The History of the Siemens-ABP Investment in Hull Contents
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LOGISTICS INSTITUTE The History of the Siemens-ABP Investment in Hull Contents Executive Summary ...................................................................................................5 Table of Acronyms .....................................................................................................6 1. Introduction .............................................................................................................7 2. Overview of the Policies Driving UK Renewable Energy ...........................9 2.1 2008 UK Climate Change Act and 2009 EU Renewable Energy Directive ................................................................... 9 2.2 UK Commitment to Offshore Wind ....................................................... 9 2.3 Electricity Market Reform and Uncertainty .......................................10 3. Siemens’ Selection Process and Commencement in Hull .........................11 3.1 Timeline ......................................................................................................... 11 3.2 Siemens Selection Criteria and Process .............................................14 3.3 The Formation of Green Port Hull ........................................................ 15 3.4 Siemens comes to Hull ............................................................................ 15 3.4.1 Construction Phase .................................................................................. 15 3.4.2 Alexandra Dock Site .................................................................................16 3.4.3 Challenges ................................................................................................... 17 4. Vitality of the Offshore Wind Industry .......................................................... 19 5. Conclusion .............................................................................................................. 21 6. Appendix ................................................................................................................ 23 Appendix 1: The Crown Estate’s Offshoring Wind Leasing Rounds .................................................................................................... 23 Appendix 2: GPH Strands Projects and Activities ...................................... 24 Appendix 3: Interviewees .................................................................................. 25 7. Endnotes ................................................................................................................ 26 8. About the Green Port Impact Assessment Project .................................. 27 2 | GIA.HULL.AC.UK UNIVERSITY OF HULL | 3 Executive Summary In March 2014, Siemens announced that it would be investing £160m in the development of an offshore wind facility on Hull’s Alexandra Dock; Siemens’ chosen partner, Associated British Ports (ABP), would invest a further £150m in the project. The journey, starting from the initial discussions with Siemens and to the loading of the first blades in January 2017, lasted 8 years and was quite challenging, with several delays and obstacles that presented themselves along the way. It is a journey that is worth documenting as there are many lessons to be learnt from policy implications to skills, local authorities and stakeholders support. This report details the main events leading to the opening of the blade manufacturing plant in Hull, as informed by several influential stakeholders, some of whom were involved from the start and others at different stages, but all contributing to making the investment a success. The goal of this report is to inform and educate policy makers and local stakeholders as to the barriers that existed along the way, and the ways in which they were overcome, so that future inward investments in the offshore sector can be facilitated and dealt with in an expedited manner. The interviews revealed that, while the process was long and arduous, its success might not have been possible without the commitment of key stakeholders, particularly that of UK Government, ABP and especially the local authorities through Green Port Hull (GPH), which, among other things, provided the facilities required for skilling, training and hiring of the local workforce. Despite the challenges, the Hull and the Humber region is on track to become a world-class centre for offshore wind and there is great potential in the Siemens Supply Chain, particularly in manufacturing and services. 4 | GIA.HULL.AC.UK UNIVERSITY OF HULL | 5 Table of Acronyms 1.Introduction In 2006, Hull City Council commissioned IBM2 to identify On 25th March 2014, Siemens announced its decision to the economic competencies for Hull. Four specific areas invest £160m (EUR 190m) in wind turbine production and of impact were identified in which Hull and the region installation facilities in Yorkshire; its partner, Associated ABP Associated British Ports could develop a strategic advantage. These were: British Ports (ABP), invested a further £150m in the infrastructure development at Alexandra Dock to CfD Contract for Difference • Ports & Logistics: Hull/Humber Ports should market support Siemens’ facilities. The Alexandra Dock site is DECC Department of Energy and Climate Change themselves as one integrated port area focusing on approximately a 139-acre (56 ha) site4. Siemens stated becoming a gateway for the UK as a whole due to its EMR Electricity Market Reform that the investment would, “provide a huge boost to the strong position and capacity for growth UK’s offshore wind industry and the Humber region”. The ERYC East Riding of Yorkshire Council • Pharmaceutical: Existing manufacturing strengths need combined investment of £310m is expected to create FES Future Energy Scenarios to nourish, innovation stimulated, adding value and up to 1,000 jobs directly, with additional jobs during 5 GHG Greenhouse Gas diversification to increase competitiveness construction and indirectly in the supply chain . GIA Green Port Impact Assessment • City Centre: Joint regional and city marketing required This paper provides a detailed summary of the ‘history’ GPGP Green Port Growth Programme to change weak image perception, market region’s of the Siemens-ABP investment, (hereafter “the central location as a gateway to the UK, not solely the investment”), with a view to, among other things, answer GPH Green Port Hull North questions such as: Why did Siemens choose Hull? What HCC Hull City Council are the lessons to be learned? What can be further • Renewable Energy: Sufficient opportunity to develop done to facilitate the development of a strong offshore HRO Harbour Revision Order Greenfield sites close to ports. industry in the region? ITT Invitation to Tender Since then, there have been some significant The paper is organised as follows: Section 2 provides a LCCC Low Carbon Contracts Company developments in all of these areas as can be evidenced by the following: contextual overview of the UK and EU policies that were MoU Memorandum of understanding central to the decisions taken by Siemens during the early stages of the investment. In particular, it explains MVA Mega Volt Amp • Increased freight through the Humber ports, ABP investing £15m to upgrade the container port in Hull the time lags that influenced Siemens actions and the O&M Operation and maintenance and the construction of a new cruise terminal3 implications that they had.Section 3 opens with a timeline of the significant events and milestones that shaped the RB Reckitt Benckiser • RB, a leading manufacturer of home, hygiene and investment: starting with the former Yorkshire Forward’s Regional Growth Fund healthcare products, has invested £110m in a new RGF interest in the offshore wind sector in 1999, through to Global R&D Centre; reinvestment from Smith & RO Renewables Obligations Siemens dispatching the first rotor blades in January Nephew’s in Hull and University of Hull’s investment in 2017. The timeline also maps the inception of GPH and Ro-Ro Roll-on/Roll-off the new health building the GPGP and its involvement in Siemens-ABP journey. YF Yorkshire Forward • The Humber named the Energy Estuary with the Section 3 continues with a review of the activities that development of offshore Operations and Maintenance have taken place since the start of the plant construction activities on the South Bank; Siemens opening a blade in November 2014, including some of the challenges to factory in Hull; the formation of GPH as a joint initiative be overcome. The paper concludes with a review of the by Hull and East Riding; brand supported by the Green vitality of the offshore wind industry. Port Growth Programme (GPGP) The paper is intended as a resource to understand the • Hull named as UK City of Culture 2017. challenges that key stakeholders encountered during their efforts to contribute to the development of a new renewables industry in the Humber region, with a view to assisting those involved in similar future endeavors. 6 | GIA.HULL.AC.UK UNIVERSITY OF HULL | 7 2. Overview of the Policies Driving UK Renewable Energy 2.1 2008 UK Climate Change Act and 2.2 UK Commitment to Offshore Wind 2009 EU Renewable Energy Directive In the context of offshore wind, the UK Government The commitment to reduction of GHG and to climate committed to rapid increase in offshore wind deployment change have been important components on the energy to meet the 2020 EU renewable energy target. Round agenda in the UK and Europe since the early 2000s. In 1 (2000) of The Crown Estate’s commercial seabed