also spreads risk.
•
Operating in a wider market than the UK offsets the risk of delays in planning approval of UK.
Page 53 – Step 6: Exploiting the Opportunities – Strategic Business Development
Key Points: Step 6
Project Development and Services.
•
Opportunities exist in relation to project development and environmental services.
•
Despite the delays faced by wind projects in planning, independent power project developers and utilities in the UK and Scotland have been very
successful. This reflects the high attractiveness of the UK market and particularly the Scottish wind market in worldwide terms.
•
Many companies interviewed reported that their long-term vision for their role in the market was to move towards the offshore sector.
•
Some companies are expanding their project development services to other countries. The main route to market is through established infrastructure
project developers in the target country, which may include energy utilities.
•
Planning is a key business risk - companies report significant variation between project developers in their effectiveness in taking projects through the
planning process. Companies in the supply chain should target project developers who have a good track record in this respect.
Turbine Technology and Manufacture
•
Opportunities exist in relation to turbine technology development, general and specialist component supply, composite materials and fabrication, major
steel fabrications and assembly.
•
Turbines can be transported from worldwide to wind farm developments. With the rapid growth of wind energy globally and the undersupply of turbines,
new turbine manufacturers are establishing a growing market share. Indeed it is probably necessary to pursue global emerging markets in order to
compete on economies of scale.
•
Technology-led opportunities are opening up for the next generations of turbines, both onshore and offshore, and for their transport, erection and
maintenance. Scottish sites may be more representative of future global developments in terms of wind speed and terrain, which may provide
competitive advantage for technologies developed and demonstrated in Scotland and for Scottish test facilities
•
Because of well established supply chains, the main opportunity is through specialist high value component supply, where a technological advantage can
be demonstrated. In practice strategic partnerships with major customers in the supply chain may exist with major utilities or independent project
developers.
Wind Farm Construction, Operation and Maintenance
•
Wind farm construction, operation and maintenance are characterised by on-site activity at the project location and frequently require specialist
equipment.
•
Success is dependent on proactive researching of project opportunities and building relationships with specific project developers.
•
Given the need to invest in specialised plant or servicing vessels it has been found essential to operate in a wider market than the UK to offset the risk of
delays in planning approval of UK projects. Where appropriate targeting a range of sectors can also spread the risk.
Page 54 – Step 6: Exploiting the Opportunities – Strategic Business Development
Offshore Wind Energy
In view of the increasing importance of offshore wind, a separate focus has been included in this
report. The UK has the largest offshore wind resource in the world, with relatively shallow waters and
strong winds extending far into the North Sea. The UK has been estimated to have over 25% of the
total European potential offshore wind resource - enough to power the country nearly three times
over 50 . Scottish sites may be more representative of future global developments in terms of wind
speed and conditions than for example Danish sites – which provides a competitive advantage for
technologies developed and demonstrated in Scotland.
Of the marine renewable energy generation technologies, offshore wind is by far the most developed
although it is recognised that in future other marine renewable technologies such as wave and tidal,
could also contribute significantly to the energy mix.
Offshore wind energy is expected to be a major contributor towards the UK Government's 2010 and
2020 targets for renewable generation, and is being taken increasingly seriously by the UK energy
sector. Companies involved in the UK offshore market now include multinational energy and utility
companies. Offshore wind could contribute as much as 3% to the Government's 2010 targets for
51
renewable energy .
With the desire that the UK wind resource be properly utilised, the Crown Estate launched the first
round of offshore wind farm leasing in 2000. This round of leasing known as ‘Round 1’ is discussed
below along with the following rounds of leasing rolled out in 2003 and 2008.
Crown Estate Rounds 1, 2 and 3
Location
In Round 1 and Round 2, the wind farms were located off the east and northwest coasts of England.
In Round 3 the wind farms will be located off the east, west and south coasts of England and off the
coast of Scotland. In Round 3 the wind farms will be further offshore than in the two earlier rounds of
leasing. The figures 18 and 19 show the locations of wind farms in rounds 1, 2 and 3.
50
51
www.bwea.com/offshore/info.html
www.bwea.com/pdf/publications/Industry_Report_08.pdf
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Figure 19: Locations of Round 1 and Round 2 wind farms
Figure 20: Potential locations for Round 3 wind farms
Round 1
The first round of offshore windfarm leasing was supported by the Government using
a Capital Grants Programme, which helped developers with project capital costs.
Although this support mechanism was only used for Round 1, it helped to kick start
the offshore wind market in a way that wouldn’t have been possible without this
support. Feedback from developers suggests that support was vitally important and
without the Offshore Capital Grants Programme, there would be no offshore wind
market in the UK worth speaking of today.
The first phase of the development of offshore wind projects in the UK was launched
in December 2000 and has resulted in fourteen projects, of which five are now
operational. Each Round 1 project was eligible for a grant of between £9m-10m from
the Government’s offshore wind capital grants programme, once consented. This
was expected to cover approximately 10% of project capital costs. In addition,
Round 1 projects were eligible for Renewable Obligation Certificates (ROCs) at the
level of 1 ROC/MWh generated.
Round 2
Round 2 saw 15 projects, with a combined capacity of up to 7.2 GW, receive leases
to operate offshore wind farms. These projects are all at varying stages of
development, either progressing through the planning system, under further
development or under construction. None of the Round 2 projects are yet operational,
although it is expected that the Greater Gabbard offshore will be fully operational in
the 1st quarter of 2011.
Additionally, in July 2009, the Crown Estate offered Round 1 and 2 offshore windfarm
operators the opportunity to apply for area extensions.
Capital grants as provided to Round 1 projects were not available to Round 2
projects, so the only financial subsidy on offer was the ROC subsidy.
Round 3
On June 4th 2008, The Crown Estate announced proposals for the third round of
offshore windfarm leasing. This time The Crown Estate is taking a more prominent
Page 56 – Offshore Wind Energy
role, where it will co-invest with developers, combining the technical experience of the offshore wind industry with efficiencies generated by The Crown
Estate’s access to resources and stakeholders.
In January 2010 the Crown Estate Announced the Round 3 offshore wind development partners for each of the nine Round 3 offshore wind zones within UK
waters. All parties have now signed exclusive zone development agreements with The Crown Estate, to take the proposals through the planning and
consenting phase 52 . Construction is expected in 2014 followed by operational projects in 2018.
Offshore Grid Connection
Grid connection of offshore wind farms is not a major technical problem, given that the technologies involved are well known. However, optimising these
technologies for remote offshore sites will be important to ensure reasonable project returns. It is also important to note that the lead times involved in cable
supply can be an issue. It is likely that within offshore wind farms, 33 kV connections will be used. At the centre of each wind farm it is likely there will be a
platform with a 33 - 132 kV transformer station and connection to the mainland will be achieved using 132 kV connections.
Case Study: Greater Gabbard Offshore Wind Farm
The Greater Gabbard offshore wind farm will have two substation platforms, which will collect the energy generated by the turbines and transform the voltage
from 33kV to 132kV for delivery ashore. The platforms will house the transformers, high-voltage and medium-voltage switchgear as well as the necessary
protection and control technology, and both will include back-up systems to provide emergency power supply.
One platform will house three 180-MW power transformers and the other, two 90-MW transformers. This will allow cable lengths within the wind farm to be
minimised, thus reducing cost and power losses. Three 3-phase 132kV subsea cables will transport power to the land-based substation, which is to be built
near Sizewell in Suffolk. This substation will house the grid connection point, which will be designed to meet British grid codes - the conditions required for
exporting power to the national grid. However in future with larger wind farms located further offshore (greater than 50km) it may be necessary to use High
Voltage Direct Current (HVDC) cable to connect to the onshore grid, which will help to minimise losses.
Exploiting up to 60GW of untapped wind and sea power could be made possible by a bid to build an offshore energy grid off the east coast of the UK.
A report, published by the Electricity Networks Strategy Group in March 2009, indicates that timely investment on the onshore network can provide significant
benefits in facilitating the connection of offshore networks with a potential saving of £850m 53 .
It was announced in January 2010 that RPS Group have been awarded a contract to examine the feasibility of an offshore grid in the Irish Sea. The ISLES
study 54 , will be carried out on behalf of the Scottish Government, the Department of Enterprise, Trade and Investment Northern Ireland and the Department of
52
53
54
http://www.thecrownestate.co.uk/newscontent/92-r3-developers.htm
http://www.ensg.gov.uk/assets/1696-01-ensg_vision2020.pdf
www.scotland.gov.uk/News/Releases/2010/01/08101417
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Communications, Energy and Natural Resources in Ireland It will explore issues around an offshore transmission network in the Irish Sea and help make the
case for commercial investment. It will also be the first building block towards making an offshore grid a reality. It will complement the work of the Electricity
Networks Strategy Group and will help inform work to achieve the European vision of an offshore supergrid, the declaration of which, North Seas Countries
Offshore Grid Initiative, was signed in December by the UK, Ireland, the Benelux countries, Sweden, Denmark, France and Germany.
The process of grid connection is often complex and the infrastructure required is significant. Some of the key issues surrounding grid connection and
infrastructure are discussed on page 19.
Offshore Grid Connection for Round 3
In 2007 The Crown Estate undertook a feasibility assessment of transmitting electricity through offshore transmission systems. A conclusion of this study was
that the activity was technically feasible and offered commercial possibilities. A resultant action from the study was to undertake a more detailed investigative
study examining the potential requirement offshore transmission connections for Round 3 wind farms.
In April 2008, the Crown Estate commissioned a study into the potential requirement for offshore transmission connections for Round 3 wind farms and
connecting up to 25 GW of additional wind generation. The report found that the cost of connecting Round 3 farms would be in the range £280k/kW to
£477k/kW of capacity, depending on distance from shore, and recommended that further more detailed investigations should be carried out into:
•
The extent of constraints on the supply chain that may impact delivery of the Round 3 connections;
•
Raising the power transfer capacity of the High Voltage Alternating Current (HVAC) and HVDC technologies to improve economies of scale;
•
‘No regret’ onshore reinforcement options that can be progressed immediately to provide the necessary transmission capacity in a timely manner.
The Crown Estate believes that there is a case for commencing onshore reinforcements ahead of connection applications, and understands that the supply
55
chain requires a coordinated plan and commitment to have the confidence it needs to invest in infrastructure to support transmission development . The
Government announced in March 2009 that tenders for a new offshore energy grid regime will be launched in summer 2009. The regime will ensure offshore
cable connections are delivered on time and at reasonable cost to maintain an effective and secure grid.
Scottish Territorial Water Developments
On February 16th 2009, the Crown Estate announced it would be offering exclusivity agreements to companies and consortia for 10 sites for development of
offshore windfarms within Scottish territorial waters 56 . The 10 agreements will be made with nine companies and consortia; in total the sites have the potential
to generate more than 6.4 GW (installed nameplate capacity) of offshore wind power, double the current level of onshore renewable capacity.
55
56
http://www.thecrownestate.co.uk/round3_connection_study_briefing_note.pdf
Scottish territorial waters – waters within the 12 nautical mile limit from Scottish shores
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Figure 21: Scottish Territorial Waters – Award of
Exclusivity Agreements
The process began in May 2008 when the Crown Estate requested initial expressions of interest from
companies wishing to be considered for developing wind farms within Scottish territorial waters. The Crown
Estate received a high level of interest, with applications received for 23 sites, submitted by a total of 14
development companies and consortia.
The following table provides details of the proposed developments and developers.
Table 11: List of proposed Scottish Territorial Water Offshore Wind Developments
Plan ID
Site Name
Company
Size (MW)
2
Area (km )
1
Solway Firth
E.ON Climate & Renewables UK Developments
300
61
2
Wigtown Bay
Dong Wind (UK)
280
51
3
Kintyre
SSE Renewables
378
69
4
Islay
SSE Renewables
680
95
5
Argyll Array
Scottish Power Renewables
1,500
361
6
Beatrice
SSE Renewables / SeaEnergy Renewables
920
121
7
Inch Cape
RWE nPower Renewables / SeaEnergy Renewables
905
150
8
Bell Rock
SSE Renewables / Fluor
700
93
9
Neart na Gaoithe
Mainstream Renewable Power
360
105
10
Forth Array
Fred Olsen Renewables
TOTAL
415
128
6,438MW
1,234km
2
The 10 exclusivity agreements are designed to allow developers to begin the initial survey and
consultation processes for their sites while the Scottish Government conducts a Strategic
Environmental Assessment 57 (SEA) for offshore wind within Scottish territorial waters. The SEA was
launched on January 23rd 2009 and the Scottish Government has committed to completing this within a
12-month period, and The Crown Estate will work closely them on the SEA process. Following
completion of the SEA, The Crown Estate can go on to award agreements for lease for suitable sites 58 .
