offshore wind uk

43
A common initiative with Offshore Wind UK Market Study 2011

Upload: others

Post on 26-Dec-2021

8 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Offshore Wind UK

A common initiative with

Offshore Wind UK

Market Study 2011

Page 2: Offshore Wind UK

Preface

Strong Norwegian competence lies within the offshore sector and stems from more than 100 years of maritime

shipping and North Sea oil and gas activities. The fine-tuned capabilities are now transferred to the offshore wind

sector for technology and services conceptualisation. Companies developing the North Sea wind resources could

benefit from the lessons learned in Norway and add complementary expertise in order to achieve their targets.

In order to inform the Norwegian offshore industry participants about the opportunities in the two most important

markets for offshore wind competence, Innovation Norway and INTPOW – Norwegian Renewable Energy Partners

have collaborated to commission two studies - Offshore Wind Germany and Offshore Wind UK, both inspired by

the two Norwegian Offshore Wind Clusters Arena NOWand Windcluster Mid-Norway.

In order to promote the Norwegian offshore wind capabilities, Norwegian Renewable Energy Partners – INTPOW

and Innovation Norway have also commissioned a market Study and mapping of the emerging Norwegian offshore

wind supply chain.

Innovation Norway

Innovation Norway promotes nationwide industrial development profitable to both the business economy and

Norway‟s national economy, helps to release the potential of different districts and regions by contributing towards

innovation, internationalisation and promotion.

Norwegian Renewable Energy Partners - INTPOW

INTPOW promotes the Norwegian renewable energy industries internationally and facilitates partnerships between

Norwegian and international industry participants, including in offshore wind. It is a non-profit joint venture

between the Norwegian renewable industry and the Norwegian Government.

BVG Associates

Page 3: Offshore Wind UK

Contents iii

Contents

Contents .............................................................................................................................................. iii

List of figures ....................................................................................................................................... iv

List of tables ......................................................................................................................................... iv

Executive summary ............................................................................................................................... 1

Introduction ......................................................................................................................................... 2

1. Market conditions........................................................................................................................ 3

1.1. Political targets ........................................................................................................................... 3

1.2. Installation forecast .................................................................................................................... 3

1.3. Offshore turbines and balance of plant demand .............................................................................. 6

1.4. Installation services demand ........................................................................................................ 8

1.5. Funding ..................................................................................................................................... 9

1.6. Permitting frameworks .............................................................................................................. 10

1.7. Test and demonstration facilities ................................................................................................. 11

1.8. Contracting standards ............................................................................................................... 11

1.9. Market barriers ......................................................................................................................... 12

2. Market structure ....................................................................................................................... 14

2.1. Stakeholder organisations .......................................................................................................... 14

2.2. Offshore wind farm developers and owners .................................................................................. 17

2.3. Offshore transmission owners ..................................................................................................... 18

2.4. Supply chain ............................................................................................................................ 19

2.5. Industry alliances and consolidation ............................................................................................ 24

2.6. Projects and supply chain structure ............................................................................................. 26

2.7. Project details .......................................................................................................................... 29

Endnotes............................................................................................................................................ 37

Page 4: Offshore Wind UK

iv List of figures and tables

List of figures

Figure 1 Forecast annual and cumulative UK offshore installation to 2020. ....................................................... 4

Figure 2 Indicative outlook for UK offshore installation to 2050. ...................................................................... 4

Figure 3 Geographic spread of UK offshore wind farms to 2020. ...................................................................... 5

Figure 4 Forecast UK turbine demand to 2020. ............................................................................................. 6

Figure 5 Forecast UK turbine foundation demand to 2020. ............................................................................. 6

Figure 6 Forecast UK subsea export cable demand to 2020. ........................................................................... 7

Figure 7 Forecast UK subsea array cable demand to 2020. ............................................................................. 7

Figure 8 Forecast UK substation HVAC transformer and HVDC convertor demand to 2020. ................................. 7

Figure 9 Forecast UK turbine and foundation installation vessel demand to 2020. .............................................. 8

Figure 10 Forecast UK subsea cable installation vessel demand to 2020. .......................................................... 8

Figure 11 Potential UK east coast manufacturing cluster locations. .................................................................. 9

Figure 12 Developer share of UK operating offshore wind farms (MW). .......................................................... 17

Figure 13 Developer share of UK offshore wind farms under construction (MW). ............................................. 17

Figure 14 Developer share of UK offshore wind farms in planning (MW). ........................................................ 17

Figure 15 Suppliers of wind turbines to the UK offshore wind market from 2003 to 2011. ................................ 19

Figure 16 Suppliers of turbine foundations to the UK offshore wind market from 2003 to 2011. ........................ 20

Figure 17 Installers of turbines in the UK offshore wind market from 2003 to 2011. ........................................ 20

Figure 18 Installers of foundations in the UK offshore wind market from 2003 to 2011. ................................... 21

Figure 19 Suppliers of export cable to the UK offshore wind market from 2003 to 2011. .................................. 21

Figure 20 Suppliers of array cable to the UK offshore wind market from 2003 to 2011. .................................... 22

Figure 21 Installers of export cable in the UK offshore wind market from 2003 to 2011. .................................. 22

Figure 22 Installers of array cable to the UK offshore wind market from 2003 to 2011. .................................... 23

Figure 23 Suppliers of substation electrical systems to the UK offshore wind market from 2003 to 2011. ........... 23

Figure 24 Breakdown of CAPEX costs for UK offshore wind farms in 2010. ...................................................... 26

Figure 25 EPC supply chain structure. ........................................................................................................ 27

Figure 26 Multi-contract supply chain structure. .......................................................................................... 28

Figure 27 UK offshore wind farm development sites (The Crown Estate, supplied April 2011). .......................... 30

List of tables Table 1 Abbreviations used. ...................................................................................................................... 29

Table 2 UK project description. ................................................................................................................. 31

Page 5: Offshore Wind UK

Executive summary 1

Executive summary

General conditions

As part of its efforts to meet targets under the EU‟s

Climate and Energy package, the UK Government

expects that about 30 per cent of its electricity will

need to be generated from renewable sources by

2020. In the longer term, the UK has also

committed to reducing its greenhouse gas

emissions to 80 per cent below 1990 levels by

2050.

Offshore wind is expected to play a fundamental

role in this shift in energy generation. A total UK

pipeline of more than 50GW of offshore wind

capacity has already been established, along with

structured frameworks for delivery and it is

expected that 20-25GW of offshore wind capacity

will be installed by 2020. This rapid rate of

installation is expected to offer significant

opportunities to the supply chain, with a particular

focus on industrial development in the UK. Such

growth is dependent on some key market barriers

being addressed.

Market mechanism. Current reforms to the UK‟s

renewable market incentive mechanism must

provide the same or improved level of support, as

the economic case for offshore wind farm

development currently is marginal. Changes need

to be introduced in such as way that uncertainty

causes minimal delay.

Planning reform. The Government has introduced

reforms via the Localism Bill that will see the

Infrastructure Planning Commission replaced. Any

changes that are introduced should avoid adding

further delays into the development and consenting

process.

Supply chain investment. Investment in the

offshore wind supply chain is expected to amount

to billions of pounds and the UK‟s pipeline of

offshore wind projects has attracted a number of

the major Tier 1 suppliers to the point of

committing to locate facilities in the UK.

In parallel with this, the supply chain to these

players needs to develop at all levels and especially

at coastal locations. Early signs of this development

are now quite visible but UK suppliers, often seen

by the wind industry as risk averse, will face tough

competition from overseas players who in many

cases have a long track record of delivery to the

wind industry.

It should be noted that, while the UK Government

and other public stakeholder bodies are actively

encouraging interest from overseas companies in

the UK offshore wind market, the intention is to

increase collaboration, joint ventures and UK-

focused inward investment rather than the import

of more goods and services.

Projects

The geographic spread of UK offshore wind activity

up to 2020 is mainly focused on the North Sea with

almost 60 per cent of developments to be installed

off the east coast of the UK.

Approximately 20 per cent of capacity will be

installed in Scottish waters, predominantly in the

east, up to 2020 but, in the longer term, the

development of floating foundations and improved

grid capacity may well allow offshore wind farms to

be developed in areas of deep water and higher

winds close to the Scottish west coast.

The remaining capacity will be installed off the west

and south coasts of England and Wales.

As the decade progresses, projects will be installed

on higher wind sites in deeper waters further from

shore and with larger turbines, creating new

challenges throughout the project lifecycle for wind

farm developers and supply chain.

Due to the increasing size of turbine components,

new manufacturing capacity is expected to be built

near large deepwater port facilities. The focus of

the UK offshore wind market on the North Sea

means that it is expected that clusters of

development will be located on the major estuaries

of the east coast of England and Scotland.

Experience and innovation for the future

The UK‟s pipeline of projects has established a

favourable foundation for future offshore wind

development and the UK now holds significant

experience from developing and installing what will

be heading towards 3GW of offshore wind plants by

the end of this year.

Significant work is underway by the UK

Government and other stakeholder bodies to

Page 6: Offshore Wind UK

2 Introduction

encourage innovation and support the development

of world class research and development facilities.

While the UK supply chain is still comparatively

young, recent years have seen a rapidly rising level

of activity as new manufacturing capacity is

planned and new and dynamic industry alliances

and consortia are formed.

Introduction

The UK currently has the largest pipeline of offshore

wind projects in the world with approximately

50GW of capacity installed, under construction or in

planning. Massive investment will be required by

the supply chain in order to meet the demand that

this will create for turbines, foundations, cables,

electrical systems and installation and O&M

services.

Offshore Wind UK: Market Study 2011 is a report

prepared by BVG Associates for Innovation Norway

and INTPOW to inform potential Norwegian

suppliers about the opportunities and challenges

the UK market presents.

The report introduces the main public and private

stakeholders in offshore wind in the UK and

explains today‟s key market barriers that project

developers face, including the challenges of

sourcing funding and meeting planning

requirements.

It also explores the motivations behind the UK

Government‟s support for offshore wind and its

strong focus on securing UK-based activity and

creating domestic jobs.

Our installation forecast through to 2050 is included

as well as detailed demand breakdowns for key

components and services. These look at both

companies who have already supplied to existing

projects and the expected demand over the next 10

years.

Significant investment decisions are already being

made to locate major offshore wind production

centres in the UK and new entrants need to move

quickly to identify potential partners and customers

to be in a strong position to supply this rapidly

expanding market.

