The supply chain

The continued expansion of the offshore wind industry offers a significant opportunity for the UK to rebuild its engineering and manufacturing base.

The supply chain for projects has to date been dominated by established overseas suppliers with a relatively small percentage being supplied from within the UK. The much larger scale of the planned Round 3 projects and the engineering and manufacturing challenges this presents is set to change this situation. There will be a much greater need for new supply chain capacity to be based in the UK creating opportunities for both multinational and local companies to become suppliers. The Governments aspiration is for a minimum 50% content to be supplied from the UK.

The growing area of operations and maintenance should not be overlooked as more and more completed projects come on line. The supply chain associated with operational development relies much more heavily on local based business and is a significant opportunity area. This will become increasingly so as projects come out of warranty periods and operators seek to reduce costs.

The following diagram summarises the five key areas where supply chain opportunities exist in the development of an offshore wind farm.

Source: BVG Associates

Typically the supply chain opportunities for each of the above include:

 

Development and consenting

  • Development services (e.g. feasibility, licensing, planning, radar)
  • Environmental surveys
  • Coastal process surveys
  • Met station surveys
  • Sea bed surveys
  • Engineering and design services
  • Human impact studies

Turbine manufacture

  • Nacelles
  • Towers
  • Blades
  • Hubs
  • Bearings
  • Gearboxes
  • Generators

Balance of plant

  • Foundations (steel/concrete)
  • Substations (onshore and offshore).
  • Cables and associated products

Installation and commissioning

  • Ports for load out, construction and project management activities
  • Marine services
  • Specialist installation contractors
  • Offshore engineering and consultancy

Operations and Maintenance

  • Operations and maintenance bases
  • Service vessels
  • Marine services
  • Office and IT services
  • Fabricators and workshops
  • Personnel and training
  • Local goods and services

Decommissioning

  • A significant cost at the end of a wind farm life and likely to have similar supply chain requirements as installation and commissioning

The need for components and services extends far beyond the above list and recent work to categorise the supply chain for a forthcoming Round 3 project found more than 650 categories.

In order to better understand supply chain potential Kent County Council commissioned the University of Chichester to undertake a study of business capability in Kent and Medway. The study identified the presence of businesses in Kent and Medway which could potentially meet 40% of the industry’s supply chain needs. This capability rises to 60% if the search area is extended into neighbouring counties giving rise to the notion of a regional supply chain cluster. Key strengths in Kent and Medway are in operations and maintenance, support services, port and marine activities.

The study further confirms that Kent is uniquely placed to become a key player in the offshore wind industry and could become a key centre for the supply of spare parts as projects move out of warranty periods and operators look to reduce cost. The future market for spares is expected to be a significant growth area and the University indicates the value of this could be £879 million a year by 2020. The full study report and recommendations is available to view – please click here.

Developers of wind farms have demonstrated a willingness to engage and work with local businesses. They recognise there are economic benefits associated with their projects, but equally that doing business locally can reduce their costs. In Kent both the London Array and Vattenfall have run supply chain events and they continue to actively support the Kent Wind Energy initiative.

It is important to recognise that it is not just about supplying projects within your local area. This is a burgeoning new industry in the UK and Northern Europe and a growing market for services and components. Businesses in Kent and Medway are geographically very well placed to take advantage of this growth.

For further reading, the Crown Estate have published a report ‘Offshore Wind: A Supply Chain Health Check’ – please click here to access a copy of the report. The Department for Business Innovation and Skills have published a report 'UK Offshore Wind Supply Chain: Capabilities and Opportunities' - please click here to access a copy of the report.

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