Leases which enable the developers to actually go ahead with construction works will only be granted
by The Crown Estate once the developer has obtained statutory consents and permissions from the
Scottish Government.
These proposed sites are in deep water (>30m deep) and will therefore be more difficult and crucially,
more expensive to develop than current offshore developments. Thus, it is far from certain how many of
these proposals will go forward. The main mechanism by which these projects would be supported is by
57
58
A Strategic Environmental Assessment (SEA) is a system of incorporating environmental considerations into policies, plans and programmes. It is sometimes referred to as Strategic Environmental Impact Assessment.
The Crown Estate manages all sea areas within 12 nautical miles of the UK shore.
Page 59 – Offshore Wind Energy
the Renewables Obligation. Even so, if these developments were to go ahead today then financially they would struggle, as the costs for foundations and
suitable turbines would be higher than for current offshore projects. However, given the depth of knowledge learnt from the Beatrice project 59 (an offshore
turbine, deep water, test project) and developments in both turbine and foundation technologies, these developments are becoming more technically feasible.
There is confidence from developers that there is the potential for these proposed developments to work and that development will take place. Two key
issues are confidence and competition – the Government aims to provide long term confidence – and competition will act to reduce costs.
Financing an Offshore Wind Energy Project
In the current economic recession, there are indications of problems with project financing. In some cases, this has lead to companies withdrawing from
projects or in changes in ownership rather than the project not being taken forward. This has been seen particularly in the offshore market where there has
been evidence that the recession has affected the offshore wind industry, both directly and indirectly. However at the start of 2010 there are also signs that
some projects which were postponed, or in doubt, are now going ahead.
The present-day costs of installing offshore wind energy in the UK are around 3,000 £/kW, compared to 1,400 £/kW for onshore. The higher capital
expenditure costs offshore are due to the increase in size of structures and the logistics of installing the turbines at sea. The costs of offshore foundations,
construction, installations, and grid connection are also significantly higher than onshore. For example, offshore turbines are around 20% more expensive,
and towers and foundations can cost more than 2.5 times the price for a project of similar size onshore.
Scottish Gas owner Centrica has reported offshore costs being much higher than expected and there is still much uncertainty about how well existing
technologies will work in deeper waters. Although rising costs lead to Centrica postponing building an £750 million offshore wind farm near Skegness,
Lincolnshire, in October 2009, they announced that they would go ahead invest £725 million to build the 270MW offshore wind farm and also announced
equity partner and refinancing of their existing wind portfolio 60 .
E.ON seriously reviewed plans to develop the London Array wind farm in the Thames estuary in the light of higher development costs and difficulties in
securing funding. However in December 2009 they (along with DONG Energy and Masdar) announced that six major supply and installation contracts for the
London Array have been signed, paving the way for construction of the world's largest offshore wind farm. Given the Government’s recent proposal to
increase its support for offshore wind, the partners are satisfied that the project is now financially viable and are now keen to push ahead with construction
and to produce the first renewable power in 2012.
From April 1st 2009, under the revised RO, onshore wind receives 1 ROC/MWh and offshore wind receives 1.5 ROC/MWh, an increase from the original
1 ROC/MWh. This change acknowledges the extra difficulties, risks and costs involved in offshore wind development as compared with onshore wind
development. Developers have experienced a great increase in the cost of offshore development, with costs almost doubling in recent years. Addressing
concerns regarding these issues, in its December 2009 pre budget report, the Government announced that it will make available 2 ROCs per Megawatt Hour
(MWh) generated to all projects accredited by Ofgem between April 2010 and March 2014.
Marine renewable technologies will receive added financial support following an overhaul of the UK's system for supporting renewable energy. On the 30th of
March 2009, Energy and Climate Change Minister Mike O'Brien announced that up to £10 million of funding is to be made available to help develop the next
generation of offshore wind technology.
59
60
http://www.beatricewind.co.uk/home/default.asp
http://www.centrica.com/index.asp?pageid=835
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Offshore Wind Supply Chain Constraints
Global market conditions, beyond the UK’s control, have led to a shortfall in the supply of turbines as a result of increasing demand from around the world in
recent years. This has pushed up prices and led to long supply lead times as supply has failed to keep pace with demand. The high cost of commodities has
also increased prices. The recent recession has changed the situation to some extent; commodity prices have dropped and some turbine manufacturers are
cutting back production; but it isn’t clear what impact this will have on the UK wind market.
The UK Government recognises there are constraints within the supply chain which are affecting the wind market in the UK. Therefore the Government is
seeking to address this issue but this is a long-term process and any measures will take time to implement and take effect. Specific constraints for the
offshore supply chain are discussed below.
Installation Vessels
The lack of suitable installation vessels was one of the main causes of the construction delays experienced by several Round 1 project developers. This
appears to be a growing problem, with vessels reportedly booked out for two years where previously they could be secured with only six months’ notice. This
has led to developers forming partnerships with vessel owners or chartering vessels for long periods for their own use or in collaboration with other
developers.
It was noted by one developer that there are only two vessels available globally that are suitable for installing larger (~5MW) turbines in deeper water. This
may lead to the continued use of smaller ~3.6MW turbines.
There is some concern amongst developers and cable suppliers about the availability of sufficient vessels for cable laying for Round 3 projects, particularly for
the larger cables used to connect offshore wind farms to shore.
Jack up vessels
Use of current jack up vessels is only viable in depths less than 45m. New designs and massive investment in a new fleet would be required for depths
between 40m and 60m. Round 3 will provide sufficient work to justify an investment on this scale.
There is evidence that these investment decisions are being made. Three vessels committed to in the latter half of 2008 are the MPI Adventure and Discovery
and GeoSea’s Sea-2000. Other companies have designed vessels in order to be able to progress to manufacturing quickly.
Floating vessels
Floating vessels are an alternative to jack up vessels. However, operations are highly weather and sea state dependent. There are only a limited number of
vessels available and the offshore wind sector would be in direct competition with the Oil & Gas sector. Moreover, there would be a step change in vessel day
rates from the current generation of jack up vessels and the experience and success to date of floating vessels is almost entirely based on the floating vessel
Page 61 – Offshore Wind Energy
Svanen working on foundations. Floating vessels do have the potential to take over as the primary foundation installation method for deep water projects,
although turbine installation from floating vessels still requires significant development work.
Ports
A number of key industry stakeholders consider UK port facilities to be inadequate for offshore wind development. This has led some Round 1 developers to
use harbour facilities in the Netherlands and Denmark instead. The lack of adequate quayside facilities is expected to be more of an issue for the larger,
heavier wind turbines being considered for Round 3 projects, although again it may be possible to use overseas ports.
However, there is potential for UK ports to be developed to be competitive with those in mainland Europe and there is strong industry support for
Government/RDA investment in port facilities coupled with incentives to set up co-located manufacturing and support facilities. This was also a key
recommendation from a recent Carbon Trust report 61 , and DECC is currently working with the BWEA to study port facilities for offshore wind.
On the 30th of March 2009, more than 100 port operators, developers, investors and wind manufactures from across the UK met with the Government to cut
through a potential bottleneck in offshore wind farm development.
With the potential market for UK ports worth £1bn up to the year 2020, there is an extraordinary opportunity for ports to be involved in the supply of services
to manufacturers and developers of offshore wind farms.
The UK needs ports with the capacity to handle large vessels and with available space for wind turbine manufacturers and their supply chain. At the moment,
there are too few sites to meet future demand for offshore wind technology, although port operators have started to recognise the potential revenue
opportunities from offshore wind.
With larger (5 MW) turbines being developed, which are exceedingly difficult to transport by road the opportunity for British ports to provide construction and
transportation services for the European wind market is there to be realised.
In a recent report to DECC, the key requirements to allow a port to support wind farm construction were laid out 62 . While the requirements may vary between
wind turbine manufacturers, typical requirements for a construction base with the capacity to handle 100 turbines a year include:
•
At least 80,000m2 (8 hectares) suitable for lay down and pre assembly of product.
•
200–300m length of quayside with high load bearing capacity and adjacent access.
•
Water access to accommodate vessels up to 140m length, 45m beam and 6m draft with no tidal or other access restrictions.
•
Overhead clearance to sea of 100m minimum (to allow vertical shipment of towers).
•
Sites with greater weather restrictions on construction may require an additional lay-down area, up to 300,000 m2 (30 hectares).
Other requirements relating to cranes and load bearing points are relatively easily achieved through local engineering works. Ideally, sites should have good
land-side transportation access to facilitate their use also in transportation for onshore wind farm construction.
61
62
Carbon Trust report “Offshore Wind Power – big challenge, big opportunity”, published October 2008
UK Ports for the Offshore Wind Industry: Time to Act, BVG Associates report for DECC, February 2009
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Additionally, developers are also interested in port facilities where turbine assembly as well as construction can take place. Such a facility would require up to
500 hectares of flat area for factory and product storage and direct access to a dedicated high load bearing deep-water quayside, a minimum of 500m in
length. If UK sources of supply of key components were developed this would prove an important incentive for wind turbine manufacturers to establish turbine
assembly facilities in the UK.
UK ports must act fast as there are several European ports with superior facilities well placed to absorb the demand from the British offshore market.
Grid connection
UK Government views the development of offshore wind generation as a major contributor to meeting the 2020 renewable generation target. At present there
is little electricity network infrastructure installed offshore; DECC and Ofgem are working together to develop a new regulatory regime for offshore electricity
transmission so that significant amounts of renewable offshore generation can be connected to the onshore grid. They aim for the new regime to ‘Go Active’ 63
in June 2009 and ‘Go Live’ 64 a year later, June 2010.
Some Round 1 project developers experienced significant delays in obtaining approval for grid connection, which put back construction. Long lead times for
the supply of transformers compounded this problem. All of the Round 1 projects were relatively small and relatively close to shore and so the challenges for
grid connection will be greater for Rounds 2 and 3. In particular, there is likely to be a move to HVDC cables for projects more than about 100 km from shore.
This technology is well established for international transmission projects but has not been used for offshore wind applications.
In many parts of the country the transmission network is operating at close to theoretical capacity. This is a location specific issue, which is acutely felt in
Scotland where developers have to queue to connect to the transmission network. This issue can result in delays in obtaining firm connection agreements
and can increase costs if networks need to be reinforced before connection can safely take place. All this can add significant delays to a project and increase
the time between project inception and beginning to see income generation.
In addition, for offshore projects there is the requirement for offshore infrastructure prior to the landfall connection. This lack of infrastructure does offer
opportunities for cable laying companies and in particular sub sea cable laying companies. There is a need and hence an opportunity for sub sea cable
suppliers to significantly increase production.
Cables
The only three suppliers of HVAC and HVDC subsea cables in Europe currently have full order books until approximately 2013. One reason for the few
companies involved is the difficulty to break into the high voltage cable market, mainly due to the costs involved and the years of research required to
overcome the technological barriers.
Foundations
For Round 1 projects, offshore wind turbines were installed using mono-pile foundations driven into the seabed – this is the standard technology for shallow
water and has proved successful. As projects move further offshore into deeper water, alternative foundation technologies will be required, e.g. jacket
63
64
Necessary mechanisms and processes introduced
New regulatory regime is fully operational
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structures 65 . The Beatrice offshore wind project – a demonstration project part-funded by DECC and the European Commission – has used jacket
foundations to support its two 5MW turbines. Scottish Enterprise supported the feasibility work for this project as well as a joint study into fabrication,
installation and mass production for the jacket structures.