Page 7: Offshore Wind UK

Market conditions 3

1. Market conditions

1.1. Political targets

Renewable energy generation in the UK is still at

relatively low levels compared with much of the

rest of the European Union (EU) and the country is

still heavily dependent on fossil fuels and nuclear

power generation for most of its energy. Work to

change this situation is underway, driven by

challenging renewable energy targets and concerns

about the energy security of supply.

Under the EU‟s Climate and Energy package, the UK

is committed to sourcing 15 per cent of its energy

from renewable sources by 2020.i The UK‟s target

is based on its economic strength and high level of

renewable energy resources.

This target covers heat and transport energy

consumption as well as electricity. Recognising that

it will be difficult to achieve much renewable growth

in heat and transport by 2020, the Government

expects that about 30 per cent of electricity will

need to be generated from renewable sources if it

is to meet its overall target.

The UK has also passed domestic legislation to

unilaterally reduce its greenhouse gas emissions to

80 per cent below 1990 levels by 2050.ii

In its 2009 Renewable Energy Strategy, the

Government said that it expects a range of

renewable technologies to contribute to the future

energy mix but there will naturally be a focus on

those that are both cost effective and can be

deployed on a large scale.

The UK has some of the best onshore and offshore

wind resources in the world. While onshore wind is

expected to account for a significant share of the

renewable energy capacity up to 2020, the stronger

wind resource and reduced planning restrictions

offshore means that it is anticipated that offshore

wind will play a much larger role beyond 2020.

As well as helping to meet legislative targets,

offshore wind improves the country‟s energy

security of supply by decreasing its reliance on

fluctuating fuel prices. It also reduces the UK‟s need

for imported fuels at a time when political instability

and growing world demand may affect supplies.

The Government also seeks to create a domestic

supply chain to support this new sector that could

generate an estimated 70,000 UK jobs by 2020.iii

The value of these jobs could be further enhanced

as they are likely to be clustered around large

industrial areas that are suffering from high levels

of unemployment.

“Offshore wind not only

provides clean, green, secure

energy, the investment that

comes with it is great for the

UK economy too.”

Chris Huhne, UK Secretary of State

for Energy and Climate Change

1.2. Installation forecast

Offshore wind development rounds

The development of offshore wind in the UK has

been facilitated by The Crown Estate, which has

renewable energy development rights on the UK

continental shelf (see Chapter 2 for more

information). To date, it has run three main rounds

of offshore wind development plus others focusing

specifically on projects off the Scottish coast and

demonstration sites. A further round in Northern

Irish waters was announced in March 2011.

Round 1 was announced in 2000 with an original

capacity of 1.5GW across 17 sites and was planned

as a pilot phase in which the industry could build up

an understanding of the technical challenges of

offshore wind. Round 2 was announced in 2003

with a further 15 sites and a planned capacity of

7.2GW. More recently, extensions totalling a further

1.7GW were awarded to developers for existing or

planned sites from Rounds 1 and 2. In 2008, the

Scottish Territorial Waters round saw a further 10

projects announced in Scottish waters with a total

capacity of 6.4GW.

In January 2010, The Crown Estate announced the

names of the development partners for nine Round

3 zones. This round marked a significant increase in

the scale of development with a combined

generation capacity of more than 32GW bringing

the total UK pipeline of projects to 49GW. This is

expected to grow to more than 50GW with the

anticipated Northern Irish leasing round and new

demonstration sites.

Page 8: Offshore Wind UK

4 Market conditions

While The Crown Estate has indicated that no

announcements will be made before 2014, it is

understood a programme of further leases is likely

to follow at some point.

Installation forecast

These rounds represent a significant pipeline but

planning and financial issues have already resulted

in the cancellation of some projects. Furthermore,

the challenges of coordinating the large number of

approvals and procurement contracts required for a

large offshore wind farm means that delays are also

expected to some projects.

The market forecast in Figure 1 was prepared by

BVG Associates for The Crown Estate in February

2011.iv This forecast is based on our understanding

of the status of individual projects, the commercial

environment in which development and supply

chain communities are working and an

understanding of existing and future renewable

targets.

While this report is focused on the UK market, it

should be noted that most of the companies

involved will also be looking to operate in the wider

EU market and will consider this when making

investment decisions.

We anticipate that by 2020 the UK will have an

installed offshore wind capacity of almost 23GW

compared with around 2GW at the end of 2010.

See Figure 1 for a breakdown of this installation

capacity by development round. By 2030, this will

have risen to nearly 70GW.

Figure 1 Forecast annual and cumulative UK

offshore installation to 2020.

By the middle of the next decade, some of the wind

farms installed in Rounds 1 and 2 will be

approaching the end of their operational life. Rather

than completely decommissioning them, many will

be “repowered” (replaced with new technology). We

anticipate repowering of the first generation of

offshore wind farms to include replacement of

foundations, due to the expected increase in

turbine size, while offshore substations and export

cables may be partly re-used.

This results in a difference between the gross

installed capacity and the net generating capacity

shown in Figure 2 up to 2050. Such a long term

prediction is necessarily indicative and is based on

existing trends and an understanding of the likely

contribution of offshore wind to the EU energy mix.

By 2050, we envisage it is possible that a gross

installed capacity of more than 150GW will have

been installed in UK waters with a net generating

capacity of nearly 90GW.

For some of the supply chain, such as component

suppliers, the gross installed capacity is important,

while the net installed capacity is more relevant to

sectors involved in O&M, for example.

Figure 2 Indicative outlook for UK offshore

installation to 2050.

0

5

10

15

20

25

0

1

2

3

4

5

'11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Cum

ula

tive c

apacity (

GW

)

Annual in

sta

lled capacity (

GW

)

R1 R2 R1/R2+

R3 STW Future Rounds

Cumulative

0

40

80

120

160

200

240

0

1

2

3

4

5

6

'10 '20 '30 '40 '50

Cum

ula

tive c

apacity (

GW

)

Annual in

sta

lled capacity (

GW

)

New build Repowering

Cumulative (gross) Cumulative (net)

Page 9: Offshore Wind UK

Market conditions 5

Figure 3 shows that the geographic spread of the

UK offshore wind activity up to 2020 is mainly

focused on the North Sea with almost 60 per cent

of developments to be installed off the east coast of

England.

We forecast that approximately 20 per cent of

capacity will be installed in Scottish waters up to

2020 but, in the longer term, the development of

floating foundations and improved grid capacity

may well allow offshore wind farms to be developed

in areas of deep water and higher winds close to its

west coast.

The remaining capacity will be installed off the west

and south coasts of England and Wales.

Figure 3 Geographic spread of UK offshore wind

farms to 2020.

East coast West coast South coast Scotland

Page 10: Offshore Wind UK

6 Market conditions

1.3. Offshore turbines and balance

of plant demand

Turbines

Offshore wind turbines installed today typically

have a rated power of between 3MW and 5MW. The

reduced cost of energy associated with larger

turbines means that turbine size will increase in the

future. The annual average rated power of installed

turbines is expected to remain similar to current

levels until 2014 and then increase as larger units

are introduced up to an average of approximately

6MW by 2020.

Figure 4 provides a forecast of UK demand for

offshore wind turbines over the next decade. We

expect that more than 4,000 turbines will be

installed in UK waters by 2020, when it is predicted

that approximately 600 turbines will be installed

each year.

Figure 4 Forecast UK turbine demand to 2020.

Turbine foundations

With the exception of the 2007 Beatrice

demonstrator project and the Ormonde wind farm,

which is currently under construction, every UK

project installed to date has used cylindrical

monopile foundations.

As can be seen in Figure 5, as projects are installed

in deeper water with larger turbines, alternative

foundation designs will be required that can handle

the greater loads and decreased wind loading

frequencies.

Demand is naturally related to turbine demand but

is offset because, as is the case today, foundations

are installed a year before turbines.

By 2020, we expect that monopiles will only

account for about 10 per cent of annual foundation

demand, with the remainder including steel

structures such as jackets, tripiles and tripods.

To avoid the environmental noise impact of driving

piles, suction buckets designs have also been

proposed as well as concrete gravity-based designs

which sit on the seabed. Concrete solutions also

mitigate the risk of more volatile steel prices but

the challenge of large scale production and a UK

market preference for proven steel designs mean

they are not expected to account for more than 10

per cent of foundation demand to 2020.

Figure 5 Forecast UK turbine foundation demand to

2020.

Electrical systems

Future offshore wind farms will also tend to be built

considerably further offshore in the next decade,

which will create greater demand for export cables

to connect them to shore. The high transmission

losses of long distance AC cables means that a

significant portion of export cable demand will be

for high voltage direct current (HVDC) systems.

Between 2011 and 2020, almost 7,000km of

subsea export cable will be required, of which more

than 60 per cent is expected to be HVDC. As shown

in Figure 6, demand is expected to stay low until

the middle of the decade when it will increase

sharply. There is concern within the industry that,

without prompt investment in new manufacturing

capacity, there will be shortages in supply by 2015.

0

1,000

2,000

3,000

4,000

5,000

0

200

400

600

800

1,000

'11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Cum

ula

tive n

um

ber

of

turb

ines

Annual num

ber

of

turb

ines

Number of turbines Cumulative

0

1,000

2,000

3,000

4,000

5,000

0

200

400

600

800

1,000

'11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Cum

ula

tive n

um

ber

of

found

atio

ns

Annual num

ber

of

found

atio

ns

Number of monopiles Number of other foundations

Cumulative monopiles Cumulative other foundations

Page 11: Offshore Wind UK

Market conditions 7

Figure 6 Forecast UK subsea export cable demand to

2020.

There are more manufacturers of medium voltage

subsea array cables used to connect the turbines to

the offshore substations and there are fewer

barriers to new companies entering. As shown in

Figure 7, however, total demand up to 2020 is

expected to be more than 4,000km of cable for the

UK market with a peak annual demand of almost

700km.

Figure 7 Forecast UK subsea array cable demand to

2020.

There will also be significant demand for offshore

and onshore substations and DC converter stations.

As can be seen in Figure 8, up to 20 high voltage

AC transformers and six high voltage DC converters

will be required annually by 2020 for the UK

market. There is currently concern over the supply

of DC converter stations as they are only available

from limited number of suppliers with proprietary

technologies.

The construction of onshore and offshore

substations will also generate considerable demand

for other high voltage electrical equipment such as

reactors and switchgear.

Figure 8 Forecast UK substation HVAC transformer

and HVDC convertor demand to 2020.

