Statements can help supply chain invest in future offshore wind developments
Supply chain statements for Scotland’s offshore wind industry could help maintain development momentum in the face of additional challenges presented by CfD, writes Gavin Mackay of HIE
Scotland’s offshore wind sector has driven a remarkable reduction in costs in a very short space of time.
It is now one of the most cost-effective generation technologies available; cheaper even than conventional technologies such as gas-fired power stations, which have long been the UK price benchmark.
Offshore wind projects that were successful in the UK government’s last Contract for Difference (CfD) round are expected to provide extremely competitively priced, low carbon electricity to the UK consumer.
The CfD has been a tremendous success in driving down the cost of the transition to a net-zero electricity system. The scale of projects and technology innovation alongside a wealth of expertise and strategically located, well-equipped facilities have all created efficiencies, enabling the construction of projects off our coasts.
There has been notable success in both the construction and operation of these projects, which is important.
However, CfD has also made industry development more challenging. The speed at which projects have grown and the ever-present requirement for cost reduction have made it difficult for some elements of the supply chain to respond at the necessary pace, particularly in manufacturing.
There is currently a mismatch between the provision of electricity at the lowest cost to the consumer and creating the right conditions for the supply chain to invest in creating world-class production facilities that meet the needs of industry.
Changes are required and building on the Offshore Wind Sector Deal, Crown Estate Scotland has been first out the gate with its contribution to supporting industry development in Scotland. The ScotWind offshore wind leasing round, aligning with Marine Scotland’s Sectoral Marine Plan (which is currently out for consultation), will make provision for up to 10GW of new projects to be operational by the early 2030s.
We hope the introduction of Crown Estate Scotland’s Supply Chain Development Statements will help to instil further confidence in the Scottish supply chain, prompting companies to invest in the required plant, equipment, people, procedures and infrastructure to continue their journey to becoming the highly productive, competitive, quality suppliers the industry needs.
To be competitive in Scottish waters, the industry demands the most efficient facilities in the world, with high degrees of automation as well as the right infrastructure from which to deliver projects.
There is a long list of potential advantages to the Supply Chain Development Statements, if all parties (project developers, OEMS, supply chain, academia, government and its agencies) view them as a framework and enabler to joined up offshore energy project development.
The statements could drive different relationships with the supply chain, creating better visibility of cumulative opportunity and timelines. The long lead-in will allow time for a meaningful programme of development activity to ensure the supply chain is geared up and ready.
They could also drive efficiency in creating the right infrastructure to meet the needs of the industry and create a framework for co-ordinated offshore development. In time we could see a seamless dovetailing with CfD supply chain plans to create one, smooth development process for all parties.
The ScotWind leasing requirements, which are contractual, lay the foundations for a more collaborative approach across developers, OEMs, top-tier contractors, public agencies and the supply chain to reduce barriers to investment and further develop a highly efficient, cost effective, world-class offshore wind industry in the region.
We look forward to continuing our work with industry and partners to ensure that the Highlands and Islands and DeepWind offering can feature positively in the Supply Chain Development Statements, maximising economic and social benefit to our area while satisfying the demands of industry.
- Gavin MacKay is head of energy industries at Highlands and Islands Enterprise