For depths between 30m and 70m, foundations can still be used but these would most likely be tripod/jacket foundations, which are more costly than standard
monopole foundations.
Turbine supply lead times
Another risk in the wind market, at least until recently, is the long lead-time for wind turbine supply. Up until the onset of the recession many manufacturers
had full order books and could choose to prioritise orders. Currently turbine lead times are approximately 20 months for the large turbines. Given the current
economic recession it is possible that lead times may reduce, but it is as yet too early to gauge this.
The Future for Offshore Wind
Offshore Market forecast for short and medium term
The UK is listed in the Ernst and Young August 2009 report as 7th in the All Renewables Index, 5th in the Long-term Wind Index and 6th in the Near-term Wind
Index. Despite delays in the offshore wind industry, the impact of the short-term boost to offshore wind ROC bandings continues to increase short-term
forecasts, resulting in a one-point rise. Both the onshore and offshore markets remain buoyant.
With the support of the RO mechanism and high oil prices the offshore wind market was very attractive. However, falling oil prices and increasing project
costs can mean slower returns for investors in the UK wind market. Volatility in oil prices is expected to continue, however, given crude oil is a finite resource
and with current reserves shrinking, the long term trend for the price of oil is an upward one.
Moreover, the UK has now fallen to fifth in the Long-term Wind Index due to the sustained high capital costs of turbines, mainly due to the impact of the
Sterling – Euro exchange rate. The continuing issues over grid connection and long planning queues continue to hamper the long-term progression of
projects despite short-term measures, such as the reorganisation of grid queues, which have helped progress some projects.
Despite these concerns, the long-term outlook for the UK wind market remains strong and the major economies are likely to come out of the recession more
carbon focused, which will increase demand for renewables. It is expected that the major construction and installation work involved in Round 3 projects will
really begin around 2014-2015. Potentially Scottish near shore developments will progress and be ready for construction around the same time.
Novel designs
There are companies across the world that are currently developing new offshore turbine technology with the aim of reducing both the CAPEX and OPEX
costs involved in a turbine development.
65
Jackets are four –legged steel lattice or tripod structures.
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Floating turbines - Floating turbines have the potential to significantly reduce the CAPEX costs of offshore wind. With no requirement for lattice or mono
piles, normally anchored by cables to the sea bed, floating turbines will not only be cheaper and easier to install but will be able to be deployed in water
depths down to 700m, depending on technology used. The floating of turbine installations is more similar, technologically speaking, to the Oil and Gas
industry than current offshore turbine installation techniques. This provides great advantage and opportunity for the UK and Scotland, given the current
breadth and depth of expertise in the Oil & Gas sector.
With research and development currently underway on a number of potential designs, it is expected that floating turbines could be ready for installation on a
commercial scale around 2018 onwards. For the current Scottish Oil & Gas industry, there will be great opportunities when floating turbines are installed on a
large scale. The opportunities are potentially greater than current opportunities with fixed offshore turbines.
Several Norwegian companies are developing floating turbines. Currently there are three main designs:
•
As part of a consortium called Windsea, Statkraft is developing a floating triangular platform, with a three to four-megawatt turbine mounted at each
corner. The platform would be anchored to the sea bed, but by a single chain so it could rotate as the wind changed direction.
•
Statoil takes a different approach: fixing a conventional turbine to a concrete buoy, anchored to the sea bed with three cables. Called Hywind, the
company aims to switch on a 2.3 megawatt prototype device in autumn 2009.
•
A different approach is being taken by another Norwegian company called Sway. It mounts its turbine on an elongated floating mast, the bulk of which
sits below the water. Connected to the seabed by a metal tube, the turbine mast is designed to sway with the wind and waves, and can lean at an angle
of up to 15 degrees. It could launch a prototype in 2010.
Advanced Turbines - AMSC is developing a super conducting 10MW direct drive offshore turbine 66 , aimed at the UK offshore wind market and planned for
commercial availability from 2015.
AMSC's business model is to licence out its wind turbine designs to customer companies and provide the superconductor components, rather than make the
wind turbines themselves. It also helps customers set up supply chains to source all the required components. AMSC hope to find a partner in the UK or
northern Europe to supply the 10MW turbine for the UK market.
Fellow US company Clipper is currently working on a 7.5MW offshore wind turbine, with the intention of developing a prototype in North East England, as well
as a new production facility in the east of Newcastle.
Conclusion
There is considerable scope for technology and design innovation: the installation of wind turbines in deeper water is viable in theory but the UK wind industry
cannot yet say that it is in a position to undertake this challenge. More installation experience from floating vessels is needed, along with significant
investment in a range of new vessels. New methods for installation of turbines from floating platforms are required in addition to the development of the
floating turbine concept.
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http://www.newenergyfocus.com/do/ecco.py/view_item?listid=1&listcatid=32&listitemid=2246
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Offshore Wind - Supply Chain Opportunities
For wind farms located further offshore in deep water, there are significant opportunities for the (Scottish Oil & Gas) supply chain. These opportunities are
quite diverse and include:
•
Provision of installation and maintenance vessels
In the UK, there is significant experience of supplying installation and maintenance vessels for the Oil and Gas industry and this knowledge and
experience could be transferred to the offshore wind market.
•
Cable laying and seabed grid infrastructure
There are many UK companies with much experience of deep water cable and pipe laying for the Oil and Gas industry and again these skills are
transferable and will be in great demand in the offshore wind market.
•
Manufacture and installation of anchors and platforms
As a result of work in the Oil and Gas industry, in the UK there are companies who have the capability to manufacture and install platform infrastructure.
As wind farms move further offshore to deep water, there will be significant opportunities for companies with such capabilities.
•
O&M contracts for anchors and platforms
As with O&M contracts for wind turbines, O&M contracts for anchors and platforms could often be awarded to the manufacturer. This will provide further
opportunities for manufacturers. There is also scope, however, for dedicated O&M companies with experience in the Oil and Gas industry to transfer their
skills and expand into the offshore wind market.
•
Helicopter and other transport and accommodation for far offshore installations
Currently in the Oil and Gas industry, helicopter is the main mode of transport from shore to offshore rigs. As wind farms move further offshore it will
become difficult to access turbines in a time efficient manner without helicopter access. However, there is a move away from helicopter access for some
asset managers, following a trend in the oil and gas industry, and further thinking is underway regarding offshore accommodation for wind farms far from
the coast and those close to other wind farms where facilities could be shared.
•
Provision of port facilities
At least six locations distributed around the UK need to be available for use from 2014 onwards. These locations will need to be offered to the developers
by 2011 at the latest, to be factored in to developers’ project plans. Failure to make construction ports available will affect the commercial attractiveness
of projects as well as making achievement of 2020 targets dependent on Continental ports. Apart from the loss of economic activity in the UK,
62
Continental ports may well be encouraged to support their own national projects as a priority over UK projects .
•
Provision of skilled personnel
It has been estimated that under a dynamic growth scenario (34GW installed offshore and onshore by 2020), employment in the UK wind industry would
rise to 57,000, from 5,000 currently11. Professionals required by the wind industry include electrical and electronic engineers, structural and marine
engineers, health and safety specialists, construction project managers and maintenance workers.
•
Health and Safety
As developments move further from shore, the increasing distances raise new health and safety issues. The distance from wind farms to emergency
Page 66 – Offshore Wind Energy
medical care means changes in protocols and facilities will be needed from the very first activities during offshore wind farm construction in order to
protect construction staff.
•
Training and centres of excellence
There is an increasing need for training which Scottish organisations are increasingly addressing – for example the University of Strathclyde has
launched a new Doctoral Training Centre for wind energy with the aim of producing the next generation of experts for the Scottish and global wind
markets.
Page 67 – Offshore Wind Energy
Small and Micro Wind Energy
The Government’s Microgeneration Strategy (2006) 67 and British Wind Energy Association (BWEA) defines a small-scale wind system as turbines rated
50kW or less, this is then sub divided into two categories, micro-wind turbines and small-wind turbines. Projections by the BWEA estimate the value of the UK
market for small and micro-wind turbine installations in 2009 is £60m 68 , around 5% of that for large onshore across the UK 69 .
Table 12: Definitions of Micro-Wind and Small-Wind Turbines 70
Micro-Wind Turbines
•
•
•
•
Small-Wind Turbines
•
•
•
•
•
<1.5 kW
Typically with a diameter of less than 2.1 m (Swept Area <3.5m²).
Either free-standing, mounted directly to the side or top of the attached
building, remote homes or onboard boats
Usually mounted 3-4m above the ridgeline of the attached building, or up to
approximately 16m for free standing system setups.
1.5 kW – 50 kW
Typically with a diameter of more than 2.1m (Swept Area > 3.5m²).
Tend to be either freestanding or mounted directly to the side or top of the
attached building.
Predominantly freestanding although interest in mounting units on top of large
residential and commercial buildings is growing.
Freestanding small wind turbines can reach over 30m in total height.
There are marked differences between the small and microwind turbine market and the large-scale wind market in
terms of operational characteristics, siting considerations,
the value of the market and the market drivers. Small-scale
systems have a greater range of applications compared to
large turbines and can be either off grid or on grid, mobile or
fixed, and can form part of combined installations, often with
photovoltaic systems. Small and micro wind turbines
therefore need to be suitable for installation and operation in
a diverse range of conditions such as those encountered in
the built environment, remote locations, and onboard boats,
where the primary purpose of the site is not electricity
generation.
Whereas large-scale turbines require substantial capital investment and primarily serve the commercial power sector, the predominant customer base for the
small and micro-wind market is the domestic sector. Furthermore, the nature of the supply chain for small wind turbines, from technical development,
manufacture, distribution and installation, as well as marketing and sales activities, is fundamentally different to that for large-scale wind installations.
The main sectors for purchase and utilisation of small and micro wind turbines are:
•
Marine Leisure (e.g. yachts)
•
Domestic
•
Commercial/Public (e.g. schools)
•
Agricultural
67
http://www.berr.gov.uk/whatwedo/energy/sources/sustainable/microgeneration/index.html
BWEA Small Wind Systems Market Report 2008
Assuming total value of onshore UK 2009-2014 of £8.26 billion
70
BWEA
68
69
Page 68 – Small and Micro Wind Energy
The Growth of the Small Scale Wind Sector
The BWEA Small Wind Systems UK Market Report (2009) presents the most
recent research into the small wind sector based on contributions across the
global micro and small wind industry. UK market revenue and annual
deployment increased between 2007 and 2008, although the total number of
turbines deployed in 2008 decreased slightly compared to the previous year.
Sharp increases are however expected for 2010, due to Feed in Tariff
policies. Table 13 summarises the relative number of turbine installations by
type, based on BWEA estimates.
Figure 22 shows the growth in installed capacity in the UK since 2005. The
UK market has grown rapidly in the last five years and the gross market
revenue for 2010 is forecast to be over £61 million with a gross export market
revenue of over £42 million. Therefore the total market value forecast for
2010 is over £104 million.
Table 13: Turbine installation numbers by type (forecast for 2010)
Micro‐Wind and Small‐Wind Turbines No. Installed
%
Micro-wind Turbines
22,000
80%
Small-Wind Turbines
5,000
20%
Off Grid (12, 24 or 48 Volts) or
On Grid (240 Volts)
12,000
15,000
45%
55%
Building Mounted or
Free Standing
9,500
17,500
35%
65%
Vertical Axis Wind Turbines or
Horizontal Axis Wind Turbines
2,000
15,000
7%
93%
Types of Micro and Small‐scale wind turbines
Figure 22: Cumulative Installed UK Capacity 2005-2010
Additional findings of BWEA Market Report 2009:
•
Micro wind turbines (<1.5 kW) take the largest share of the
small wind sector in the UK, accounting for 80 % of total
installations and by 2010 will contribute 37 % of generating
capacity.
•
The 1.5 – 10 kW category turbine has seen, on average, the
greatest annual domestic market growth from 2005 to 2009.
•
Most small-scale wind turbines in the UK are grid connected
(55 %)
•
Building mounted systems are a relatively new application,
however sales have risen significantly from just 2 sold in 2005
to an estimated 9,647 units by 2010, and now account for
over about 20% of small wind installations.