0

1,000

2,000

3,000

4,000

5,000

0

250

500

750

1,000

1,250

'11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Cum

ula

tive leng

th (

km

)

Annual le

ng

th (

km

)

Length of HVAC export cable Length of HVDC export cable

Cumulative HVAC export cable Cumulative HVDC export cable

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0

100

200

300

400

500

600

700

'11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Cum

ula

tive leng

th (

km

)

Annual le

ng

th (

km

)

Length of array cable Cumulative

0

20

40

60

80

100

120

140

0

5

10

15

20

25

30

35

'11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Cum

ula

tive n

um

ber o

f tr

ansf

orm

ers

/convert

ers

Annual num

ber

of

transfo

rmers

/co

nvert

ers

Number of HVDC converters Number of HVAC transformers

Cumulative HVDC converters Cumulative HVAC transformers

Page 12: Offshore Wind UK

8 Market conditions

1.4. Installation services demand

Turbine and foundation installation

vessels

The offshore wind industry needs vessels with large

amounts of deck space, high transit speeds and

cranes with hook heights of approximately 100m.

This means that, while construction vessels from

the oil and gas industry have been used in the past,

there are significant advantages in using purpose-

built ships.

Currently, the industry has a relatively small fleet

of specialist vessels but, while there have been

concerns about a lack of investment, there now

appears to be a strong pipeline of turbine and

foundation installation vessels under construction.

As can be seen in Figure 9, by 2020 we estimate

that up to eight turbine installation vessels will be

required to serve the UK market plus a similar

number of foundation installation vessels.

Furthermore, the expected growth in the size of

turbines and foundations and the requirement to

operate further from shore in water depths of up to

50m means the vessels themselves will need to

conform to more demanding specifications.

By the end of the decade, most projects will require

vessels capable of working in water depths of more

than 50m with a crane capacity of more than 750

tonnes.

Figure 9 Forecast UK turbine and foundation

installation vessel demand to 2020.

Cable installation vessels

The UK market is expected to require up to 10

cable installation vessels by 2020, of which at least

two must be suitable for export cable installation.

A key challenge for the offshore wind industry is a

lack of export cable installation vessels with cable

carousels large enough to be able to carry the

length of cable required to connect wind farms

located more than 100km offshore. Combined with

high levels of competition from the interconnector

market, this area of activity is considered a

potential bottleneck for development.

Array cable installation has proved technically

challenging with problems reported on most

projects. Many of these stem from pulling the cable

through the turbine transition piece or damage

during or after laying.

Figure 10 Forecast UK subsea cable installation

vessel demand to 2020.

Ports

To date, the UK has seen a growing level of port

activity but has faced strong competition from the

Continent.

Future construction port facilities are expected to

have a storage area of at least 12 hectares to allow

for the laying out of turbine blades, towers and

turbines in preparation for final delivery. In terms

of quayside, ports will need at least 300m with

access for vessels up to 140m long and 45m wide

with 8m draft. Such a facility is expected to be able

to handle up to 500MW of installation traffic per

year.

0

5

10

15

'11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Annual vessel chart

er

dem

and

Number of turbine installation vessels Number of foundation installation vessels

0

5

10

15

'11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Annual vessel chart

er

dem

and

Number of export cable installation vessels

Number of array cable installation vessels

Page 13: Offshore Wind UK

Market conditions 9

There is also an incentive for developers to use

ports as close to the wind farm site as possible.

This minimises the steaming time for a jack-up,

which reduces weather risk and therefore increases

turbine installation rates.

Discussion with the industry suggests that

developers would prefer construction ports less

than 12 hours steaming time from site (250km at

12 knots) and are unlikely to consider installing

large projects from a port that is more than 24

hours steaming time (500km at 12 knots) from the

wind farm.

It is forecast that the UK market will require up to

seven port facilities equivalent to that described

above. In reality, it is more likely that the majority

of activity will take place through a smaller number

of large clusters able to handle 1GW or more per

year.

Due to the focus of the European offshore wind

market on the North Sea, it is expected that such

clusters would be located on the major estuaries of

the east coast of England and Scotland. See Figure

11 for locations of likely key locations.

Figure 11 Potential UK east coast manufacturing

cluster locations.

1.5. Funding

Project funding

It is estimated that the UK‟s offshore wind

development will require more than £70 billion in

investment by 2020.

To date, most of the UK‟s operating offshore wind

farms have been funded from the balance sheet of

asset owners without recourse to project finance.

This investment has usually been provided by large

power utilities but a number of investors have also

bought shares in projects.

Over the next 10 years, balance sheet funding is

expected to account for around half of the capital

investment required with the partial-sale of

completed wind farms expected to be an important

vehicle for raising capital for new projects.

Although no UK wind farms have been project-

financed yet, the scale of Round 3 means that

banks will almost certainly need to become involved

at an early stage. Interest from the financial

community is expected to grow as new ways of

reducing risks are developed.

As a further means of encouraging investment, the

Government has said it will establish a Green

Investment Bank in 2012 with a £3 billion reserve,

some of which may be used to unlock private

investment by filling potential funding gaps caused

by overstretched utility balance sheets or

underwriting risk to reduce the cost of capital.

Supply chain funding

As well as the investment that is required in

offshore wind farm hardware, significant

investment in new capacity is also required by the

supply chain. This includes funding for the research

and development required to bring products to

market and investment in manufacturing

infrastructure and facilities.

The majority of this cost will be privately funded

but public funding has also been made available.

It is forecast that approximately £2 billion will need

to be invested in UK infrastructure by 2020 to

support the expected levels of activity.

In 2010, the Government advised that it would

provide up to £60 million to support the

- Tyne

- Medway

- Tees

- Forth

- Humber

- Tay

Page 14: Offshore Wind UK

10 Market conditions

development of large scale offshore wind

manufacturing facilities at port sites in England.

A further £70 million was also announced by the

devolved Scottish Government with similar

objectives.

“We are making these

investments so that major

manufacturers will decide

that this is the place they

want to come and build their

offshore wind turbines.”

David Cameron, Prime Minister

On a regional level, support for individual

companies has been delivered through the English

Regional Development Agencies. Although some will

be abolished by the current Government in 2011,

this support is likely to continue in some form

through local economic partnerships (LEPs) which

are being introduced in their place.

Enterprise zones are also expected to be

established in the Tyne and Tees areas to

encourage offshore wind manufacturing activity by

offering business tax relief for up to five years.

1.6. Permitting frameworks

Planning authorities

Since 2010, offshore wind projects with a capacity

of more than 100MW have been subject to the

Infrastructure Planning Commission (IPC) for

consent. The IPC was set up by the previous

Government as an independent body to streamline

the planning process and reduce uncertainty about

timescales for obtaining a decision.

The IPC process is broken down into five stages:

- Pre-application consultation

- Application

- Acceptance of the application by the IPC

- Examination of the application, and

- Decision.

According to the IPC, it should take a year to make

a decision from accepting an application.

The new Government has stated that it intends to

replace the IPC in 2012 with the Major

Infrastructure Planning Unit (MIPU). It is intended

that this will maintain the IPC‟s timescales and

processes but the final decision on whether to grant

consent will be taken by the Secretary of State to

provide democratic accountability.

Consultees

The IPC process has introduced a framework

through which a range of public and private bodies

are consulted on the plans of developers. This

framework has been established to ensure that all

the relevant stakeholder submit their views within

an established timeframe.

Statutory consultees which must be consulted for

offshore wind projects include: the Environment

Agency; Natural England; English Heritage; the

Ministry of Defence; OFCOM (the

telecommunications regulatory body); the Civil

Aviation Authority; the Marine Management

Organisation; and local authorities.

Non-statutory consultees are invited to participate

in the consultation process as well and include local

businesses and residents as well as trade

associations and special interest groups. Examples

relevant for offshore wind include the Chambers of

Commerce, the Chamber of Shipping, the National

Federation of Fishermen‟s Organisations, Trinity

House and the Royal Yachting Association.

An ongoing concern about the planning process is

the possible delays caused by the need for

statutory and non-statutory consultees to feed into

applications in a timely manner. Due to the current

economic climate and government cuts, many of

these bodies have limited resources and may

struggle to handle the rapidly increasing pipeline of

offshore wind projects.

A further challenge for developers is that the IPC

process requires them to have greater certainty

over the cumulative impact of their projects at an

earlier stage than previously demanded. The need

to define the “maximum potential adverse effect” of

a project could limit a developer‟s ability to

optimise the design of offshore wind farm once

consent has been granted because it may need to

definitively establish its turbine and infrastructure

choices and not be able to benefit from subsequent

technology developments.

Page 15: Offshore Wind UK

Market conditions 11

1.7. Test and demonstration

facilities

The UK already has strong research and

development (R&D) capability in a number of

sectors relevant to the offshore wind industry

including aerospace, environmental analysis,

composites and some aspects of drive train

development.

In recent years, increasing levels of R&D activity

focussed specifically on offshore wind has

developed across the country‟s universities,

research and technology organisations and private

companies.

Funding

Offshore wind R&D funding has been made

available in the UK from a number of sources. To

date, funding sources have included the

Department of Energy and Climate Change (DECC)

(£30 million), the Carbon Trust‟s Offshore Wind

Accelerator (£50 million) and the Energy

Technologies Institute (ETI) (£15 million).

University research into offshore wind is generally

funded by the Engineering and Physical Science

Research Council (EPSRC).

Facilities

Doctoral training centres. There are a number of

universities with offshore wind-related centres of

excellence supported by EPSRC. Centres of

relevance to the offshore wind industry include:

Wind Energy Systems (University of Strathclyde);

E-Futures (University of Sheffield); Technology for

Low Carbon Futures (University of Leeds); and the

Advanced Composite Centre for Innovation and

Science (University of Bristol). A renewable energy

doctoral training centre is currently being planned.

Research and technology organisations. There

are a number of relevant open access R&D facilities

in the UK that provide both expertise and facilities

that are relevant to offshore wind. Two notable

examples are TWI, which provides a range of

services including reliability and asset management

and Narec, which houses the UK‟s only open access

full scale blade and drive train test facilities.

Changes in the UK R&D landscape

The UK R&D landscape is currently undergoing

significant changes. In 2010, the UK government

announced a new strategy to maximise the

commercial impact of UK R&D and launched the

Technology Innovation Centres (TICs). These will

be a network of “elite” centres with different

specialities. Each TIC may consist of several

centres, with an overarching management

organisation.

The centres will have open access R&D facilities for

testing and prototyping and will be primarily run by

industry. Six centres have been announced and the

first that will be developed is the High Value

Manufacturing TIC. Others that may be relevant to

the wind industry are the Energy and Resource

Efficiency TIC and the Electronics, Photonics and

Electrical Systems TIC.

