Sunday, December 22, 2024

Supply chain squeeze threatens to blow UK wind power plan off course

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At the port of Nigg on the Cromarty Firth, a vessel arrives from Hull to deliver 108m-long Siemens Gamesa blades for the 60 turbines forming Ocean Wind’s Moray West offshore wind farm.

The turbines are pre-assembled on the quayside before the Wind Orca, an installation vessel, transports the vast structures 22km offshore into the Moray Firth.

However, a global rush for turbine parts and cabling, as well as delays in plugging into the under-developed national electricity grid, are exacerbating turbulent market conditions that have forced some developers to defer projects.

‘The best we can do is be advocates to show how projects like Moray West deliver for local economy’ — Adam Morrison, Ocean Winds UK Country Manager © Jeremy Sutton-Hibbert/FT

Availability of vessels such as the Wind Orca is another major obstacle, with new markets in the US and Asia willing to pay above the odds to secure these specialised ships for nascent projects.  

The offshore wind industry is not only central to the Labour government’s goal of decarbonising electricity generation by 2030, underpinning the pathway to net zero carbon emissions, it also forms one of Europe’s greatest economic opportunities: a transition to clean energy away from the fossil fuel industry on which northern Scotland has been dependent for decades.

“It’s extremely challenging: a lot of developers aren’t able to get projects over the line at the moment,” said Adam Morrison, Ocean Winds’ UK country manager. “We are dragging Moray West into existence.”

Map showing the operational and planned wind farms in UK waters (data as of Jan 2024). The map shows the operational wind farms and the mooring methods, both fixed and floating platforms.

An arresting image on a marine traffic tracking website encapsulated the race against -time facing the UK offshore wind market, of which Scotland accounts for about two-thirds. “We could see many of the biggest vessels sailing simultaneously to the US,” said Morrison.

“Macro factors are the issue: the challenge — why some projects fail — is wider market conditions,” he added.

Madrid-based Ocean Winds, a joint venture between EDP Renewables and ENGIE, this month celebrated the first export of power from the wind farm off the Caithness coast, in the far north east of Scotland.

It has operations in seven other countries, focusing on Europe and the US, highlighting growing international options for developers.

When complete early next year, Moray West will add 882MW to the UK’s offshore wind target of 50GW by the end of the decade, up from around 15GW now.

But the sector faces several headwinds, and not just the rough seas that frequently make construction too dangerous.

“As blades get larger, smaller vessels carry fewer of them, raising costs,” said Ed Watt, a partner at Addleshaw Goddard, a law firm that works in the sector. “This increases demand further for the latest generation of installation vessels.”

Wind turbine components lay in the Port of Nigg
The turbines are pre-assembled on the quayside before the Wind Orca transports them 22km offshore © Jeremy Sutton-Hibbert/FT

Connecting to the national electricity grid is another pressing issue for wind farm developers, some of which must wait up to 15 years for a connection. “We should be on emergency footing on network build,” he said.

SSEN, the transmission arm of energy giant SSE responsible for the network in northern Scotland, is consulting with communities as it unveils detailed routes of large overhead pylons to transfer power southwards.

But activists are rallying against the planned upgrade, bemoaning the impact of vast metal structures on Scotland’s countryside, tourism and agriculture. They aim to table formal objections to the plans that could trigger public inquiries, thereby delaying the rollout.

Companies such as SSE wanted the maximum statutory time limit for planning decisions to be 12 months to provide certainty for developers and communities, executives said. The industry fears that longer delays could threaten 2030 grid expansion targets.

“I am very worried,” said Morrison. “The best we can do is be advocates to show how projects like Moray West deliver for local economy — that helps build the case that societally we need to build more [electricity] networks.”

Ocean Winds said Moray West, the latest in its 6GW development portfolio of UK offshore wind farms, should inject more than £800mn into the Scottish economy, as well as 70 long-term roles in the operations based in Buckie on the Moray coast.

Around half of the workers on the project have come from the oil and gas industry — a key concern in the north-east, where many reject Labour’s opposition to new exploration licenses.

Sir Keir Starmer’s key offering to Scotland — the state-owned energy company GB Energy that aims to facilitate private investment into clean power — aims to boost employment and eventually reduce bills. It has a budget of £8.3bn over five years to fund community wind farms and the supply chain.

The Ocean Winds Moray West Onshore Substation
Ocean Winds said Moray West should inject more than £800mn into the Scottish economy, © Jeremy Sutton-Hibbert/FT

As international competition in the offshore wind gold rush heats up, the prime minister has said he wants to “win the race”.

Morrison, who also sits on the board of industry body Renewables UK, said the formation of GB Energy, which will be headquartered in Scotland, had been generally welcomed by the private sector.

GB Energy should have a commercial focus, he added, treating “market deficiencies” by driving investment into research, new technologies and securing raw materials critical to transmission, such as steel and copper.

“We should have a more strategic plan for energy,” he said. “And GB Energy can sponsor that.”

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