•
At the end of 2009 the UK export market represented 28% of
all small wind turbine sales and this was expected to grow to
40% by 2010.
•
Total estimated numbers of people employed in the UK smallscale wind industry in 2010 is estimated to be 3,850.
Page 69 – Small and Micro Wind Energy
Scottish Small and Micro-Wind Market
Support Schemes
A number of Grant and loan schemes are in operation as shown in Table 14. However as of the end of March 2010 these are due to be replaced by Feed In
Tariffs.
Table 14: Grant schemes for small-scale wind technology in Scotland
The Low Carbon Buildings Programme
The LCBP offers capital grants over four years for the installation of MCS certified microgeneration technologies including small-scale wind installations. The scheme was launched in two phases..
Under Phase 1 of the LCBP grants are available to householders for individual dwelling installations and provides a maximum of £1,000 per kW of installed capacity, subject to an overall cap of
£2,500 or 30% of the relevant eligible cost, whichever is lower. This stream is due to be open until end of March 2010 for electricity technologies such as wind turbines and late 2010 for heat
71
generating technologies or as long as funds last .
Phase 2 provides grants to the public sector and charitable organisations and was launched in December 2006. Since then further funds have been made available, most recently in April 2009. This
sees the current programme deadline for grants to be made and installations to be completed extend from 1 July 2009 until April 2011, although for electricity generating technologies the limit is the
end of March 2010, with the introduction of Feed-in Tariffs. Organisations may apply for up to 50% of the cost of installing approved technologies up to a maximum of £200,000
CARES - Communities and Renewable Energy Scheme
CARES is funded by the Scottish Government and offers grants for small wind systems to communities in Scotland. All legally constituted, non-profit distributing community organisations are eligible
to apply. CARES offers grants to a range of community organisations to help with the installation of a variety of renewable energy technologies. Communities may apply for funding for technical
assistance and capital grants for renewable energy equipment installation and associated costs. Under CARES there is no set grant funding. The amount of funding awarded is determined on a
case by case basis.
CARES is a rebranding of a previous Scottish Government scheme (the Scottish Community Householder and Renewables Initiative). At the end of 2008, 31 grants had been allocated under the
Communities Stream of SCHRI. CARES continues the support available for communities under the previous SCHRI programme and builds on this by increasing the maximum grant levels by 50%.
Grants of up to £150K are now available. Technical assistance funding is also available to support non-capital projects, such as feasibility or scoping studies and capacity building within a
community. The maximum grant is £15,000.
Energy Saving Scotland home renewables grant scheme
This is a grant and advice programme, assisting Scottish home owners to install renewable technologies in their home. A grant of 30% of the total cost or up to £4,000 is available. The scheme is
due to end in March 2010, when Feed in Tariffs are introduced. In addition homeowners can borrow money to install renewable energy systems boilers with an Energy Saving Recommended Loan
of between £500 and £10,000. The loans are unsecured and interest free
Page 70 – Small and Micro Wind Energy
Feed In Tariffs
Feed-in tariffs (FITs) will be introduced for small-scale low-carbon electricity generation, up to a maximum limit of 5 megawatts (MW) through changes to
electricity distribution and supply licences. They are intended to encourage the uptake of small-scale low-carbon energy technologies while the Renewables
Obligation continues to be the main support mechanism for large scale renewables deployment. FITs will guarantee a price for a fixed period for electricity
generated using small-scale low carbon technologies.
Similar FIT’s have proved successful in other European countries such as Germany and served to boost the uptake of renewable energy by shortening the
payback period on investment. The success of a FIT in the UK however will depend on whether the rate is set at the correct level so to recognise the strong
UK industry that currently exists.
The Government set out a consultation on its proposal to modify electricity supply licence conditions for the purpose of introducing the Feed-In Tariff Scheme
which closed in January 2010. It intends to lay the proposed modifications to electricity supply licence conditions in parliament in February 2010 with the aim
72
of starting the scheme in April 2010. For wind generation the tariffs will depend on the generation scale .
Number of Installations
Table 15: Estimated small-scale wind market in Scotland
2009
Although information is available regarding the UK small wind sector as a whole, few data exist to
allow definitive figures for the number of units installed in Scotland. In order to estimate the
number of small wind turbines in Scotland, this study has assumed that Scotland’s share of the
grants awarded under was the same as its share of the installations listed in the 2008 BWEA
market survey (21.8 %). It is thus supposed for the purpose of this report that Scotland represents
21.8 % of the UK small wind turbine market and the number of installations in Scotland is 21.8% of
the total number of installations in the UK as estimated by BWEA.
There are grants available under other programmes in the UK, but methods and dates of reporting
differ between grant programmes their inclusion in the analysis introduces error. Table 15 shows
details of small wind deployment in Scotland extrapolated from BWEA 2009 sales projections.
Scotland
UK total
257
1,181
21.8 %
100%
6,100
27,866
12 MW
53 MW
Energy Production
14,000 MWh
64,000 MWh
Gross Domestic Market Value
£13,000,000
£60,000,000
Gross UK + Export Market Value
£18,000,000
£84,000,000
AWARDED GRANTS
Proportion of grants awarded
Number of units
Cumulative installed capacity
Small Scale Wind - Market Opportunity
By the end of 2009, the number of installations in Scotland was estimated to be approximately 6,100 with an installed capacity of 12 MW supplying
14,000 MWh per annum. Domestic electricity consumption in Scotland is estimated as 12,000 GWh/yr 73 ; therefore it was estimated that small-scale wind
energy could provide approximately 0.12% of the domestic electricity consumed in Scotland in 2009. UK domestic electricity usage in 2020 is estimated as
71
Stream 2 of Phase 1 provided grants for larger public and commercial installations but is now closed.
72 http://www.decc.gov.uk/en/content/cms/consultations/elec_financial/elec_financial.aspx
73
The calculation is based on a figure of 2,322,400 dwellings in Scotland (General Register for Scotland) and an average domestic consumption in Scotland of 5,187kWh/yr (source: http://www.berr.gov.uk/files/file45726.xls). 2007 figures from DECC estimate
12,001.3GWh/yr domestic consumption in Scotland.
Page 71 – Small and Micro Wind Energy
107 TWh 74 . BWEA predicts that small-scale wind will generate 1.7 TWh of electricity in 2020, which equates to 1.6 % of estimated UK domestic electricity
consumption in 2020. This illustrates there is clearly room for substantial expansion of the market.
Case Study: Proven Energy; Global Growth
Proven Energy, based in Stewarton, Ayrshire, continues to grow as a leading Scottish manufacturer of small wind turbines, having installed more than
700 wind powered energy systems worldwide. It has developed bespoke energy solutions with specific conditions in mind and has installed turbines in desert
and arctic landscapes across the world.
Set up in 1980, Proven has recently been named the second most successful small wind turbine manufacturer in the world by the American Wind Energy
Association. Proven supplies a range of 2.5kW, 6kW and 15kW turbines to resellers in over 60 countries worldwide and their annual growth has averaged
over 50% year on year for the last three years. Their success in exporting to the global market – with demand for Proven turbines remaining strong despite
the economic downturn, has led to a range of economic benefits, such as an increase in manufacturing jobs.
Market Value Projections
The number of units sold by the end of 2009 by Scottish manufacturers is estimated to be 4,200 75 . This study has analysed the market value in Scotland over
the next five years using scenario based forecasting to determine the future development of these sales. The methodology for the scenario analysis is based
around four variables; the results are shown below in Table 16:
1. An estimate of the level of sales from Scottish small-scale wind turbine manufacturers in 2009.
2. The increase upon that sales level from 2009–2014.
3. The declining cost of different turbine types based on historical BWEA sales figures from 2005–2007.
4. The relative proportion of each turbine type as calculated in the BWEA Market Report 2008.
Table 16: Scenarios for the projected size of the small-scale wind market in Scotland (2009-2014)
Scenarios
Modest Growth
Accelerated Growth
Units installed
16,000
66,000
74
Market Value (£)
£ 58 million
£225 million
Installed capacity 2014 (MW)
33 MW
133 MW
This figure is calculated using the 2020 electricity generation projection of 348TWh from the DECC report Updated Energy and Carbon Emissions Projections, November 2008, and assuming domestic electricity consumption accounts for 30.7% of total electricity
generated in 2020.
Based on the Scotland’s share of small wind installations listed in the BWEA 2008 market survey. This figure has been extrapolated from the total UK annual sales figures of 19,457 in 2009 as projected by BWEA and assuming the market share from Scottish
manufacturers is 21.8%. Sales information requested from small-scale wind turbine manufacturers in Scotland relating to sales targets and anticipated orders confirmed this as an accurate estimation of likely sales in 2009.
75
Page 72 – Small and Micro Wind Energy
Assuming the Accelerated Growth estimate of market, Figure 23 shows the predicted annual sales by turbine size in terms of units, Figure 24 shows the
same prediction in terms of monetary value. It can be seen that in both cases, the 0-1.5kW range turbine shows the greatest value. Although the 10-20 kW
and 20-50kW range turbines show far fewer annual sales in terms of units, their high cost in comparison to smaller models means their monetary value is
reasonably high.
The greatest expansion in the market is likely to be the rural environment where there is a greater wind resource and manufacturers were of the opinion that
the agricultural sector offered greatest potential. Rural areas comprise of 98% of Scottish land area and house 21% of the population 76 .
Figure 23: Predicted annual small-scale wind system sales in Scotland
(2009-2014) Accelerated Growth
Figure 24: Predicted value of annual sales of small wind systems in Scotland
(2009-2014) Accelerated Growth
30,000
£90,000,000
£80,000,000
25,000
20-50 kW
20-50 kW
£70,000,000
Annual Sales
Value of Annual Sales
10-20 kW
20,000
1.5-10 kW
0-1.5 kW
15,000
10,000
5,000
£60,000,000
1.5-10 kW
0-1.5 kW
£50,000,000
£40,000,000
£30,000,000
£20,000,000
£10,000,000
£0
0
2009
2010
2011
2012
Year
76
10-20 kW
General Register Office for Scotland
Page 73 – Small and Micro Wind Energy
2013
2014
2009
2010
2011
2012
Year
2013
2014
Global Opportunity
From information gained at the consultation, the average proportion of units supplied from Scotland and installed by area were, 11% Scotland, 39% rest of the
UK, 9% Europe and 41% the Rest of the World. BWEA estimate 40% of UK turbine sales are outside the UK.
Therefore a sizeable export market for small-scale wind turbines now exists, further boosted by a weakened pound sterling. Consultation with manufacturers
in 2007 highlighted that Asia, Australia and New Zealand, the USA, Greece and Italy remain countries with potential for future sales. South Africa, Canada
and France are also prime targets for small wind systems.
The Effect of the Global Economic Crisis
In early 2009, consultation with industry experts and manufacturers, gave little indication that the small scale wind market had been significantly affected by
the current economic downturn due to the raft of policy measures introduced which are serving to promote uptake. In particular, Scottish manufacturers export
approximately 40-50% of manufactured product thus the export potential for small and micro turbines is considerable and was aided by the decreased value
of the weakened pound sterling. Nevertheless, the total number of small turbines deployed in 2008 decreased slightly on the previous year and Scottish
Manufacturer Windsave went into administration. It is however expected that the introduction of feed in tariffs in 2010 will see greater incentivisation and
uptake of small scale wind turbines.
Small Scale Wind - Constraints to Growth
Whether the significant growth potential for small-scale wind in Scotland is realised largely depends on planning policy reform, the availability of financial
support to encourage market expansion, the cost of product certification and the availability of information.
Planning Restrictions
All those consulted agreed that planning restrictions present the greatest barrier to market growth of the small-scale wind industry. Planning issues are due to
the fact that noise impacts are associated with small-scale wind turbines and also that compliance with the Microgeneration Certification Scheme (MCS) or
BWEA Performance and Safety Standard will be a prerequisite for Permitted Development for both the turbine and installer in the near future. Certification is
addressed in greater detail below.
In Scotland, the issue of noise is addressed by granting Permitted Development if a small wind system is installed 100 metres from a neighbouring house or
flat, yet it is expected that the Scottish Government will adopt the MCS linked scheme once this is approved in England 77 . This is likely to be resolved later in
2009, which should streamline the planning process for roof mounted and freestanding turbines up to 1.5 kW.