The intention is that much of the near to market

R&D in the UK will focus around these TICs with the

university network providing underpinning

research.

1.8. Contracting standards

The process of awarding major contracts in the

offshore wind industry generally utilises a

competitive tendering process in which bidders are

subject to a rigorous evaluation of submissions

against specific weighted criteria.

Standard requirements of purchasing organisations

cover a company‟s health, safety and

environmental performance, experience, local

knowledge and financial standing.

Suppliers will be expected to be aware of, and be

able to comply with, the relevant provisions of:

UK health and safety legislation such as

Construction (Design & Management)

Regulations 2007, Health & Safety at Work

Act 1974 and Management of Health and

Safety at Work Regulations 1999

Appropriate compliance with design

standards and methods of construction such

as relevant marine environment DNV, BS

and IEC codes, and

Page 16: Offshore Wind UK

12 Market conditions

Management systems such as BS EN ISO

9001, 14001 and 18001 for quality,

environmental and health and safety

methodologies respectively.

1.9. Market barriers

The development of the offshore wind rounds by

The Crown Estate means that the UK offshore wind

market currently has the largest defined pipeline of

projects in the world. Market barriers still exist,

however, that could hamper progress.

Market Mechanism. The UK‟s main market

incentive to develop renewable electricity

generation is currently the Renewables Obligation

(RO). This places an obligation on retailers of

electricity to obtain an annually increasing

proportion of their electricity from renewable

sources. Under its planned Electricity Market

Reform, the Government has said it intends to

replace the RO with a feed-in tariff (FIT) which is a

fixed revenue that a wind farm owner receives for

the energy it sells. It is currently consulting on

whether to adopt a “contract for difference” or

“premium” FIT. More information about the existing

and planned market support mechanisms can be

found in DECC‟s electricity market reform

consultation document published in December

2010.v

There have been concerns raised about the impact

that the proposed change could have on the UK‟s

market. Unless the new regime provides the same

or improved level of incentive and risk for

developers, there is risk that projects will not

proceed.

This market reform is being undertaken with the

aim of reducing electricity price risk but the

uncertainty caused by replacing the existing

scheme may also cause delays as developers

postpone making investment decisions until the

impact of the reform is clear.

Planning Reform. As discussed above, the

Government has introduced reforms via the

Localism Bill that will see the IPC replaced.

Planning issues have already had an impact on the

wind industry by causing significant delays for

onshore and offshore projects. The uncertainty

caused by the planning system has been blamed for

restricting the UK‟s onshore wind market both in

terms of the difficulty of obtaining permission for

projects themselves, and for the necessary

associated reinforcement of the electricity

transmission network.

A key justification for forming the IPC was to

ensure that the major projects required to meet the

UK‟s renewable targets were not unreasonably

delayed.

While the Government has confirmed that the

replacement for the IPC will maintain the same

timescales, any changes that introduce further

delay into the consenting processes are expected to

discourage investment.

Supply chain investment. As discussed above,

the investment required for the development and

construction of the UK‟s offshore wind farms is

considerable. Investment in the supply chain is

comparatively smaller but is still expected to

amount to billions of pounds and is required to

achieve the cost improvements that will be required

to sustain long term activity.

The UK‟s pipeline of offshore wind projects has

attracted a number of the major Tier 1 suppliers to

a point of committing to locate facilities in the UK.

To support this development, investment will be

required by the UK supply chain.

UK companies have often been seen by the wind

industry as risk averse to investing in new facilities.

One reason for this is a lack of confidence in the

long term nature of the market due to the relative

lack of UK onshore activity compared with the

Continent, where there have been long periods of

year on year growth.

There are a number of reasons why it is in the

interest of both the offshore wind industry and the

UK government to support supply chain

development:

Growing a focussed supply chain for large

components in and around the ports closest

to offshore wind farms offers significant

logistics savings.

There is a large amount of relevant

experience available from North Sea

operators in the UK‟s oil and gas sector.

Page 17: Offshore Wind UK

Market conditions 13

As revenue from developers‟ UK wind farms

will be in pounds, the fact that they can buy

goods and services in the same currency

means they can protect themselves from

exchange rate fluctuations.

The industry is expected to generate

significant levels of employment and tax

revenue.

As well as serving the UK market,

companies setting up facilities will also have

significant export opportunities.

Supply chain events run by The Crown Estate

have sought to educate companies about the

opportunities offered by the industry as well as

introducing suppliers to potential customers.

It should be noted that, while stakeholders are

actively encouraging interest from overseas

companies in the UK offshore wind market, the

intention is to increase UK-focused inward

investment rather than importing more goods

and services. Indeed, the UK is unlikely to be

satisfied with continued high levels of overseas

content in domestic projects.

Page 18: Offshore Wind UK

14 Market structure

2. Market structure

An increasing number of companies from a range of

sectors are already involved in the UK‟s offshore

wind market, ranging from multinational

conglomerates to small component manufacturers.

Behind the scenes, various Government and non-

governmental organisations are also working to

develop the structure and frameworks that will

support the industry.

This section identifies the key stakeholder

organisations and industrial players and provides a

summary of the current market structure in each of

the main sectors.

2.1. Stakeholder organisations

The Crown Estate

The Crown Estate is a private organisation that

administers a large property and land estate and

pays its profits to the Treasury. Its portfolio covers

urban property, the Windsor Estate, large rural

holdings and its Marine Estate.

The Marine Estate covers most of the seabed out to

the UK‟s 12 nautical mile territorial limit and

includes the rights to explore and utilise the natural

resources of the UK continental shelf (not including

oil, gas and coal). The Energy Act 2004 also gives

The Crown Estate the right to license the

generation of renewable energy within the

Renewable Energy Zone out to 200 nautical miles.

As discussed in Chapter 1, The Crown Estate has

sought to exploit these offshore wind assets

through a series of leasing rounds with a potential

total capacity of more than 50GW. Revenue is

generated by The Crown Estate by charging

developers a seabed lease that is based on the

amount of revenue generated by the offshore wind

farms.

To assist with the rapid development of Round 3,

The Crown Estate is co-investing with developers

up to half of the cost of obtaining planning

consents. It also seeks to address issues common

to all projects such as seabed archaeology and

works with key stakeholders such as the fishing

industry, the oil and gas industries and wildlife

groups.

The UK Government

Department of Energy and Climate Change.

Until 2008, mitigating the impact of climate change

had been the responsibility of the Department for

Environment, Food and Rural Affairs (DEFRA) while

energy policy was owned by the Department for

Business, Enterprise and Regulatory Reform

(BERR). The need to ensure these two policy areas

were aligned meant that in 2008 these two

functions were merged to form DECC.

The remit for DECC extends to Scotland, Wales and

Northern Ireland but not to the Isle of Man and the

Channel Islands. Its main policy direction under the

previous Labour Government was set out in the

2009 Renewable Energy Strategy which describes

how the UK intends to meet its binding EU

renewable energy target described in Chapter 1.vi

The current coalition Government has largely

adopted these ambitions in its 2010 UK Renewable

Energy Action Plan.vii

DECC has sought to stimulate UK offshore wind

supply chain activity and draw inward investment to

the UK through grants to both wind turbine

manufacturers and suppliers. DECC also sets the

policy on market support mechanisms and is the

host department for the Office of the Gas and

Electricity Markets (Ofgem) (see below).

Department for Business, Innovation and

Skills. BIS is responsible for business support and

regulation as well as research and higher and

further education. Its jurisdiction is mostly

restricted to England although its research funding

covers the whole of the UK, as does its promotion

of overseas trade.

BIS sets the UK‟s low carbon economy policy, in

close dialogue with DECC. It is overseeing the

allocation of the £60 million fund for offshore wind

port infrastructure announced in the Government‟s

2010 Spending Review.

BIS delivers most of its impact through associated

public bodies. It is the host department for UK

Trade and Investment (UKTI) which promotes

overseas trade and inward investment through the

UK‟s worldwide network of embassies and

consulates. BIS also oversees regional economic

Page 19: Offshore Wind UK

Market structure 15

development and inward investment which is

mostly delivered through the Regional Development

Agencies (RDAs) and the devolved administrations

(see below).

The RDAs have also delivered business support

programmes and a number have treated offshore

wind as a major strategic priority. As such, they

have been important players in educating

companies about the opportunities offered by

offshore wind and providing support to businesses.

The Coalition Government is abolishing the English

RDAs in 2011 but it is anticipated that BIS will

continue to provide business support funding

through a network of „local enterprise partnerships‟

(LEPs) that will replace some the functions of RDAs.

Devolved government

Northern Ireland, Scotland and Wales have elected

administrations with devolved powers from central

government. The power of each body is defined by

a separate piece of legislation and the scope of

their responsibilities varies. Energy policy has

typically been retained by central government while

economic development and planning has been

devolved. In practice, the separation of energy

policy is not clear cut as the Scottish Government

has been able to stop new nuclear power stations

being built despite the decision nominally falling to

central government.

The Scottish and Northern Ireland governments

have also set up public bodies, including Scottish

Development International and Invest Northern

Ireland, to supplement the work of UKTI.

Regulators and consenting bodies

Infrastructure Planning Commission. The IPC

was established in 2009 to streamline the planning

system for nationally significant infrastructure

projects and overcome the lengthy planning

process that has affected a number of high profile

projects.

In England, it examines applications from the

energy, transport, waste water and waste sectors

while, in Wales, it examines applications for energy

and harbour developments. The current coalition

Government has stated that it will abolish the IPC,

leaving the final decision with the Secretary of

State. The process will be retained within a Major

Infrastructure Unit in the Department for

Communities and Local Government.

Office of the Gas and Electricity Markets.

Ofgem regulates the energy market across

England, Scotland and Wales. Its primary role is to

protect electricity and gas consumers by

maintaining healthy competition between providers

but it is also required to take account of the

environmental impact of the energy generated.

Ofgem administers the RO but it does not set the

level of support which is the responsibility of its

parent department, DECC.

Ofgem‟s role incorporates the regulation of the

offshore transmission network. So far, offshore

wind farm developers have built and owned the grid

connection but EU law means that the generating

assets and transmission network must now be

under separate ownership. Ofgem is currently

overseeing the transition of existing grid connection

assets to independent offshore transmission

operators (OFTOs) to comply with this requirement.

Ofgem had initially proposed that future grid

connections would be built by the OFTOs but this

raised concerns among developers that the

connection may not be ready in time. It is now

more likely that developers will build the connection

but then transfer the asset to an OFTO once the

project is completed.

