Infrastructure Horizons: Wind A practical guide for contractors seeking to enter the onshore & offshore wind civil engineering sector. Contents 01 CONTENTS 03 INTRODUCTION 05 THE WIND LANDSCAPE 07 THE WIND SECTOR: CHALLENGES INTRODUCTION 07 THE MARKET 11 TURBINE MANUFACTURERS 15 SMALL & MEDIUM-SIZED WIND THE WIND SECTOR WIND THE 17 LEADING CLIENTS: AN OVERVIEW 18 COMPANY PROFILES A-Z THE MARKET 31 THE SKILLS CHALLENGE 32 RESOURCES RESOURCES Infrastructure Horizons Introduction to the Toolkit Situated at the edge of Europe’s north Atlantic archipelago, The UK is a global leader in offshore wind, and has the world’s the UK boasts the greatest potential of any European country biggest wind farms at all stages of production. Currently, the for wind power. Britain’s onshore and offshore wind sector UK has 1.86GW of offshore wind operation across 14 project has grown significantly since the turn of the century, and sites. Operation, construction, and planning of offshore wind now offers significant and diverse opportunities to civil facilities all present diverse opportunities for civil engineering engineering contractors. In order for the UK to meet its contractors to engage in this expanding market. However, 2020 renewable energy commitments, as well the over- the sector also faces cost pressures, with a Offshore Wind arching goals of achieving low-carbon growth and energy Programme Board (OWPG) due to be established by the security, further increases will be necessary in wind energy end of 2012 to oversee a target of a 30% cost reduction by deployment over the next ten years. 2020 by overseeing the UK’s offshore wind sector as a single business. The OWPG seek to minimise risk in the sector, In September 2012, UK wind farms hit an all-time high of by evaluating industry practises, and assigning solutions. power output, breaking through the four gigawatt (GW) It is hoped that this toolkit will play a part in enabling civil barrier for the first time; and National Grid predicts that engineering contractors to engage in the collaborative this record will be broken every autumn from now on, as models of engagement thus identified. increasing capacity from wind power is added to the grid This Toolkit is primarily aimed at civil engineering contractors annually. Renewables now generate just under 10 per cent who hope to win work in the wind sector, and provides of the UK’s electricity, and wind energy has become the an over-view of the key players and opportunities in the sole largest contributor to the renewables mix. Based on the industry. It outlines the challenges specific to the wind current levels of growth in the sector, renewable power as a sector that contractors will need to be aware of when whole could be providing more electricity than the nuclear bidding for work if they are to break into the sector for sector before 2016. the first time. While the toolkit has been written for the benefit of our members, CECA hopes that it will gain a wider The Department of Energy and Climate Change’s UK audience amongst those who may find its contents of use, Renewable Energy Roadmap (2011) identified renewable whatever their position in the supply chain, their level of energy as a key sector for securing the UK’s long-term experience, or their skills background.We are grateful to economic prosperity, and has declared its headline goal of CITB-ConstructionSkills for their sponsorship of this toolkit, ensuring that 15% of the UK’s energy demand is met from and of the Infrastructure Horizons series. We are indebted to renewable sources by 2020 in the most cost effective way. all those who have been involved in its preparation, whether DECC has estimated that £110bn of investment is needed by contributing to its preliminary market testing, taking part in the country’s electricity sector by 2020 if the UK is to in research interviews, or providing expert testimony to aid meet its renewable energy goals. The move to a low carbon in its preparation. CECA hopes that the Toolkit will provide a economy in the context of securing Britain’s energy security platform from which CECA members can take full advantage will require Britain to roll-out the utilisation of wind- of this emerging market, and engage in what is fast becoming generated power on an ever increasing scale. a central feature of the UK’s energy infrastructure landscape. CECA Wind Toolkit The Wind Landscape The Wind Sector has grown at an astonishing rate over the It is clear that both the on-shore and off-shore wind sectors last decade. Wind power is the fastest growing source of present considerable challenges to contractors seeking renewable energy in the European Union. In the next ten to break into this area of industry. The opportunities are years, the wind industry’s contibution to GDP is expected even more exciting given that the wider renewable and to increase almost three-fold, and it will act as a driver for sustainable energy sector is a relatively new industry which economic growth for the forseeable future. Despite this, it is still evolving rapidly, having expanded exponentially over is easy for contractors to see the sector as a closed shop, the last ten years. with specialist firms dominating a niche market. But this In 2012, the wind industry is set to invest £5 billion in the need not be the case, and as the sector expands there will UK economy, with projects in the pipeline to 2020 worth a be increased opportunities for contractors to bid for work in further £50 billion, and is forecast to employ an estimated the sector as the supply chain gains maturity. 