For turbines above 1.5 kW, or those that do not meet the requisite criteria of a Permitted Development, planning permission is required. The Government is
yet to release technical planning guidance on small scale wind turbines and it was the opinion of stakeholders consulted that authorities have not been
appropriately instructed on how to differentiate between planning requirements for small-scale installations and large scale turbines. As such, planning
77
http://www.northwilts.gov.uk/print/relaxation_of_planning_consent_for_microgeneration.pdf
Page 74 – Small and Micro Wind Energy
authorities have neither the technical expertise nor the resources to adequately manage an increasing demand for small wind installations, which has led to
uncertainties and significant delays in planning decisions.
Siting Considerations
Until recently turbine performance has been based on theoretical results from manufacturer’s tests. Although market drivers have successfully encouraged
uptake, actual energy output from turbines, and therefore potential to carbon emission savings, has come under scrutiny. Several field trials have been
completed to test the actual output from turbines in operational settings, including research commissioned by the Carbon Trust in 2008 to determine how
small-scale turbines can be best sited to save the most carbon 78 by maximising energy generation. The Carbon Trust conclude proper turbine siting is a
fundamental consideration, due to the fact that energy output is directly dependent on location specific variables, primarily wind speed, sheltering and
turbulence which vary considerably across the UK. For example, test results showed that many turbines in urban locations might not even pay back the
carbon emitted during their production, installation and operation.
To help ensure small-scale turbines are installed in locations that will guarantee good electricity output, the Carbon Trust has developed an on-line Wind
Power Estimator 79 specifically for small-scale systems. The tool will enable the user to estimate the local annual mean wind speed at a chosen location in the
UK and the annual yield and carbon savings of a small wind turbine. In addition, the EST are currently running field trials 80 for small-scale wind turbines to
determine energy generation and carbon savings, identify factors that influence performance of micro-wind systems, evaluate inverter performance and to
provide independent information to the consumer. In 2009 the EST created a new diagnostic tool 81 that helps consumers identify the best microgeneration
technologies for them 82 .
There have also been industry certification measures developed to independently check the accuracy of the turbine ratings such as the Microgeneration
Certification Scheme 83 (MCS) and BWEA standard which are discussed later in this report. The hope is that the Carbon Trust and EST tools mentioned
above, as well improved quality standards, will help individuals and developers appropriately site turbines in order to take full advantage of support measures
and drivers serving to promote the small-scale wind industry.
Financial Support Mechanisms
A report 84 commissioned by BERR (now DECC) as part of the Microgeneration Strategy, revealed that installation costs present a considerable barrier for
small-scale wind turbines with consumers placing a lower value on ongoing energy costs compared with upfront capital costs. In order for UK manufacturers
to meet growing demand and anticipated industry growth by increasing production and expanding their product range, companies are sought financial
assistance from Government and RDA’s. The DECC report ‘The Growth Potential for Microgeneration in England, Wales and Scotland’ suggests a method to
offset the capital costs of the installation and further encourage uptake in the form of ‘deeming’. Deeming involves bringing forward the annual FIT payments
so that support is front-loaded and directly contributes towards the initial cost of installing a turbine.
The introduction of a Feed In Tariff, discussed on page 71, is aimed to address these issues.
78
Small-scale wind energy, Policy insights and practical guidance, Carbon Trust, 2008
http://www.carbontrust.co.uk/windpowerestimator/WindPowerEstimatorTerms.aspx
80
http://www.warwickwindtrials.org.uk/resources/Jaryn+Bradford+-+Energy+Saving+Trust.pdf
81
http://www.energysavingtrust.org.uk/Generate-your-own-energy
82
http://www.energysavingtrust.org.uk/Generate-your-own-energy/Home-Energy-Generation-Selector
83
http://www.microgenerationcertification.com/
84
The growth potential for Microgeneration in England, Wales and Scotland, June 2008
79
Page 75 – Small and Micro Wind Energy
Certification Costs
In order for a turbine model to become BWEA or MSC certified it must be assessed by a UKAS accredited certification body, meet a set of strict criteria and
undergo 2,500 hours of operational testing. This is a robust standard deemed fit for purpose by the small wind turbine industry, state officials, scientists and
consumers. However the certification procedure is expensive relative to the size of the market at present, costing in the region of £40,000 - £100,000 per
turbine model. Moreover, if a technical modification is made to a turbine product, it must be reassessed in order to maintain certification and the manufacturer
must again bear the cost of this.
The US, Australia, and several EU States including Ireland, Spain, and France are supporting manufacturers financially by providing subsidies or funding for
the cost of product certification. The UK offers no such support and although the market is growing rapidly, it is presently a small sector, and therefore the
relative cost of certification is significant and often too costly for small companies. Financial support from the UK Government is necessary to create a
responsible market in order to safeguard consumer confidence and future market potential.
Lack of Available Information
It is the opinion of industry stakeholders consulted that there is a lack of unbiased information available to the public across the whole suite of
microgeneration technologies. Similarly stakeholders consider that efforts to debunk myths and misconceptions amongst the general public have been
ineffective. Small wind turbines are a discretionary purchase so in order for uptake to progress from early adopters to mass-market penetration, consumers
must have an understanding of the real costs and benefits of installation. One measure developed to address this is the Carbon Trust’s Wind Yield Estimation
Tool launched on March 5th 2009. The online tool allows users to calculate the annual yield and carbon savings of a small wind turbine based on the local
annual wind speed and obtain initial quantitative estimates of the sites potential. Further efforts to co-ordinate a program to improve advice and information to
installers and end–users will raise awareness and boost demand.
Supply Chain
All the manufacturers of small-scale wind turbines in Scotland were consulted in order to gather information relating to the small-scale wind market as a whole
and supply chain opportunities. Every company who responded agreed they would seek to expand their supply chain options as the market expands and
raised a number of issues around this:
•
Key competitiveness issues for sourcing supply chain products or services from companies in Scotland are environmental responsibility, the provision of
good services and their location.
•
Companies have only recently reorganised key aspects of their supply chain.
•
Due to the recent growth in the export market for small scale wind, companies have set up alliances with international installers and distributors, as well
as overseas supply and manufacturer deals, for example in the US. Hence Scottish companies must compete with suppliers worldwide on quality, cost
and delivery time.
•
Companies seek to strike a balance between ‘value-added’ and complexity. Some aspects of the supply chain have a relatively high value-added and
some less so. High value added areas would ideally be kept in-house to maximise the benefit to the company.
Page 76 – Small and Micro Wind Energy
•
In some cases UK manufacturers have over 600 companies supplying necessary components, equipment and services to support small and micro scale
wind turbine manufacturing business. Hence the supply chain will rely on effective interaction between a small number of turbine technology companies
and a much wider supply chain industry.
•
Some manufacturers intend to sell only to stockists, distributors and installers in trade as business develops.
•
Some manufacturers are currently liaising with investors and endorsers in order to calculate for anticipated growth and reasonably assess supply chain
options as the market expands.
•
Companies note that the number of businesses who are part of the supply chain for their products may take an hourglass shape, ie:
-
A large number of component suppliers, many of whom will be SME’s. These companies supply bespoke items (blades, generators etc.) as well as
commodity components (wiring, fasteners etc.)
A small number of turbine technology companies. For these companies the design, ‘ownership’ and intellectual property must be kept within the
control of the technology company to maximise the present value of the brand and product.
A large number of companies installing the turbines, again many of these may be SME’s.
Page 77 – Small and Micro Wind Energy
Small and Micro-Wind Supply Chain
Considering the current capacity of small-scale turbines installed in Scotland, BWEA projections for market development and the likely growth of installation
capacity expected by 2020 in the UK, there is clearly scope for sector expansion for manufacturers, suppliers and installers in Scotland. As a result, there is
an opportunity for growth for supply chain companies. However, historically the small-scale wind market has been seen as a niche area with relatively small
potential compared with large onshore and large offshore application. A number of developments around technology, marketing, media coverage and overall
awareness have opened up a much broader landscape of opportunity.
A supply chain breakdown was carried out with the main question being, ‘What is the relative value of each aspect of the supply chain?’, the methodology for
this was to characterise the supply chain via breaking it down into component parts and using industry experience to apportion an estimated percentage to
each. Using the market assessment and the consultation results, it is possible to assess the value of each aspect of the supply chain through to 2014. Based
on a projected market value of £225m to 2014, values for each element of the supply chain are shown in Figure 25 below. The highest value sector within the
supply chain is design, construction and installation; costs within this sector have also been broken down in Figure 26.
Figure 25: Estimated Cumulative Value of UK Small and Micro Wind Market to
2014
Page 78 – Small and Micro Wind Energy
Figure 26: Estimated Cumulative Value of UK Small and Micro Wind Design,
Construction and Installation Sector to 2014
Small Scale Wind - Business Development
The following issues arose from consultation with small-scale wind turbine technology companies:
•
The availability of private sector investment is not sufficient to effectively expand businesses or supply chain companies and the application process for
funding is complicated.
•
Small turbine manufacturers may seek to move their manufacturing bases aboard, for example to the Far East, to reduce shipping costs.
Routes to Market
During discussions with the Micropower Council and SME’s, it was noted that synergies would need to be found and established with major national
companies in order for existing market players to make the step into the mass market as the market grows. Only companies of considerable size will have the
brand appeal and broad market coverage or reach to make mass-market rollout realistic. It was thought SME’s would have a supporting role in the supply
chain but not the presence in the market, or the resources to establish small-scale wind in the mass market on their own.
A number of types of companies and organisations have been identified as having synergies with and within the small–scale wind turbine market. These
companies and organisations include:
•
Energy suppliers – both major operators and smaller niche market companies that provide ‘green tariffs’. These companies could use synergies to
promote ‘green energy’ in general.
•
Other renewable technology companies – some renewable technologies complement each other. Combining building integrated or stand alone wind
turbines and photovoltaics are effective systems as solar output is highest in summer complementing wind turbine output which is higher in winter and
operates through the night. Therefore photovoltaic companies may provide an opportunity to promote small-scale wind technology through combined
renewable packages.
•
Insulation companies – the obvious benefits of promoting energy efficiency and renewables as a package offer opportunity for turbine manufacturers or
installers to increase market size by developing promotions and offers. Under the current Carbon Emissions Reduction Target (CERT) energy providers
are promoting subsidised offers on loft and cavity insulation and allows suppliers to meet up to 5 per cent of their obligation through a ‘flexibility
mechanism’. This aims to target hard to treat homes, typically those off grid or solid walled homes. Certifed insulation companies, particularly those
servicing hard to treat homes, are in a good position to work in collaboration with the small wind manufacturers as installers. They will have access to an
already established installer network qualified to appropriate electricty standards and are well placed to roll out small scale wind across the market.
•
DIY chains or other home improvements outlets – the market coverage of these companies and the customer profile of their clientele allow for
business advantage. However, since the news that B&Q have pulled small wind turbines from their product line after a recent report questioned the
efficiency of the products 85, customer confidence has been affected. It is recommended outlets promote MCS or BWEA certified technologies to help
raise market confidence.
85
http://www.warwickwindtrials.org.uk/resources/Warwick+Wind+Trials+Final+Report+.pdf
Page 79 – Small and Micro Wind Energy
•
Finance or insurance companies – may offer opportunity to develop packages that consider the risk specific to financing domestic renewable
installations.
•
Universities, colleges and research organisations – these organisations can offer services that allow verification, standardisation and possibly
certification of technologies alongside existing industry standards. This would further increase market confidence in small-scale wind technologies.
•
Estate Agents and House Builders – these companies could market homes with installations to evaluate the increase in value of a property that a
renewable installation could provide. This could change the outlook of the financial aspects or a purchase, which could in turn invigorate the market.
•
Construction Companies – these companies could incorporate renewable systems including small wind turbines, into new buildings at the outset and
encourage the deployment of small-scale wind.
Other organisations such as Local Authorities and Energy Saving Scotland advice centres have also been identified as having a common goal to some
extent. Links with these companies and organisations should be encouraged and strengthened to allow supply chain and market to fully grow, develop and
realise its full potential.