Electricity transmission

The UK onshore high voltage transmission grid is

operated by National Grid in England and Wales,

Scottish Power and Scottish and Southern Energy

(SSE) in Scotland and Northern Ireland Electricity in

Northern Ireland. National Grid transmission is

typically at 275kV or higher while the Scottish and

Northern Irish grids are at 132kV and 33kV

respectively.

National Grid is also the National Electricity

Transmission System Operator (NETSO) for

England, Scotland and Wales, so is responsible for

overseeing and managing the flow of electricity

across the whole of the transmission network. This

includes the elements owned and operated by

Scottish Power and Scottish and Southern Energy.

Connections for new generators such as offshore

wind farms are also co-ordinated by National Grid.

Page 20: Offshore Wind UK

16 Market structure

Acting in its role as NETSO, National Grid publishes

an annual Offshore Development Information

Statement, which aims to help the development of

a coordinated and economical offshore electricity

transmission system.viii

Scottish Power, SSE and National Grid all also have

interests in the development of offshore wind

projects beyond their transmission remits.

As power generators, Scottish Power and SSE both

have significant portfolios of developments while

National Grid has been awarded preferred bidder

status by Ofgem to become an offshore

transmission operator (OFTO).

Trade bodies

RenewableUK. RenewableUK, formerly the British

Wind Energy Association, is the primary trade body

for the offshore wind industry. Its membership

extends to companies involved in wave and tidal

energy and onshore wind but its activities do not

currently include other forms of renewable energy

generation. Key activities include national

conferences, political lobbying, and policy

development on issues such as skills, and health

and safety.

Renewable Energy Association. REA is a more

broadly based trade association than RenewableUK,

with membership covering solar and biofuels as well

as wind and wave and tidal. While there is some

overlap with RenewableUK‟s membership, the REA

is generally not seen to represent the UK offshore

wind sector.

NOF Energy. NOF energy is a membership-based

business development organisation. Its focus has

traditionally been on oil and gas but it has

recognised the synergies that could be achieved

with offshore wind and has extended its activities

accordingly. These include networking and events,

international business support, industry intelligence

and consultancy services.

Page 21: Offshore Wind UK

Market structure 17

2.2. Offshore wind farm

developers and owners

The scale of investment required in offshore wind

means that many developers of UK projects are

large companies with interests in a number of

European countries. They fall into three categories:

Large energy companies such as Centrica,

SSE, RWE and Statoil

Financial backers, such as Masdar, Siemens

Project Ventures and Stadtwerke München,

and

Independent developers, such as Warwick

Energy and Mainstream Renewable Power.

Most projects are likely to change hands at least

partially either before or after construction. In

many cases the new owners have existing offshore

wind assets and their acquisitions enable them to

broaden their portfolio of assets.

Developer share of operating projects and those

under construction or in development are shown in

the figures below. As of March 2011, about 45GW is

in development, 1.7GW under construction and

1.3GW operating.

Figure 12 Developer share of UK operating offshore

wind farms (MW).

Figure 13 Developer share of UK offshore wind

farms under construction (MW).

Figure 14 Developer share of UK offshore wind

farms in planning (MW).

Vattenfall,

390

DONG

Energy, 308

E.ON Climate

&

Renewables,

244

RWE npower

renewables,

150

Centrica

Energy, 142

Other, 107

DONG

Energy, 520

SSE

Renewables,

298

RWE npower

renewables,

252E.ON Climate

&

Renewables,

189

Statkraft,

158

Statoil, 158

Vattenfall,

150

Centrica

Energy, 135

Masdar,

126

Siemens

Project

Ventures, 68

SSE

Renewables,

5628

RWE npower

renewables,

5548

Centrica

Energy, 5340

Scottish

Power

Renewables,

5267Vattenfall,

3737Mainstream

Renewable

Power, 2360

Statkraft,

2250

Statoil, 2250

Siemens

Project

Ventures,

2058

DONG

Energy, 1994

Fluor, 1700

SeaEnergy

Renewables,

1460

E.ON Climate

&

Renewables,

1310

Other, 3201

Page 22: Offshore Wind UK

18 Market structure

2.3. Offshore transmission owners

In order to comply with European legislation, the

UK has introduced a system that separates the

ownership of the generating assets from the

ownership of the offshore grid connection. Offshore

wind farms that do not have an offshore substation

are excluded from the process.

Only companies identified through a tendering

process run by Ofgem in 2010 are qualified to act

as OFTOs. These are:

Balfour Beatty Capital

DONG Energy Sales and Distribution

(subsequently withdrew)

Green Energy Transmission (a consortium of

Equitix and AMP Capital Investors)

Macquarie Capital Group (a consortium

including Macquarie Capital Group, Barclays

Private Equity and NIBC Infrastructure

Partners)

National Grid Offshore, and

Transmission Capital Partners (a consortium of

Transmission Capital International Public

Partnerships and Amber Infrastructure Group).

The tendering process for maintaining each

connection to offshore wind farms that are

operating or under construction is currently

underway. The first contract was awarded in early

2011 to Transmission Capital Partners for the Robin

Rigg wind farm.

It is anticipated that further awards for Gunfleet

Sands, Sheringham Shoal, Thanet, Walney and

Ormonde will be made during 2011 while the

tender for the Greater Gabbard project is to be re-

run. The tendering processes for the London Array

and Lincs projects, which began offshore

construction in 2011, have not started.

An OFTO is paid a fixed fee based on its bid for the

transmission line by National Grid, which recovers

the cost through transmission charges paid by the

generator.

Page 23: Offshore Wind UK

Market structure 19

2.4. Supply chain

This section outlines the supply of key components

and services to UK projects between 2003 and

2011. Construction of a wind farm usually runs over

several years and generation by some turbines

often begins before a wind farm is completed. Here,

projects have been assigned to calendar years as

presented in data published by the European Wind

Energy Association.ix

Data has been included for the Walney 1, Ormonde,

Sheringham Shoal and Greater Gabbard projects on

the assumption that they will be completed by the

end of 2011.

Wind turbines

The UK offshore wind turbine market to date has

been dominated by Vestas and Siemens who have

supplied all completed projects apart from two

turbines by REpower on the Beatrice demonstrator

project and the Ormonde wind farm which is

currently under construction. See Figure 15 for a

breakdown of turbine supply to the UK market by

company since 2003. The dominance of Siemens

and Vestas is unlikely to change significantly in the

short term as they are already earmarked or

contracted for many of the projects planned up to

the start of Round 3.

This lack of competition in the market has been a

challenge for the industry but REpower are

expected to gradually increase their market share

and Areva and Bard are now establishing a track

record on the Continent.

Looking beyond 2015, about 30 companies are

known to have offshore turbine designs at various

stages of development with the majority targeting

the European market. The fact that future offshore

projects are unlikely to be smaller than 300MW,

however, will limit the ability of players to capture

small market shares and this means that the

European offshore wind industry is unlikely to

support more than ten wind turbine suppliers.

Figure 15 Suppliers of wind turbines to the UK

offshore wind market from 2003 to 2011.

Turbine foundations

With the exception of the Beatrice demonstrator

project and the Ormonde wind farm currently in

construction, all completed UK projects have used

monopile foundations and the large majority of

these have been supplied by the Belgian joint

venture between SIF and Smulders.

The Scottish-based companies Cambrian

Engineering and Isleburn jointly delivered the

foundations for Scroby Sands in 2003 but have not

delivered any since. More recently, a consortium of

Erndtebrücker Eisenwerk (EEW) and Bladt

Industries were contracted to build the foundations

for the Walney 1 project and they also won the

contract for the 175 foundations for the first phase

of London Array. The monopiles for the Greater

Gabbard wind farm were produced by Chinese

manufacturer Shanghai Zhenhua Heavy Industry

(formerly ZPMC).

In the UK, north east-based company Tees Alliance

Group (TAG) has invested approximately £20

million in a production facility which is expected to

start operations in 2011 and other players have

signalled intent to enter the market.

0

200

400

600

800

1,000

1,200

1,400

03 04 05 06 07 08 09 10 11

REpower Siemens Vestas

An

nu

alin

stal

led

cap

acit

y (M

W)

Page 24: Offshore Wind UK

20 Market structure

The Beatrice demonstrator project used jacket

foundations that were manufactured by Burntisland

Fabrications (BiFab) which has also supplied the

jacket foundations used on the Ormonde and

German Alpha Ventus projects. See Figure 16 for a

breakdown of foundation supply to the UK market

by company since 2003.

Figure 16 Suppliers of turbine foundations to the UK

offshore wind market from 2003 to 2011.

Turbine installation

The leading turbine installation companies to date

have been A2SEA and MPI Offshore. While a

number of other companies have been active, few

have built up an extensive track record.

Deriving market shares is problematic since in

many projects, more than one supplier has been

used. This has been done to accelerate installation

or because project schedules have slipped and

vessels have needed to be mobilised for other

projects. In Figure 17, the challenge of establishing

the contribution of different suppliers in delivering a

given project has been addressed by dividing the

installed capacity equally between those players

active on the project.

There are also differences in the way vessels are

contracted. The vessel operator may be contracted

directly by the wind farm developer or via a third

party. Figure 17 shows the share of the charter

market rather than the share of installation

contracts. For 2011, we assume that the vessels

earmarked for use will complete each project.

Many of the vessels have been used in other

sectors such as oil and gas and been modified to

suit offshore wind. In future, it is expected that

turbine installation will largely be undertaken by

specialist wind farm installation vessels. There are

about 15 installation vessels currently in

construction. In a number of cases, these have

been commissioned by new players to the

installation market, for example, Master Marine,

Beluga Hochtief and Swire Blue Ocean.

Figure 17 Installers of turbines in the UK offshore

wind market from 2003 to 2011.

Foundation installation

Many of the issues seen in the turbine installation

market also apply to the foundation installation

market. A further complication is that foundation

installation may require more than one vessel and

often from different suppliers. In Figure 18, we

consider the main installation vessel used.

A2SEA and MPI Offshore have had a significant

share of the market. They are joined by several

operators of heavy lift vessels, notably Ballast

Nedam, and its heavy lift crane Svanen, and

Scaldis, and their sheer leg crane Rambiz. Such

vessels have also been used for offshore substation

installation.

