Ten years ago, we produced for The Crown Estate our first offshore wind supply chain gap analysis. The aim was to identify the bottlenecks in the UK supply chain if its Round 3 leasing process was delivered to capacity and on schedule. In retrospect, it was a tall order for the UK to reach 33GW by 2020, but that was what developers said they would do and what we were asked to assess against.
One of the key conclusions from our 2009 analysis is that with market visibility and confidence in policy stability, the supply chain would invest to meet demand.
The main issue was whether investment in new factories and vessels could be made in time. Existing capacity would be inadequate to meet the expected acceleration in demand. It was suggested that a series of major investments at offshore wind port ‘superhubs’ was required, at which several manufacturers would co-locate. Today, if you look around Europe, these superhubs are conspicuous by their absence. Bremerhaven, that superhubs’ trailblazer that inspired 1,000 visits from envious governments, has struggled to maintain momentum. The three jewels in its crown – Multibrid, REpower, Weserwind –struggled to make an impact on the industry and have all gone.
In fact, there are very few ‘brand new’ coastal factories busy. Siemens Gamesa has its sites at Cuxhaven and Hull, MHI Vestas at Lindø, Sif at Maasvlakte and JDR Cables at Hartlepool. The new investment has flowed but it has mainly been at existing sites, such as Smulders at Hoboken, NKT at Cologne and Karskrona (via ABB) and MHI Vestas on the Isle of Wight. The reasons for this less dramatic investment are not complex. The slower growth and greater uncertainty favoured incremental investments.
With the industry’s current buoyancy and high expectations for the 2020s, will today’s factories continue to meet demand? The answer is probably not. The globalisation of the industry makes it a much more complex equation. Investors need to take a broader view. The US market is expected to take off in a few years’ time. State governments are trying (with our help) to understand if offshore wind can be an economic stimulus, as the UK did a decade ago. The Chinese, Japanese, Korean, Taiwanese and Vietnamese markets also look attractive, and everyone wants the jobs locally (but with low prices too).
If we were to undertake a gap analysis today, we would need to take a global and longer view. We recently completed a study for WindEurope on the challenges of achieving 450GW in Europe by 2050, requiring 6x more supply chain capacity in some areas compared to what we have been delivering in recent times. Is it too much of a stretch to get to 1,500GW globally by then?