Page 80 – Small and Micro Wind Energy
Appendix 1: Renewables Obligation Certificate (ROC) Banding 2009
Band
Technology
MWh required per ROC
ROC per MWh
Established 1
Electricity from landfill gas
4
0.25
Established 2
Electricity generated from sewage gas
Co-firing of biomass
2
0.5
Reference
Onshore wind
Hydro-electric
Co-firing of energy crops
Energy from waste with CHP
Geopressure
Co-firing of biomass with CHP
Standard gasification
Standard pyrolysis
1
1
Post-Demonstration
Dedicated biomass
Co-firing of energy crops with CHP
⅔
1.5
Post-Demonstration
Offshore wind
½
2
Emerging
Wave
Tidal-stream
Advanced gasification
Advanced pyrolysis
AD
Dedicated energy crops
Dedicated biomass with CHP
Dedicated energy crops with CHP
Solar photovoltaic
Geothermal
Tidal impoundment – tidal barrage
Tidal impoundment – tidal lagoon
½
2
Page 81 – Appendix 1: ROC banding 2009
Appendix 2: Feed in Tariffs
Scale
Year 1:
1/4/10 –31/3/11
Year 2:
1/4/11 –31/3/12
Year 3:
1/4/12 –31/3/13
Tariff lifetime
(years)
≤1.5kW
34.5
34.5
32.6
20
>1.5-15kW
26.7
26.7
25.5
20
>15-100kW
24.1
24.1
23.0
20
>100-500kW
18.8
18.8
18.8
20
>500kW-1.5MW
9.4
9.4
9.4
20
>1.5MW-5MW
4.5
4.5
4.5
20
Page 82 – Appendix 2: Installed Capacity Growth Assumptions to 2014
Appendix 3: Installed Capacity Growth Assumptions to 2014
Onshore Scotland
•
All constructed and operational projects will remain so up to 2014
•
All projects under construction will be completed and operational by 2014
•
All presently consented projects will be constructed and operational by 2014
•
35% of current applications will be accepted, constructed and operational by 2014
Table A3- 1
Development Stage
Operational
Under Construction
Consented
In Planning
Cumulative 2014
Installed 2009-2014
Current Capacity (MW)
1,642
647
2,090
3,409
~5,500 MW
~3,800 MW
Onshore Rest of UK
•
All constructed and operational projects will remain so up to 2014
•
All projects under construction will be completed and operational by 2014
•
All presently consented projects will be constructed and operational by 2014
•
25% of current applications will be accepted, constructed and operational by 2014
Table A3- 2
Development Stage
Operational
Under Construction
Consented
In Planning
Cumulative 2014
Installed 2009-2014
Current Capacity (MW)
1,104
269
1,037
3,206
~3,200 MW
~2,100 MW
Page 83 – Appendix 3 Installed Capacity Growth Assumptions to 2014
Offshore UK
•
All constructed and operational projects will remain so up to 2014
•
All projects under construction will be completed and operational by 2014
•
All presently consented projects will be constructed and operational by 2014
•
65% of al current applications will be accepted, constructed and operational by 2014
Table A3- 3
Development Stage
Operational
Under Construction
Consented
In Planning
Cumulative 2014
Installed 2009-2014
Current Capacity (MW)
566
774
4,113
1,420
~6,300 MW
~5,700 MW
Major (>50MW) Onshore Wind Farm Applications
Under Construction
Table A3- 4 Section 36 Applications Under Construction
Construction Start Date
February 2009
August 2008
June 2008
October 2006
Name
Arecleoch
Crystal Rig 2
Little Cheyne Court
Whitelee/Eaglesham Moor
Area
South Ayrshire
Scottish Borders
Kent
East Renfrewshire
Installed Capacity (MW)
150.0
117.3
59.8
117.3
Developer
Scottish Power
Fred Olsen Renewables
Npower Renewables
Scottish Power
Installed Capacity (MW)
Developer
Consented
Table A3- 5: Section 36 Applications Granted Planning Permission
Consent Date
Name
Area
December 2008
July 2008
June 2008
June 2008
April 2008
February 2008
January 2008
October 2007
September 2007
Lochluichart
Clyde
Carraig Gheal
Mark Hill
Gordonbush
Tween Bridge Moor
Griffin Forest
Fullabrook Down
Harestanes
Highland
South Lanarkshire
Argyll and Bute
South Ayrshire
Highland
South Yorkshire
Perth and Kinross
Devon
Dumfries and Galloway
Page 84 – Appendix 3 Installed Capacity Growth Assumptions to 2014
51.0
579.0
60.0
90.0
87.5
66.0
204.0
66.0
163.0
LZN
Airtricity
Green Power
Catamount Energy
Scottish and Southern
E.ON Renewables
Green Power
Devon Wind Power
Scottish Power
In Planning
Table A3- 6: Section 36 Applications and >50MW sites In Planning
Submission Date
January 2009
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
May 2008
May 2008
December 2007
December 2007
August 2007
June 2007
May 2007
February 2007
June 2006
March 2006
September 2005
September 2005
September 2005
June 2005
April 2005
April 2005
March 2005
March 2005
January 2005
November 2004
November 2004
November 2004
October 2004
March 2004
January 2004
December 2001
Name
Carnedd Wen
Marshland St James
Black Law Extension
Llaithddu
Davidstow
Earlshaugh
Dorenell/Scaut Hill
Llandinam Repowering
Whitelee Extension
Llanbadarn Fynydd
Farkland
Fallago Rig
Strathy (South)
Spittal Hill
Strathy (North)
Park Estate (Pairc)
Shira
Glenkirk
Blackcraig
Orby Marsh
Harrows Law
Dersalloch
Spireslack
Dunbeath
Dunmaglass
Tievenameenta
Slieve Kirk
Afton
Waterhead Moor
Berryburn
Ewe Hill
Bardnaheigh Farm
Muaitheabhal
Area
Powys
Norfolk
South Lanarkshire
Powys
Cornwall
Scottish Borders
Scottish Borders
Powys
East Ayrshire
Powys
Co Londonderry
Scottish Borders
Highland
Highland
Highland
Western Isles
Argyll and Bute
Highland
Dumfries and Galloway
Lincolnshire
South Lanarkshire
East Ayrshire
East Ayrshire
Highland
Highland
Co Tyrone
Co Londonderry
East Ayrshire
North Ayrshire
Moray
Dumfries and Galloway
Highland
Western Isles
Page 85 – Appendix 3 Installed Capacity Growth Assumptions to 2014
Installed Capacity (MW)
195.0
57.0
69.0
66.7.0
50.0
108.0
177.0
96.0
150.0
59.5
51.0
144.0
177.0
75.0
80.0
250.0
79.0
93.0
69.0
54.0
111.0
69.0
69.0
99.0
66.0
63.0
74.0
120.0
79.8
80.0-120.0
63.0
159.0
Developer
Npower Renewables
Notus
Scottish Power
RPS/Fferm Wynt
Community Windpower
Terence O’Rouke
Infinergy
Scottish Power/Eurus Energy
Scottish Power
Nuon Renewables
Ted Walsh
North British Wind Power
Scottish and Southern
Baillie
Scottish and Southern
Scottish and Southern
Fred Olsen Renewables
Eurus Energy
Scottish and Southern
Mark Caudwell
Scottish and Southern
Scottish Power
Scottish Coal
West Coast Energy
RES
Airtricity
Airtricity
E.ON Renewables
Scottish and Southern
Force 9 Energy & Catamount
Scottish Power
Baillie
Beinn Mhor Power
Offshore Wind Farm Applications
Under Construction
Table A3- 7: Offshore Wind Farms Under Construction
Construction Start Date
Name
September 2008
April 2008
April 2008
July 2007
December 2006
December 2006
November 2006
November 2006
Thanet
Gunfleet Sands II
Gunfleet Sands I
Rhyl Flats
Robin Rigg B
Robin Rigg A
Inner Dowsing
Lynn
Area
Thames Estuary
East of England
East of England
North Wales
Dumfries and Galloway
Dumfries and Galloway
East Midlands
East Midlands
Installed Capacity (MW)
300
64
108
90
90
90
16
16
Developer
Warwick Energy
DONG Energy
DONG Energy
Npower Renewables
E.ON Renewables
E.ON Renewables
Centrica
Centrica
Consented
Table A3- 8 : Offshore Wind Farms Granted Planning Permission
Consent Date
December 2008
October 2008
September 2008
August 2008
November 2007
September 2007
February 2007
February 2007
December 2006
October 2004
Name
Gwynt Y Mor
Lincs
West of Duddon Sands
Sheringham Shoal
Walney
Teeside/Redcar
Greater Gabbard
Ormonde
London Array
Scarweather Sands
Area
North Wales
Greater Wash
North Irish Sea
Greater Wash
Cumbria
Yorkshire and Humber
Thames Estuary
Walney Island
Thames Estuary
South Wales
Installed Capacity (MW)
750
250
500
315
450
90
500
150
1000
108
Developer
Npower Renewables
Centrica/RES
DONG/E.ON/Eurus
Scira Offshore Energy
DONG
EdF
Airtricity
Eclipse
DONG/Shell/E.ON
DONG/E.ON
Area
Greater Wash
Greater Wash
Yorkshire and Humber
Installed Capacity (MW)
620
500
300
Developer
Centrica
Centrica
E.ON
In Planning
Table A3- 9: Offshore Wind Farms In Planning
Consent Date
January 2009
December 2008
April 2008
Name
Race Bank
Docking Shoal
Humber Gateway
Page 86 – Appendix 3 Installed Capacity Growth Assumptions to 2014
Appendix 4: Sectoral Gap Analysis
This Appendix sets out the data and methodology that was used to provide the market gap assessment in Step 5. Three tables are provided for
•
Onshore (Scotland only),
•
Onshore (Rest of the UK)
•
Offshore (UK Total).
Each table gives information broken down by opportunity under five categories, with further breakdown by two levels of subcategory. The top two levels are
shown in Table A3-1. Further detail is given for some categories – for example the Turbine Tower structure is broken down into 11 sub levels.
Table A4-1
Category Description
1
Project Development
2
Legal and Financial
3
Project Management
4
Design and Construction
5
Operation and
Maintenance
Subcategories
Feasibility Study
Mast Installation
Environmental Studies
Project Management
Public & Community Liaison
Outline Design
Site Survey
Land purchase/agents
Insurance
Bank Fees and Interest
Detail Design
Turbines
Construction Project Management
Civil Construction
Transportation & Installation
MEI Installation
Commissioning
Main connections
Service, Maintenance and Parts
Insurance
Grid Supply
Management & Consultancy
Land Related Costs or Vessel & Support Costs
Other
Page 87 – Appendix 4: Detailed Sectoral Gap Analysis
Further Subcategories as appropriate
e.g. for Mast Installation these are:
Fabricate lattice mast
Anemometers
Install mast
For each table the following data is shown:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Category
Description of activity
Typical Value (%) of development (for the given product / service)
The projected total value of contracts (for the given product / service) based on the projected installed capacity
Average annual total value of contracts (for the given product / service) (to 2014) in £M/annum
Estimated percentage of contracts (for the given product / service) historically awarded to Scottish suppliers (to 2007)
Estimated potential percentage of contracts (for the given product / service), that could be provided by Scottish suppliers
Estimated Gap (%) = The difference between the historical take and the future potential.
Gap Value = The value of the estimated gap (for Scottish companies for the given product / service) based on the projected installed capacity
shown
NB
Points shown above in Bold provide the data for the previous ‘pie-charts’.
The products or services that are in the high priority lists in Step 5 are shown in Bold in the tables.