0

200

400

600

800

1,000

1,200

1,400

03 04 05 06 07 08 09 10 11

BiFab Camcal/Isleburn

Erndtebrücker Eisenwerk/Bladt SIF/Smulders

Shanghai Zhenhua Heavy Industry

An

nu

alin

stal

led

cap

acit

y (M

W)

0

200

400

600

800

1000

1200

1400

03 04 05 06 07 08 09 10 11

A2SEA Gulf Marine KS Energy MPI Offshore

Seacore Seajacks Scaldis SMIT

Annual

inst

alle

d c

apac

ity

(MW

)

Page 25: Offshore Wind UK

Market structure 21

Figure 18 Installers of foundations in the UK

offshore wind market from 2003 to 2011.

Subsea export cable

Apart from a few early projects that were close to

shore, most UK offshore wind farm projects have

incorporated offshore substations. The primary

function of the offshore substation is to step up the

medium voltage of electricity generated by the

turbines (typically 33kV) to high voltage (typically

132kV) in order to minimise transmission losses.

The substation also includes protective switches

(circuit breakers) to allow faults in array cables

from the turbines to be isolated. There is a trend

towards fitting two or more transformers and

related switchgear which allows the wind farm to

continue to operate, albeit at reduced capacity, in

the event of a fault in one of the two independent

export cables from the offshore to onshore

substation. All projects in the UK to date have used

AC transmission systems. DC transmission systems

for wind farm export will be employed when the

distance to the onshore connection point exceeds

about 100 kilometres.

The availability of high voltage AC export cable is a

significant concern for the industry because of the

restricted number of companies able to supply the

market. Currently only Prysmian and Nexans have

a track record in supplying high voltage export

cable to UK projects. ABB has supplied projects

elsewhere in Europe and nkt cables and General

Cable have recently entered the high voltage

subsea cable market. The UK-based supplier JDR

Cables Systems is also establishing capability to

enter the high voltage subsea cable market.

The issue of cable supply is of equal concern for

projects requiring HVDC cable. HVDC cable suffers

lower transmission losses and projects more than

approximately 80km from shore are likely to use

DC systems. HVDC cables will not be required for

UK projects before 2015 but investment will need

to be in the near term due to the long lead times

for the testing and certification for new cable

products and manufacturing lines.

Early wind farms that do not have substations have

a medium voltage grid connection. The market

shares shown in Figure 19 only include projects

using high voltage export cable.

Figure 19 Suppliers of export cable to the UK

offshore wind market from 2003 to 2011.

Subsea array cables

There are more manufacturers producing 32kV

array cables used to collect power from the turbines

than export cable. So far, seven companies have

supplied UK projects and, while AEI Cables no

longer manufactures 32kV subsea cable, there are

a number of potential new entrants to the UK

market, including LS Cable and General

Cable/NSW.

0

200

400

600

800

1000

1200

1400

03 04 05 06 07 08 09 10 11

A2SEA Ballast Nedam

MPI Offshore Scaldis

Seaway Heavy Lifting SMIT

Annual

inst

alle

d c

apac

ity

(MW

)

0

200

400

600

800

1,000

1,200

1,400

03 04 05 06 07 08 09 10 11

Nexans Prysmian

An

nu

alin

sta

lled

cap

acit

y (M

W)

Page 26: Offshore Wind UK

22 Market structure

Figure 20 Suppliers of array cable to the UK offshore

wind market from 2003 to 2011.

Subsea cable installation

Cable installation has been a problematic area for

the offshore wind industry. It has been the biggest

source of insurance claims to date and few projects

have been completed without the need for repairs.

Of the companies supplying the UK market, CNS

Subsea, Oceanteam, Submarine Cable and Pipe

and, most recently, Subocean have all had financial

difficulties and have either withdrawn from the

market or been acquired by larger players.

Export cables. Export cable installation has typically

been undertaken by shallow draft barges that are

manoeuvred by tugs and which can beach in

shallow water between tides. These vessels will not

be suitable for projects further offshore and it is

anticipated that, from 2015, most export cables will

be laid by DP2 vessels with carousels capable of

handling up to 100km of cable.

There are very few of these vessels globally and

they been employed primarily for the power

interconnector market. Investment in new-build or

modified vessels will be needed but there are

encouraging signs that demand will be met.

Significant new entrants to the market are likely to

include Beluga and P&O Maritime Services in

partnership with Offshore Marine Management.

Figure 21 Installers of export cable in the UK

offshore wind market from 2003 to 2011.

Array cable. Array cable installation has proved

technically demanding with the need to move

vessels close to the turbine foundations and pull the

cable through the J-tubes. Again, barges have been

used but there is an increasing use of smaller DP2

vessels. There have also been concerns on the part

of cable installers that foundation design has not

adequately recognised the challenges of cable-

installation.

The risks and difficulties associated with cable-

laying may be a cause for the large number of

players in the array cable installation market shown

in Figure 22. Only Subocean has had a sustained

presence in the market but it went into

administration in early 2011 and has been acquired

by Technip.

0

200

400

600

800

1,000

1,200

1,400

03 04 05 06 07 08 09 10 11

ABB AEI Cables JDR Cable

Nexans NKT Parker Scanrope

Prysmian

Annual

inst

alle

d c

apac

ity

(MW

)

0

200

400

600

800

1,000

1,200

1,400

03 04 05 06 07 08 09 10 11

MPI Offshore Oceanteam Subocean Visser & Smit

Annual

inst

alle

d c

apac

ity

(MW

)

Page 27: Offshore Wind UK

Market structure 23

Figure 22 Installers of array cable to the UK

offshore wind market from 2003 to 2011.

Offshore substations

To date, most UK projects have only required a

single substation but it is anticipated that future

projects will use multiple substations if the

expected energy output is more than approximately

500MW.

Only ABB, Alstom (which acquired Areva

Transmission and Distribution in 2010) and

Siemens Transmission and Distribution have the

capability to supply high voltage transformers,

reactors and switchgear, although there are other

companies that can supply individual components.

For most UK projects, developers have sought to

tender a single topside substation contract and this

has typically been awarded to one of the electrical

suppliers listed above, who then subcontract the

fabrication of the offshore topside.

An alternative strategy is to contract the fabricator,

who subcontracts the electrical supply. As an

example, this strategy was adopted for Gunfleet

Sands where Bladt procured ABB electrical

components. The market share shown in Figure 23

shows the share of substation electrical supply.

Figure 23 Suppliers of substation electrical systems

to the UK offshore wind market from 2003 to 2011.

0

200

400

600

800

1,000

1,200

1,400

03 04 05 06 07 08 09 10 11

CNS Subsea CTC Marine

CT Offshore Global Marine Systems

MPI Offshore Submarine Cable & Pipe

Subocean Visser & Smit

Annual

inst

alle

d c

apac

ity

(MW

)

0

200

400

600

800

1,000

1,200

1,400

03 04 05 06 07 08 09 10 11

ABB Alstom/Areva Siemens

Annual

inst

alle

d c

apac

ity

(MW

)

Page 28: Offshore Wind UK

24 Market structure

2.5. Industry alliances and

consolidation

As the size of UK and Continental offshore wind

projects has grown, there has been an increasing

number of industrial alliances within the supply

chain.

Such alliances allow for greater access to funding

and promote the pooling of experience.

Developer consortia

Round 3 gave companies the opportunity to bid for

the rights to develop wind farms in zones that were

far larger than anything that had been offered

before. One result of this increase in scale was the

formation of developer consortia for most of the

larger zones.

In some cases, including Dogger Bank (Statoil,

Statkraft, RWE and SSE) and Norfolk Bank

(Vattenfall and Scottish Power), these consortia are

composed of utility-developers who have chosen to

pool their financial and organisation resources as

well as technical knowledge and offshore wind

experience.

In other cases such as the Moray Firth (EDP

Renováveis and SeaEnergy Renewables), the Irish

Sea (Centrica and RES) and the Firth of Forth (SSE

and Fluor) a utility-generator has teamed up with

an EPC (engineer, procure and construct)

contractor or a engineering consultancy who can

either project manage the development or advise

during the process.

A final consortium option was devised for the

Hornsea zone in which the independent developer,

Mainstream Renewable Power, formed a joint

venture with the project venture division from

Siemens. In this case, agreements are made with

strategic partners to supply components and

services and generate funding.

Turbine framework agreements

Where a developer has a sizable pipeline of offshore

wind projects, it may be preferable for it to arrange

framework contracts with supply chain companies.

Such agreements can offer long term commitment

in return for improved prices, increased certainty of

supply and deeper sharing of technical information

compared with contracting on a project-by-project

basis.

There have been two significant offshore wind

turbine supply framework contracts announced to

date.

In 2009, RWE and REpower signed an agreement

worth €2 billion for the supply of 250 turbines. The

majority of these turbines will be used on the

German Innogy Nordsee I project and the Belgian

Thornton Bank II and III projects.

Also in 2009, DONG and Siemens signed a similar

agreement for the supply of 575 offshore turbines,

many of which are being deployed in UK projects

including Lincs, Walney I and II and London Array.

While Mitsubishi has yet to bring an offshore wind

turbine to the market, in 2010 SSE signed a

strategic agreement with them to cooperate on

their renewable energy development.

Innovation-focused cooperation

As well as the alliances that have been established

independently by companies, a number of part-

government funded think-tanks have sought to

bring together companies with the aim of advancing

technology and reducing costs.

The Carbon Trust‟s Offshore Wind Accelerator

programme is co-funded by eight developers of UK

projects: Statoil, DONG Energy, SSE, Statkraft,

Scottish Power, E.ON UK, RWE npower renewables

and Mainstream. The programme has a budget of

more than £9 million to support the development of

innovative solutions in foundation, access,

transmission and yield calculation technology,

focussing delivering on a short-to-medium term

impact.

ETI is a public/private organisation funded by BP,

Caterpillar, EDF Energy, E.ON UK, Rolls-Royce,

Shell and the UK Government. To date, it has

supported the development of novel offshore wind

systems including a vertical axis turbine, a floating

turbine/foundation concept and an advanced

condition monitoring system to improve reliability

and operational costs.

Acquisitions and alliances

A number of turbine manufacturers have entered

into strategic partnerships with specialist

companies for the development of their blades.

Page 29: Offshore Wind UK

Market structure 25

REpower entered into a joint venture in 2007 with

blade manufacturer SGL Rotec to set up a

production business called PowerBlades, capable of

producing blades for its 6M turbine.

In 2011, Alstom, while developing a 6MW turbine

that will be optimised for the UK North sea market,

announced a strategic partnership with LM Wind

Power to develop what they describe as the world‟s

longest wind turbine blade ever produced.

As an alternative to a partnership, in 2009 Areva

acquired the German manufacturer of blades, PN

Rotor, in order to meet demand for its offshore

turbine.