90,000 people in Britain by the end of this decade. Wind The UK is the global leader for offshore wind energy, with energy currently provides enough clean, secure energy 1.4GW of operational capacity across 15 wind farms. It also to power nearly 5 million homes in the UK, and this total has more than 4 GW of installed wind capacity in operation, is set to increase to 17 million by 2020. Nonetheless, and it is estimated that onshore wind could contribute up over the past twenty years or so the wind sector has to 13 GW by 2020 – which would require an annual growth developed a complex supply chain, which includes planning, rate for the industry of 13%. According to the Department environmental impact assessment, meteorology, electricity of Energy & Climate Change, the onshore wind industry trading, turbine and component manufacturing, and was worth £548 million to the UK economy in 2011, transport and assembly. Currently, the British Wind Energy providing around 8,600 jobs - and both these statistics are Association (BWEA) lists 362 wind farms in the planning set to grow rapidly to 2020. Wind power is well on its way stage of completion, which will provide enough energy to to becoming competitive, even in a non-regulated market, power more than six million homes. This toolkit has been with development being driven by technological advances prepared to enable contractors to take advantage of this and optimised selection of sites. growth. The sector has thus evolved from a minority investment opportunity, to a technology that attracts broad-based investments across the E.U. Although a majority of “ The sector has evolved wind farms consist of land-based turbines, the rate of expansion for off-shore wind generation is roughly twice from a minority investment that of onshore wind. While as of 2009, offshore wind power accounted for less than three per cent of the E.U.’s opportunity to a technology total wind power generation, forecasts estimate that the that attracts broad-based generation capacity for offshore wind will outstrip land- based wind generation by 2030. investment” CECA Wind Toolkit Wind Energy Infrastructure Committee. The Prime Minister himself has repeated stated his support for wind generation as a vital part of the UK’s Since 2002, the Renewables Obligation has been the energy mix, promising to lead the “greenest government mainstay of support for large-scale renewable electricity ever.” As in most European countries, to plan, obtain generation, which requires electricity companies to produce permissions for and build a wind far is a long, drawn-out a percentage of their generating capacity from renewable process. Individual projects may take anywhere from two to sources, helping to bring about a five-fold increase in ten years from its initial planning to the commencement of renewable energy generation between 2002 and 2011. construction, depending on issues relating to the planning INTRODUCTION Following the Comprehensive Spending Review, the Coalition framework. Early engagement is key if contractors are to take government instituted the Renewable Obligation Banding advantage of the work available in this process. Review to achieve cost reductions in renewable electricity generation. The government’s response to this review was The Policy Landscape published in July 2012, setting out the extent of support for onshore wind projects from April 2013. The government Over the past year, a number of different policy set out the levels of financial support available through the developments have occurred with a direct bearing on the Renewables Obligation (RO) for large-scale renewable energy UK’s wind energy sector. The most significant of these was electricity generators from 2013-17. the publication by the Department of Energy and Climate Change of the UK Renewable Energy Roadmap in July 2011, Due to the current market incentive system, the Renewables which set out a headline goal of achieving 18GW capacity SECTOR WIND THE Obligation, coupled with the lower cost per megawatt from offshore wind generation by 2020 and a headline goal of large turbines, the market currently is predominantly of 13 GW for onshore generation.