Page 88 – Appendix 4: Detailed Sectoral Gap Analysis
Table A4-2 Onshore Scotland
Level
Code
Description
Typical
Value % of
development
Value
Based on
3800 MW
Installed
In
Scotland
£M
1.0
1.1
1.1.1
1.1.2
1.2
1.2.1
1.2.2
1.2.3
1.3
1.3.1
1.3.2
1.3.3
1.3.4
1.4
1.5
1.6
1.7
1.8
2.0
2.1
2.2
2.3
3.0
4.0
4.1
Project Development
Feasibility Study
Grid Power Study
Wind / Site Desktop Study
Mast Installation
Fabricate lattice mast
Anemometers
Install mast
Environmental Studies
Environmental Impact Assessment
Wildlife / Bird Study
Noise Study
Archaeology study
Project Management
Public & Community liason
Outline Design
Site access survey
Site conditions survey
Legal & Financial
Land purchase / agents
Insurance
Bank Fees & Interest
Project Management
Design & Construction
Detail design
2.0%
0.2%
0.0%
0.2%
0.2%
0.1%
0.0%
0.0%
0.9%
0.7%
0.2%
0.0%
0.0%
0.1%
0.1%
0.3%
0.0%
0.1%
2.6%
0.1%
0.5%
2.0%
0.3%
95.2%
0.7%
105
12
2
10
8
5
2
1
50
38
8
2
2
6
5
17
1
7
138
5
27
106
13
5,064
38
Page 89 – Appendix 4: Detailed Sectoral Gap Analysis
Average
£M /
year To
2014
17
2
0
2
1
1
0
0
8
6
1
0
0
1
1
3
0
1
23
1
4
18
2
844
6
Estimated
Historical
Scottish
Take %
(to 2007)
Estimated
Potential
Scottish
Take %
Estimated
Gap %
42%
80%
38%
42%
75%
33%
42%
17%
42%
80%
45%
80%
38%
28%
38%
Gap
Value £M
Based on
3800
MW
Installed
78
9
2
7
6
4
1
1
37
28
6
1
1
4
3
13
1
5
95
4
18
73
10
2,144
28
Table A4-2 Onshore Scotland
Level
Code
4.2
4.2.1
4.2.2
4.2.3
4.2.4
4.2.5
4.2.6
Description
Turbine
Tower structure
Rolled steel cans
Flanges - forged
Paint
Access platforms
Ladders
Galvanised brackets
Bolts
Power cables
Control cables
Lighting
Safety, Loss Prevention
Blades
Nacelle Cover
Hub Assembly
Bearings
Nose cone
Castings
Hydraulics
Yaw assembly
Yaw ring - forged
Electric motors
Bearings
Sensor system
Pitch control
Hydraulics
Typical
Value % of
development
65.0%
9.6%
4.4%
1.9%
1.1%
0.3%
0.3%
0.2%
0.4%
0.4%
0.3%
0.2%
0.1%
13.4%
2.6%
2.0%
5.5%
4.9%
Page 90 – Appendix 4: Detailed Sectoral Gap Analysis
Value
Based on
3800 MW
Installed
In
Scotland
£M
Average
£M /
year To
2014
3,459
509
234
101
59
18
15
10
20
20
15
10
5
712
138
104
294
259
-
576
85
39
17
10
3
3
2
3
3
3
2
1
119
23
17
49
43
-
Gap
Value £M
Based on
3800
MW
Installed
Estimated
Historical
Scottish
Take %
(to 2007)
Estimated
Potential
Scottish
Take %
Estimated
Gap %
2.4%
10%
31%
50%
29%
40%
0%
8%
0%
25%
50%
25%
25%
42%
25%
1,076
247
114
49
29
9
7
5
10
10
7
5
2
178
68
26
0%
25%
25%
74
0%
25%
25%
65
Table A4-2 Onshore Scotland
Level
Code
4.2.7
4.2.8
4.2.9
4.2.10
4.2.11
4.2.12
4.2.13
4.2.14
4.3
4.4
4.4.1
4.4.2
4.4.3
4.4.4
Description
Sensor system
Control system
SCADA
Switchgear, MCC, PLC
Condition monitoring system
Telecommunications
Anemometers
Main shaft
Gearboxes
Generators
Cooling system - water or air
Bed plate
Other
Brackets
Bolts
Cables
Lubrication
Assembly time
Construction Project Management
Environmental Monitoring
Resident Eng / Planning
Supervisor
Civil Construction
Site set up
Management costs
Roadworks
Substation buildings
Typical
Value % of
development
Value
Based on
3800 MW
Installed
In
Scotland
£M
Average
£M /
year To
2014
1.3%
0.2%
283
132
407
305
68
104
74
69
10
47
22
68
51
11
17
12
12
2
-
0.2%
10
2
11.8%
0.4%
0.5%
2.1%
0.3%
629
19
29
110
13
105
3
5
18
2
5.3%
2.5%
7.6%
5.7%
1.3%
2.0%
1.4%
Page 91 – Appendix 4: Detailed Sectoral Gap Analysis
Estimated
Historical
Scottish
Take %
(to 2007)
Estimated
Potential
Scottish
Take %
Estimated
Gap %
Gap
Value £M
Based on
3800
MW
Installed
0%
25%
25%
71
0%
0%
3%
0%
5%
5%
25%
25%
25%
25%
50%
50%
25%
25%
22%
25%
45%
45%
33
102
75
17
51
37
5%
59%
50%
90%
45%
31%
34
8
59%
90%
31%
513
16
24
89
11
Table A4-2 Onshore Scotland
Level
Code
4.4.5
4.4.6
4.4.7
4.4.8
4.5
4.5.1
4.5.2
4.5.3
4.6
4.6.1
4.6.2
4.6.3
4.6.4
4.6.5
4.6.6
Description
Hard standings
Turbine foundations
Excavation
Blinding
Formwork
Rebar
Concrete
Foundation anchors
Transformer foundations (if
separate)
Rock anchors
Landscaping / Forestry / Fencing
Transportation & Installation
General Haulage
Heavy Haulage
Erect tower
MEI Installation
Mechanical
Electrical
Trenching
Electrical installation
Earthing system
Main circuit breakers
Instrumentation
Telecommunications
Transformers
Substation
Typical
Value % of
development
Value
Based on
3800 MW
Installed
In
Scotland
£M
Average
£M /
year To
2014
1.0%
5.1%
0.29%
0.16%
0.08%
1.05%
1.85%
1.59%
54
270
15
8
4
56
98
85
9
45
3
1
1
9
16
14
44
220
12
7
3
46
80
69
0.06%
3
1
2
2.3%
0.2%
2.5%
0.2%
0.7%
1.5%
4.9%
inc
2.3%
0.7%
0.7%
0.3%
0.6%
0.0%
0.0%
1.0%
0.5%
120
13
133
13
40
80
259
20
2
22
2
7
13
43
21
6
6
3
6
0
9
5
98
11
90
9
27
54
138
67
19
20
9
18
1
30
15
Page 92 – Appendix 4: Detailed Sectoral Gap Analysis
125
35
38
17
34
2
55
28
Estimated
Historical
Scottish
Take %
(to 2007)
Estimated
Potential
Scottish
Take %
Estimated
Gap %
13%
70%
57%
46%
60%
14%
Gap
Value £M
Based on
3800
MW
Installed
Table A4-2 Onshore Scotland
Level
Code
4.6.7
4.7
Description
HV Cables
Average
£M /
year To
2014
0.9%
49
8
Commissioning
4.8
Main connections
Total Development
5.01
5.02
5.03
5.04
5.05
5.06
Typical
Value % of
development
Value
Based on
3800 MW
Installed
In
Scotland
£M
Service & Maintenance
Insurance
Grid Supply
Management & Consultancy
Land related costs
Other
Total O & M
inc
Estimated
Historical
Scottish
Take %
(to 2007)
Estimated
Potential
Scottish
Take %
Estimated
Gap %
Gap
Value £M
Based on
3800
MW
Installed
26
-
10.1%
100.0%
536
5,320
89
887
42%
60%
18%
289
2,327
48%
4%
2%
18%
12%
17%
100.0%
136
12
5
50
34
48
284
23
2
1
8
6
8
47
25%
25%
100%
50%
90%
25%
50%
50%
100%
75%
90%
50%
25%
25%
0%
25%
0%
25%
63
6
4
34
26
23
155
Page 93 – Appendix 4: Detailed Sectoral Gap Analysis
Table A4-3 Onshore - Rest of UK
Level
Code
1.0
1.1
1.1.1
1.1.2
1.2
1.2.1
1.2.2
1.2.3
1.3
1.3.1
1.3.2
1.3.3
1.3.4
1.4
1.5
1.6
1.7
1.8
2.0
2.1
2.2
2.3
3.0
Description
Project Development
Feasibility Study
Grid Power Study
Wind / Site Desktop Study
Mast Installation
Fabricate lattice mast
Anemometers
Install mast
Environmental Studies
Environmental Impact
Assessment
Wildlife / Bird Study
Noise Study
Archaelogogy study
Project Management
Public & Community liason
Outline Design
Site access survey
Site conditions survey
Legal & Financial
Land purchase / agents
Insurance
Bank Fees & Interest
Project Management
Gap
Value
£M
Based on
2100
MW
Installed
Typical Value
% of
development
Value
Based on
2100 MW
Installed
In RoUK
£M
Average
£M /
year To
2014
Estimated
Historical
Scottish
Take %
Estimated
Potential
Scottish
Take %
Estimated
Gap %
2.0%
0.2%
0.0%
0.2%
0.2%
0.1%
0.0%
0.0%
0.9%
58
7
1
5
4
3
1
1
28
10
1
0
1
1
0
0
0
5
5%
15%
10%
0.7%
21
3
2
0.2%
0.0%
0.0%
0.1%
0.1%
0.3%
0.0%
0.1%
2.6%
0.1%
0.5%
2.0%
0.3%
5
1
1
3
2
9
1
4
76
3
15
59
7
1
0
0
1
0
2
0
1
13
0
2
10
1
1
0
0
0
0
1
0
0
9
0
2
7
1
Page 94 – Appendix 4: Detailed Sectoral Gap Analysis
5%
15%
10%
5%
15%
10%
7
1
0
1
1
0
0
0
3
Table 4-3 Onshore - Rest of UK
Level
Code
4.0
4.10
4.20
4.2.1
4.2.2
4.2.3
4.2.4
4.2.5
Description
Design & Construction
Detail design
Turbine
Tower structure
Rolled steel cans
Flanges - forged
Paint
Access platforms
Ladders
Galvanised brackets
Bolts
Power cables
Control cables
Lighting
Safety, Loss Prevention
Blades
Nacelle Cover
Hub Assembly
Bearings
Nose cone
Castings
Hydraulics
Yaw assembly
Yaw ring - forged
Electric motors
Bearings
Typical Value
% of
development
95.2%
0.7%
65.0%
9.6%
4.4%
1.9%
1.1%
0.3%
0.3%
0.2%
0.4%
0.4%
0.3%
0.2%
0.1%
13.4%
2.6%
2.0%
5.5%
Page 95 – Appendix 4: Detailed Sectoral Gap Analysis
Gap
Value
£M
Based on
2100
MW
Installed
Value
Based on
2100 MW
Installed
In RoUK
£M
Average
£M /
year To
2014
Estimated
Historical
Scottish
Take %
Estimated
Potential
Scottish
Take %
Estimated
Gap %
2,798
21
1,911
281
129
56
33
10
8
6
11
11
8
6
3
394
76
57
162
-
466
3
319
47
22
9
5
2
1
1
2
2
1
1
0
66
13
10
27
-
2%
5%
1%
4%
21%
15%
25%
25%
19%
10%
24%
21%
0%
4%
0%
25%
25%
25%
25%
21%
25%
560
2
464
63
29
12
7
2
2
1
3
3
2
1
1
98
17
14
0%
25%
25%
41
Table A4-3 Onshore - Rest of UK
Level
Code
4.2.6
4.2.7
4.2.8
4.2.9
4.2.10
4.2.11
4.2.12
4.2.13
4.2.14
4.3
Description
Sensor system
Pitch control
Hydraulics
Sensor system
Control system
SCADA
Switchgear, MCC, PLC
Condition monitoring system
Telecommunications
Anemometers
Main shaft
Gearboxes
Generators
Cooling system - water or
air
Bed plate
Other
Brackets
Bolts
Cables
Lubrication
Assembly time