In terms of towers, in 2011 SSE and Marsh Wind

Technology announced that they had formed a joint

venture call Wind Towers that is set to complete the

acquisition of a tower production facility in

Campbeltown on the west coast of Scotland. This

facility, which had belonged to Vestas before it was

sold to Skykon (since in administration), currently

produces towers for onshore turbines but has

benefited from recent investment that will enable it

to make offshore towers as well.

SSE has also agreed a long term framework

contract with jacket foundation manufacturer BiFab

to buy at least 50 units a year for up to 12 years

from 2014. This followed SSE‟s purchase of a 15

per cent stake in BiFab.

In a potentially wider framework agreement that

would cover a range of offshore wind activity, SSE

also announced a memorandum of understanding in

2011 that included BiFab plus the turbine and

transmission and distribution divisions of Siemens,

engineering and vessel supplier Subsea 7 and

consultancy Atkins with the aim of delivering cost

improvements. It is expected that the arrangement

will be formalised later this year.

The restricted supply of turbine installation vessels

has been considered a constraint in the past and

this has triggered a number of alliances and

acquisitions.

Heavy lift vessel specialist Beluga and construction

giant Hochtief entered into a joint venture to order

a next-generation jack-up vessel capable of

installation up to 80 turbines a year in water depths

of 50m.

In 2009, Danish developer DONG Energy acquired

turbine and foundation installation vessel owner

A2SEA in a move to secure its own project pipeline

by ensuring vessel availability. This acquisition was

followed a year later by the news that Siemens had

agreed to become a minority shareholder in A2SEA.

More recently, DONG Energy has also become a 30

per cent minority shareholder in cable installation

and maintenance specialists CT Offshore.

Page 30: Offshore Wind UK

26 Market structure

2.6. Projects and supply chain

structure

Background

Currently, the capital cost (CAPEX) of developing

and installing a UK offshore wind farm project is

estimated to be approximately £3 million per MW.

As Figure 24 shows, the expenditure for

development and consenting accounts for

approximately four per cent of the total cost. The

procurement of the turbine and the balance of plant

accounts for more than 70 per cent of the total cost

while the installation of the project accounts for

almost 25 per cent.

Over the next decade, factors such as increasing

turbine size and projects moving into deeper water

sites further offshore will force CAPEX costs up. On

the other hand, cost savings will be found through

greater efficiency and technology advances which

will act to improve CAPEX costs.

By 2020, not including the impact of inflation, we

expect CAPEX costs to remain similar to current

levels. Looking in more detail, however, we expect

to see turbine costs per MW increase in proportion

as larger designs are used. On the other hand,

installation costs will reduce. This is because the

additional expense of handling larger foundations

and turbines is compensated by the fact that fewer

units need to be installed per MW which reduces

the number of vessel moves and installation

operations required.

Figure 24 Breakdown of CAPEX costs for UK

offshore wind farms in 2010.

Unlike sources of conventional generation, offshore

wind farms have no primary fuel costs but do have

ongoing operational costs (OPEX). These are

currently estimated to be approximately £100,000

a year per MW.

The complexity of an offshore wind farm means

these costs are spread over a wide supply chain

and a range of skills and technologies. The

developer of the offshore wind farm will typically

always undertake most of the planning and funding

activities but the way in which contracts for other

activities are arranged can vary and has evolved

over the last 10 years.

Development/consenting Turbine Balance of plant Installation

Page 31: Offshore Wind UK

Market structure 27

Turn-key model

A number of UK offshore wind farms built to date

were developed using the turn-key contracting

approach. A simplified example of this type of

structure is shown in Figure 25.

This approach means that a project developer would

hire an EPC (engineer, procure and construct)

contractor to handle most aspects of the project

including the procurement of the turbines and the

balance of plant and coordinating installation

activities. The EPC contractor will also take on the

risk of installation delays or issues.

For early projects, it was common for the turbine

manufacturer to act as the EPC contractor. In other

cases, specialist EPC contractors such as Fluor and

KBR have been used. The EPC model minimises risk

for the wind farm developer and, in the early days,

was a way for wind turbine manufacturers to enable

projects to be constructed. As competence in the

supply chain increases, we anticipate at least a

partial return to the single EPC construct model.

In terms of the long term operation and maintenance

of the offshore wind farm, all UK projects to date

have been operated initially by the turbine

manufacturer under a warranty arrangement that

generally lasts around five years. Once this period is

over, the developer can extend the contract with the

turbine manufacturer, take on the activities itself or

arrange for a third party to do so.

Figure 25 EPC supply chain structure.

Developer

Project management

Foundations design,

manufacture,

Turbine design and manufacture

Turbine installation

Wind farm O&MDevelopment

studiesCable

manufacture Electrical design,

manufacture,

installation

Construction management

installation installationTurbine O&M

Page 32: Offshore Wind UK

28 Market structure

Multi-contract model

For more recent projects, the EPC model has been

used less frequently in favour of a multi-contract

strategy in which the developer acts as the project

manager and agrees separate contracts with

component and service suppliers.

This strategy allows developers to assume more of

the risk of a project and reduce costs at the expense

of increased internal contracting complexity.

Contracts can be packaged and sub-contracted in a

range of ways but a typical structure is shown in

Figure 26. The preferred model is for some of these

contracts to be bundled into EPC works for identified

areas of the offshore wind farm with the developer

project managing the integration of these elements.

Another model has been adopted by the developers

of the Round 3 Hornsea zone, Mainstream Renewable

Power. As the only non-utility Round 3 developer,

they operate a model in which a development fund is

created through partnering with key supply chain

players. Costs are shared among the partners in

exchange for supply contracts. Once a project within

the zone is consented, Mainstream will be in a

position to sell it as a complete package with all the

major suppliers already in place.

Figure 26 Multi-contract supply chain structure.

Developer

Project management

Foundations design,

manufacture,

Turbine design and manufacture

Turbine installation

Wind farm O&MDevelopment

studiesCable

manufacture Electrical design,

manufacture,

installation

Construction management

installation installationTurbine O&M

Page 33: Offshore Wind UK

Market structure 29

2.7. Project details

The following list compiles the key details, where available, of all UK offshore wind projects built, in construction or

planned.

Table 1 Abbreviations used.

UK Round

Demo Demonstration project

Project Status

Dev In development

Constr In construction

Developers

SSE Scottish and Southern Energy Renewables

RWE RWE npower renewables

EON E.ON Climate and Renewables

AMEC AMEC Border Wind

Shell Shell Wind Energy

Dong DONG Energy

SPR Scottish Power Renewables

Supply chain

Siemens Siemens Wind Power

Siemens T&D Siemens Transmission and Distribution

BiFab Burntisland Fabrication

ABB The ABB Group

Prysmian Prysmian Cables & Systems

Page 34: Offshore Wind UK

30 Market structure

Figure 27 UK offshore wind farm development sites (The Crown Estate, supplied April 2011).

Page 35: Offshore Wind UK

Market structure 31

Table 2 UK project description.

Project Name Beatrice Blyth Barrow Burbo Bank Gunfleet

Sands 1

Kentish

Flats 1

Location North Sea,

NE Scotland

North Sea,

NE England

Irish Sea,

NW England

Irish Sea, N

Wales

North Sea,

SE England

North Sea,

SE England

Capacity (MW) 10 4 90 90 108 90

Turbines 2 2 30 25 30 30

Foundation Jacket Monopile Monopile Monopile Monopile Monopile

UK Round Demo Demo 1 1 1 1

Status Operating Operating Operating Operating Operating Operating

Developer Talisman

SSE

AMEC

Nuon

E.ON

Shell

Centrica

Dong Dong Dong Vattenfall

Turbine supplier

REpower Vestas Vestas Siemens Siemens Vestas

Foundation

supplier BiFab AMEC

SIF &

Smulders

SIF &

Smulders

SIF &

Smulders

SIF &

Smulders

Turbine

installation Scaldis

AMEC

Seacore MPI Offshore A2SEA A2SEA A2SEA

Foundation

installation Scaldis

AMEC

Seacore MPI Offshore A2SEA

Ballast

Nedam MPI Offshore

Substation N/A N/A Alstom N/A ABB N/A

Subsea cable

A = array

E = export

JDR Cable

Systems (A)

AEI Cables

(A)

Nexans

(A&E) ABB (A) Prysmian (A)

AEI Cables

(A)

Cable

Installation

A = array

E = export

Global

Marine (A)

Global

Marine (A)

MPI Offshore

(A&E)

Submarine

Cable and

Pipe (A)

Visser &

Smit (E)

CT Offshore

(A)

Global

Marine (A)

Page 36: Offshore Wind UK

32 Market structure

Project Name

Lynn & Inner Dowsing

North Hoyle Rhyl Flats Robin Rigg Scroby Sands

Ormonde

Location North Sea, E

England

Irish Sea, N

Wales

Irish Sea, N

Wales

Irish Sea,

NW England

North Sea, E

England

Irish Sea,

NW England

Capacity (MW) 194.4 60 90 180 60 150

Turbines 27 30 25 60 30 30

Foundation Monopile Monopile Monopile Monopile Monopile Jacket

UK Round 1 1 1 1 1 1

Status Operating Operating Operating Operating Operating Constr

Developer Centrica

TCW Group RWE RWE EON EON Vattenfall

Turbine supplier

Siemens Vestas Siemens Vestas Vestas REpower

Foundation

supplier

SIF &

Smulders

SIF &

Smulders

SIF &

Smulders

SIF &

Smulders

Cambrian

Isleburn BiFab

Turbine

installation MPI Offshore MPI Offshore

SMIT

KS Energy A2SEA

Seacore

A2SEA A2SEA

Foundation

installation MPI Offshore MPI Offshore

Ballast

Nedam MPI Offshore A2SEA Scaldis

Substation N/A N/A N/A Alstom N/A Alstom

Subsea cable

A = array

E = export

Nexans (A) AEI Cables

(A)

Parker

Scanrope (A)

Prysmian (E)

Parker

Scanrope (A)

Parker

Scanrope (A)

Prysmian

(A&E)

Cable

Installation

A = array

E = export

Subocean

(A)

MPI Offshore

(A)

Subocean

(A)

Subocean

(E)

CTC Marine

(A)

CNS Subsea

(A)

Visser &

Smit (A&E)

