As Alun Roberts, associate director, BVG Associates explains, the UK is about to engage in a grand exercise to develop a series of industrial strategies and the industry can expect new aspirations for UK content
Having developed the methodology by which UK content in offshore wind is measured I take more than a passing interest in the subject.
A big concern of mine is that the current ‘vision’ of 50 per cent UK content for UK offshore windfarms, set in 2012, will be raised to unrealistic levels. When the last offshore wind industrial strategy was published in 2013, the ministerial foreword cited the 70 per cent UK content in oil and gas, so don’t be surprised if this figure gets another airing.
If another sector is genuinely providing more local content than offshore wind then a government has every right to use it as a benchmark. But in this case, it is important to compare like with like.
If the government is looking across the electricity generation sector and wants to compare offshore wind with gas or nuclear generation, it needs to use the same measure, which is the UK content of the generating company’s lifetime expenditure.
If we assume that the UK content in its offshore gas industry is accurate at 70 per cent, we also have to consider how much of our gas is imported, which according to British Gas, is 55 per cent. With fuel costs about 80 per cent of the lifetime undiscounted expenditure on CCGT generation, 50 per cent UK content could probably only be achieved if the UK content in imported gas was more than 10 per cent.
But can the UK do better than 50 per cent for offshore wind? The Offshore Renewable Energy Catapult recently published a study that suggested we could reach 65 per cent in 2030.
This figure was based on some work I did in 2014 which considered the practical limits of UK content, recognising that we don’t have much economic capacity to build large vessels, do not mine iron or copper and have little prospect of disrupting the global supply chains for large electrical components such as transformers.
The 65 per cent figure supposes that we can reach our full potential, that is with all turbines, cables and substations made in the UK and all components installed by UK contractors. In a rapidly expanding UK market, the new inward investment could in theory make this happen, but despite the good backing from the government, this is an unlikely scenario.
The UK has some excellent companies in the offshore wind sector and there is room for more, but let’s get real about the opportunity and make sure that all sectors are judged on a level playing field.