Construction Project
Management
Environmental Monitoring
Resident Eng / Planning
Supervisor
Estimated
Historical
Scottish
Take %
Estimated
Potential
Scottish
Take %
Estimated
Gap %
Gap
Value
£M
Based on
2100
MW
Installed
0%
25%
25%
36
0%
25%
25%
39
0%
0%
0%
25%
25%
25%
25%
25%
25%
18
56
42
6
0%
25%
25%
9
10
7
6
3%
5%
25%
25%
22%
20%
13
9
1.3%
57
41
38
5%
25%
20%
8
0.2%
6
1
5%
15%
10%
1
Value
Based on
2100 MW
Installed
In RoUK
£M
Average
£M /
year To
2014
2.5%
7.6%
5.7%
143
157
73
225
169
24
26
12
37
28
1.3%
37
2.0%
1.4%
Typical Value
% of
development
4.9%
5.3%
0.2%
Page 96 – Appendix 4: Detailed Sectoral Gap Analysis
6
1
Table A4-3 Onshore - Rest of UK
Level
Code
4.4
4.4.1
4.4.2
4.4.3
4.4.4
4.4.5
4.4.6
4.4.7
4.4.8
4.5
4.5.1
4.5.2
4.5.3
4.6
4.6.1
4.6.2
Description
Civil Construction
Site set up
Management costs
Roadworks
Substation buildings
Hard standings
Turbine foundations
Excavation
Blinding
Formwork
Rebar
Concrete
Foundation anchors
Transformer foundations (if
separate)
Rock anchors
Landscaping / Forestry /
Fencing
Transportation & Installation
General Haulage
Heavy Haulage
Erect tower
MEI Installation
Mechanical
Electrical
Trenching
Gap
Value
£M
Based on
2100
MW
Installed
Typical Value
% of
development
Value
Based on
2100 MW
Installed
In RoUK
£M
Average
£M /
year To
2014
Estimated
Historical
Scottish
Take %
Estimated
Potential
Scottish
Take %
Estimated
Gap %
11.8%
0.4%
0.5%
2.1%
0.3%
1.0%
5.1%
0.29%
0.16%
0.08%
1.05%
1.85%
1.59%
347
11
16
61
7
30
149
8
5
2
31
54
47
58
2
3
10
1
5
25
1
1
0
5
9
8
5%
15%
10%
0.06%
2
0
0
2.3%
66
11
8
0.2%
7
1
1
2.5%
0.2%
0.7%
1.5%
4.9%
inc
2.3%
0.7%
73
7
22
44
143
12
1
4
7
24
11
3
Page 97 – Appendix 4: Detailed Sectoral Gap Analysis
69
20
3%
10%
7%
2%
10%
8%
40
1
2
7
1
3
17
1
1
0
4
6
5
6
1
2
3
12
6
2
Table A4-3 Onshore - Rest of UK
Level
Code
Description
Electrical installation
Earthing system
Main circuit breakers
4.6.3 Instrumentation
4.6.4 Telecommunications
4.6.5 Transformers
4.6.6 Substation
4.6.7 HV Cables
4.7
Commissioning
4.8
Main connections
Total Development
5.01
5.02
5.03
5.04
5.05
5.06
Total O
Service & Maintenance
Insurance
Grid Supply
Management &
Consultancy
Land related costs
Other
&M
Typical Value
% of
development
Value
Based on
2100 MW
Installed
In RoUK
£M
0.7%
0.3%
0.6%
0.0%
0.0%
1.0%
0.5%
0.9%
inc
10.1%
100.0%
296
2,940
3
2
3
0
5
3
5
49
490
48%
4%
2%
75
7
3
18%
12%
17%
100%
Page 98 – Appendix 4: Detailed Sectoral Gap Analysis
21
10
19
Average
£M /
year To
2014
1
31
15
27
Estimated
Historical
Scottish
Take %
Estimated
Potential
Scottish
Take %
Estimated
Gap %
Gap
Value
£M
Based on
2100
MW
Installed
2
1
2
0
3
1
2
5%
15%
10%
34
576
13
1
0
5%
5%
0%
25%
10%
0%
20%
5%
0%
18
1
-
27
5
10%
25%
15%
6
19
27
157
3
4
26
0%
5%
0%
15%
0%
10%
4
29
Table A4-4 Offshore UK
Level
Code
1.0
1.1
1.1.1
1.1.2
1.2
1.2.1
1.2.2
1.2.3
1.3
1.3.1
1.3.2
1.3.3
1.4
1.5
1.6
1.7
2.0
2.1
2.2
2.3
3.0
4.0
4.1
Description
Project Development
Feasibility Study
Grid Power Study
Wind / Site Desktop Study
Mast Installation
Fabricate lattice mast
Anemometers
Install mast offshore
Environmental Studies
Environmental Impact
Assessment
Wildlife / Bird Study
Marine Study
Project Management
Public & Community liason
Outline Design
Site survey
Legal & Financial
Land purchase / agents /
licencing
Insurance
Bank Fees & Interest
Project Management
Design & Construction
Detail design
Typical Value
% of
development
Value
Based on
5700 MW
Installed
In
Offshore
UK £M
Average
£M /
year To
2014
Estimated
Historical
Scottish
Take %
Estimated
Potential
Scottish
Take %
Estimated
Gap %
3.5%
0.3%
0.1%
0.3%
1.0%
0.6%
0.0%
0.4%
1.3%
598
58
10
48
175
96
5
75
217
100
10
2
8
29
16
1
12
36
5%
15%
10%
1.0%
169
28
24
0.2%
0.1%
0.1%
0.1%
0.5%
0.2%
2.9%
32
16
20
16
80
32
494
5
3
3
3
13
5
82
5
2
3
2
12
5
71
0.3%
49
8
7
1.2%
1.4%
0.5%
93.1%
1.0%
198
247
86
15,921
172
33
41
14
2,654
29
28
36
12
2,879
25
Page 99 – Appendix 4: Detailed Sectoral Gap Analysis
5%
5%
3%
5%
15%
15%
18%
15%
10%
10%
16%
10%
Gap
Value
£M
Based on
5700
MW
Installed
86
8
1
7
25
14
1
11
31
Table A4-4 Offshore UK
Level
Code
4.2
4.2.1
4.2.2
4.2.3
4.2.4
4.2.5
4.2.6
Description
Turbine
Tower structure
Rolled steel cans
Flanges - forged
Paint
Access platforms
Ladders
Galvanised brackets
Bolts
Power cables
Control cables
Lighting
Safety, Loss Prevention
Blades
Nacelle Cover
Hub Assembly
Bearings
Nose cone
Castings
Hydraulics
Yaw assembly
Yaw ring - forged
Electric motors
Bearings
Sensor system
Pitch control
Typical Value
% of
development
Value
Based on
5700 MW
Installed
In
Offshore
UK £M
Average
£M /
year To
2014
Estimated
Historical
Scottish
Take %
Estimated
Potential
Scottish
Take %
Estimated
Gap %
40.5%
7.1%
3.3%
1.4%
0.8%
0.3%
0.2%
0.1%
0.3%
0.3%
0.2%
0.1%
0.1%
8.1%
1.6%
1.2%
0.0%
0.0%
0.0%
0.0%
3.3%
0.0%
0.0%
0.0%
0.0%
3.0%
6,926
1,212
558
240
141
43
36
24
48
48
36
24
12
1,387
269
202
573
505
1,154
202
93
40
24
7
6
4
8
8
6
4
2
231
45
34
95
84
2%
10%
21%
25%
19%
15%
0%
0%
0%
20%
20%
20%
20%
20%
20%
1,430
288
132
57
34
10
9
6
12
12
9
6
3
277
54
40
0%
20%
20%
115
0%
20%
20%
101
Page 100 – Appendix 4: Detailed Sectoral Gap Analysis
Gap
Value
£M
Based on
5700
MW
Installed
Table A4-4 Offshore UK
Level
Code
4.2.7
4.2.8
4.2.9
4.2.10
4.2.11
4.2.12
4.2.13
4.2.14
4.3
4.4
4.4.1
4.4.2
4.4.3
Description
Hydraulics
Sensor system
Control system
SCADA
Switchgear, MCC, PLC
Condition monitoring system
Telecommunications
Anemometers
Main shaft
Gearboxes
Generators
Cooling system - water or
air
Bed plate
Other
Brackets
Bolts
Cables
Lubrication
Assembly time
Construction Project
Management
Civil Construction &
Foundations
Management costs
Onshore Substation buildings
Turbine foundations
0.0%
0.0%
3.0%
0.0%
0.0%
0.0%
0.0%
0.0%
1.5%
4.6%
3.5%
Value
Based on
5700 MW
Installed
In
Offshore
UK £M
519
258
793
594
0.8%
Typical Value
% of
development
Average
£M /
year To
2014
Estimated
Historical
Scottish
Take %
Estimated
Potential
Scottish
Take %
Estimated
Gap %
Gap
Value
£M
Based on
5700
MW
Installed
87
43
132
99
0%
20%
20%
104
0%
0%
0%
20%
20%
20%
20%
20%
20%
52
159
119
132
22
0%
20%
20%
26
1.2%
0.8%
0.0%
0.0%
0.0%
0.0%
0.8%
202
144
135
34
24
22
0%
0%
20%
20%
20%
20%
40
29
0%
20%
20%
27
1.0%
171
29
5%
20%
15%
33
18.6%
3,186
531
10%
25%
15%
756
1.5%
1.5%
15.7%
254
254
2,678
42
42
446
Page 101 – Appendix 4: Detailed Sectoral Gap Analysis
60
60
636
Table A4-4 Offshore UK
Level
Code
Description
8.0%
1.5%
3.0%
3.2%
16.6%
6.1%
10.5%
9.1%
5.2%
2.1%
1.8%
Value
Based on
5700 MW
Installed
In
Offshore
UK £M
1,368
257
513
541
2,839
1,039
1,801
1,551
884
353
314
Typical Value
% of
development
Average
£M /
year To
2014
Estimated
Potential
Scottish
Take %
Estimated
Gap %
0%
15%
15%
0%
10%
10%
0%
5%
5%
4.5
4.5.1
4.5.2
4.6
4.6.1
4.6.2
4.6.3
Rolled steel
Paint
Access platforms / Ladders
Other fittings
Transportation & Installation
Haulage / Transportation
Erection offshore
MEI Installation
Electrical
Transformers
HV Cables
4.7
Commissioning
0.0%
-
-
4.8
Main onshore connections
6.3%
1,077
180
100.0%
17,100
2,850
33.0%
267
75
1%
10%
9%
26
15.0%
2.0%
121
16
34
5
0%
0%
10%
10%
10%
10%
12
2
20.0%
162
46
2%
10%
8%
16
30.0%
100.0%
243
809
68
228
0%
0%
0%
0%
56
Total Development
5.1
5.2
5.3
5.4
5.5
Total O & M
Service, Maintenance &
Parts
Insurance
Grid Supply
Management &
Consultancy
Vessel & Support Costs
Page 102 – Appendix 4: Detailed Sectoral Gap Analysis
228
43
86
90
473
173
300
258
147
59
52
Estimated
Historical
Scottish
Take %
Gap
Value
£M
Based on
5700
MW
Installed
325
61
122
128
426
156
270
155
88
35
31
54
3,048
Appendix 5: Acknowledgements
Thanks are due to a number of people and organisations for their helpfulness and time in giving us their views and sharing their insights:
Ian Todd
Jim Smith
Jamie Taylor
John Robertson
Dermot Grimson
Neil Duerden
Jennifer Chapman
Ashraf Mabrouk
David Taylor
Ray Hunter
Simon Heyes
Jim Smith
Jamie Corser
James McKenzie
Alison Hunt
Andrew Jamieson
Jason Ormiston
Allan Macaskill
Aberdeen Renewables Energy Group
SSE renewables
Artemis Intelligent Power
Burntisland Fabrications
The Crown Estate
Enspec Power Ltd
I&H Brown
Macom Technologies Limited
Red-Group
RES
Scottish and Southern Energy
Scottish and Southern Energy
RJ McLeod
Scottish Government Energy Consents
Scottish Government Energy Consents
Scottish Power Renewables
Scottish Renewables Forum
SeaEnergy Renewables
Page 103 – Appendix 5: Acknowledgements