Page 37: Offshore Wind UK

Market structure 33

Project Name Thanet 1 Teesside Gunfleet

Sands 2 Greater Gabbard

Gwynt y Môr

Location North Sea, SE England

North Sea, NE England

North Sea, SE England

North Sea, SE England

Irish Sea, N Wales

Capacity (MW) 300 62 64.8 504 576

Turbines 100 27 18 140 160

Foundation Monopile Monopile Monopile Monopile Monopile

UK Round 1 1 2 2 2

Status Constr Consented

Operating Constr Constr

Developer Vattenfall EDF

Dong SSE

RWE RWE

Turbine supplier

Vestas Siemens

Siemens Siemens Siemens

Foundation

supplier SIF & Smulders

SIF & Smulders

Shanghai Zhenhua Heavy

Industry

EEW Bladt

Turbine

installation MPI Offshore SNC Lavalin

A2SEA

A2SEA Seajacks

Foundation

installation A2SEA MPI Offshore

Ballast Nedam

Seaway Heavy Lifting

Substation Siemens

T&D N/A

ABB Siemens T&D

Siemens

T&D

Subsea cable

A = array

E = export

Prysmian (A&E)

Prysmian (A&E)

Prysmian (E)

JDR Cable Systems (A)

NKT (E) Draka (A)

Cable

Installation

A = array

E = export

Subocean (A&E)

Oceanteam (E) CT Offshore (A)

Subocean (A&E)

Global Marine (A&E)

Page 38: Offshore Wind UK

34 Market structure

Project Name Sheringham

Shoal Walney 1 Walney 2 Lincs

London Array 1

Dudgeon East

Location North Sea, E

England Irish Sea, NW England

Irish Sea, NW England

North Sea, E England

North Sea, SE England

North Sea, E England

Capacity (MW) 317 183.6 183.6 270 630 560

Turbines 88 51 51 75 175 168

Foundation Monopile Monopile Monopile Monopile Monopile Monopile

UK Round 2 2 2 2 2 2

Status Constr Constr Constr Contracts

placed Constr Consented

Developer Statoil

Statkraft Dong Dong Centrica

EON

Dong Masdar

Warwick Energy

Turbine supplier

Siemens Siemens Siemens Siemens Siemens

Foundation

supplier SIF &

Smulders EEW/Bladt

SIF &

Smulders

SIF &

Smulders EEW/Bladt

Turbine

installation Gulf Marine Seajacks Seajacks MPI Offshore

MPI Offshore A2SEA

Foundation

installation

Ballast Nedam Seaway

Heavy Lifting

Scaldis Ballast Nedam

MPI Offshore A2SEA

Substation Alstom Bladt Bladt Siemens T&D

Siemens T&D

Subsea cable

A = array

E = export

Nexans (A&E) Prysmian (E) NKT (A)

Prysmian (E) Draka (A)

Nexans (A&E) Nexans (E) JDR Cable Systems (A)

Cable

Installation

A = array

E = export

Visser & Smit (A&E)

Visser & Smit (A&E)

DNK (A&E)

Project Name Humber Gateway

London Array 2

West Duddon

Docking Shoal

Race Bank Triton Knoll

Location North Sea, E England

North Sea, SE England

Irish Sea, NW England

North Sea, E England

North Sea, E England

North Sea, E England

Capacity (MW) 300 370 500 540 620 1200

Turbines 83

88

Foundation Monopile Monopile Monopile Monopile Monopile

UK Round 2 2 2 2 2 2

Status Consented Consented Consented Dev Dev Dev

Developer EON EON SPR Centrica Centrica RWE

Project Name Westernmost

Rough

Location North Sea, NE England

Capacity (MW) 240

UK Round 2

Status Dev

Developer Dong

Page 39: Offshore Wind UK

Market structure 35

Project Name Burbo Bank

Extension

Galloper

Wind Farm

Kentish Flats

2

Walney

Extension

Location Irish Sea, N Wales

North Sea, SE England

North Sea, SE England

Irish Sea, NW England

Capacity (MW) 234 504 51 750

UK Round R1/2 Ext R1/2 Ext R1/2 Ext R1/2 Ext

Status Dev Dev Dev Dev

Developer Dong SSE RWE

Vattenfall Dong

Project Name Atlantic

Array Dogger Bank Firth of Forth Hornsea Moray Firth Irish Sea

Location Bristol

Channel SW England

North Sea,

NE England

North Sea, E

Scotland

North Sea,

NE England

North Sea,

NE Scotland

Irish Sea,

NW England

Capacity (MW) 1500 9000 3500 4000 1300 4200

UK Round 3 3 3 3 3 3

Status Dev Dev Dev Dev Dev Dev

Developer RWE

Forewind

(RWE, SSE, Statkraft and

Statoil)

SSE Fluor

Mainstream Siemens

EDP Renovaveis SeaEnergy

Centrica

Project Name Norfolk Bank Rampion West Isle of

Wight

Location North Sea, E England

English Channel,

S England

English Channel,

S England

Capacity (MW) 7200 600 900

UK Round 3 3 3

Status Dev Dev Dev

Developer SPR

Vattenfall EON Eneco

Project Name Aberdeen

Harbour Argyll Beatrice Forth Array Inch Cape Islay

Location North Sea, NE Scotland

West Scotland Sea

North Sea, NE Scotland

North Sea, E Scotland

North Sea, E Scotland

West Scotland Sea

Capacity (MW) 50.4 1500 920 415 905 680

UK Round Scottish

Territorial Waters

Scottish Territorial Waters

Scottish Territorial Waters

Scottish Territorial Waters

Scottish Territorial Waters

Scottish Territorial Waters

Status Site

exclusivity agreement

Site exclusivity agreement

Site exclusivity agreement

Site exclusivity agreement

Site exclusivity agreement

Site exclusivity agreement

Developer AREG/

Vattenfall SPR SSE Fred Olsen SeaEnergy SSE

Page 40: Offshore Wind UK

36 Market structure

Project Name Kintyre Neart na Gaoithe

Solway Firth Wigtown Bay

Location West

Scotland Sea North Sea, E

Scotland Irish Sea,

NW England Irish Sea,

SW Scotland

Capacity (MW) 378 360 300 280

UK Round Scottish

Territorial Waters

Scottish Territorial

Waters

Scottish Territorial

Waters

Scottish Territorial

Waters

Status Site

exclusivity agreement

Site exclusivity agreement

Site exclusivity agreement

Site exclusivity agreement

Developer SSE Mainstream EON Dong

Page 41: Offshore Wind UK

Endnotes 37

Endnotes The web addresses for the documents referenced below were checked shortly before publication.

i Department of Energy and Climate Change, EU 2020 Climate and Energy Package,

http://www.decc.gov.uk/en/content/cms/what_we_do/change_energy/european/cepackage/cepackage.aspx [last

accessed 15 March 2011].

ii Department of Energy and Climate Change, A low-carbon UK, (2009),

http://www.decc.gov.uk/en/content/cms/what_we_do/lc_uk/lc_uk.aspx.

iii The Carbon Trust, Offshore wind power: big challenge, big opportunity, (2008),

http://www.carbontrust.co.uk/publications/pages/publicationdetail.aspx?id=CTC743.

iv The Crown Estate, Towards Round 3: Progress in building the offshore wind supply chain, (2011),

http://www.thecrownestate.co.uk/supply_chain_gap_analysis_2010.pdf.

v Department of Energy and Climate Change, Consultation on Electricity Market Reform, (2010),

www.decc.gov.uk/en/content/cms/consultations/emr/emr.aspx.

vi Department of Energy and Climate Change, The Renewable Energy Strategy, (2009),

http://www.decc.gov.uk/en/content/cms/what_we_do/uk_supply/energy_mix/renewable/res/res.aspx.

vii Department of Energy and Climate Change, The UK National Renewable Energy Action Plan, (2010),

http://www.decc.gov.uk/en/content/cms/what_we_do/uk_supply/energy_mix/renewable/ored/uk_action_plan/uk

_action_plan.aspx.

viii National Grid, Offshore Development Information Statement, (2010),

www.nationalgrid.com/uk/Electricity/ODIS/CurrentStatement/.

ix European Wind Energy Association, Operational offshore wind farms in Europe, end 2010, (2010)

http://www.ewea.org/fileadmin/ewea_documents/documents/statistics/110214__public_offshore_wind_farms_in_

Europe_2010.pdf.

Page 42: Offshore Wind UK

38

BVG Associates is a technical consultancy with expertise in wind and marine energy technologies. The team

probably has the best independent knowledge of the supply chain and market for wind turbines in the UK. BVG

Associates has over 120 man years experience in the wind industry, many of these being “hands on” with wind

turbine manufacturers, leading RD&D, purchasing and production departments. BVG Associates has consistently

delivered to customers in many areas of the wind energy sector, including:

Market leaders and new entrants in wind turbine supply and UK and EU wind farm development

Market leaders and new entrants in wind farm component design and supply

New and established players within the wind industry of all sizes, in the UK and on most continents, and

Department of Energy and Climate Change (DECC), RenewableUK, The Crown Estate, the Energy Technologies

Institute, the Carbon Trust, Scottish Enterprise and other similar enabling bodies.

For more information, please visit our website at www.bvgassociates.co.uk.

The views expressed in this report are those of BVG Associates.

Authors:

Christopher Willow has worked in the offshore wind industry for more than three years and offers a

comprehensive knowledge of both the UK‟s offshore wind supply chain and port industry. Recent work he has led

includes a report investigating the long term costs and economic benefits of offshore wind in the UK and a project

modelling the logistical benefits of clustered and distributed supply chains.

Bruce Valpy is the director of BVG Associates. Before founding the company in 2005, Bruce led wind turbine

design activities in the UK for NEG Micon (now Vestas). Since then he has created a rapidly growing, diverse client

base including the market leaders in the wind turbine and tidal turbine sectors, RenewableUK, The Crown Estate,

the UK Government (DECC), utility providers and multi-nationals.

Julian Brown has 27 years experience in engineering businesses and more than nine years experience in the

wind industry. He has provided consultancy to wind turbine manufacturers, developers, the UK Government and

supply chain entrants. As Managing Director of NEG Micon Rotors (now Vestas), Julian led the establishment of

blades technology and manufacturing at their UK Isle of Wight facility.

Page 43: Offshore Wind UK

Contact

Innovasjon Norge

Akersgata 13

0104 Oslo

www.innovasjonnorge.no

Innovation Norway Hamburg

Caffamacherreihe 5

20355 Hamburg

Germany

[email protected]

Innovation Norway London

Charles House

5 Lower Regent Street

London SW1Y 4LR

United Kingdom

[email protected]

INTPOW – Norwegian Renewable Energy Partners

PO Box 642, Skøyen

NO-0214 Oslo, Norway

[email protected]