Supply chain woes still hinder wind power supply

Two government-commissioned reports on the renewables supply chain cast serious doubt on the UK’s ability to meet its 2020 renewables target, especially for offshore wind.

Only 10.7 gigawatts of offshore wind can be built in the UK by 2020, according to a Business Department (BERR) report, which is far below the 14GW the government’s proposed renewable energy strategy says is needed.

The report was one of two BERR commissioned separately from consultants Douglas-Westwood and Sinclair Knight Merz (SKM) on supply chain constraints on renewables growth to feed into its renewables strategy.1,2 However, BERR’s consultation on the strategy, issued in June (ENDS Report 402, pp 38-39 ), only briefly lists their conclusions and gives no details on how it will deal with the problems highlighted.

For example, the document says there are only three specialist offshore wind turbine manufacturers - REPower, Multibrid and Bard Engineering, all based in Germany - and that "strong demand may increase the existing three-year lead times".

Wind turbines components such as gearboxes, bearings and generators also have "significant lead times", it says. And of the two offshore turbine installation vessels that exist, one is booked until 2013.

These problems are long-standing (ENDS Report 399, pp 24-28  and 373, pp 24-27 ), but the consultants’ reports go beyond general statements and quantify the supply chain limits.

Most notably, the Douglas-Westwood report - known to have been heavily edited by BERR - forecasts that only 10.7GW of offshore wind can be built by 2020 under a business-as-usual scenario. This is 23% below the 14GW BERR forecasts the UK needs to meet its target to source 15% of its energy from renewables by that date under the EU’s draft renewable energy Directive (ENDS Report 397, pp 48-50 ). The government’s Renewables Advisory Board (RAB) said 18GW of offshore capacity is needed to meet the target (ENDS Report 400, p 15 ).

Douglas-Westwood’s report is based on market forecasts and interviews with manufacturers throughout the renewables supply chain. It points out the UK is just one country competing for offshore turbines. "For key supply chain components, the UK faces considerable competition from elsewhere in Europe," it says. Germany, Denmark, Spain, Norway and the Netherlands are all set to install some 14GW of offshore wind by 2020, it says.

Offshore wind projects cost £2.8 million per megawatt, it adds. This is more than double the cost of five years ago - a rise that is causing developers to reassess their rates of return. "The cost ceiling has not been reached," it says.

The report also casts doubt on the government’s hopes for biomass electricity, saying only 2.3GW of capacity will be delivered by 2020. RAB was hoping for 4GW. "The sector is struggling with feedstock suppliers, with a lack of UK availability forcing imports," it says. Nevertheless a steady stream of biomass plants are being developed (see p 15  and p 16 ).

SKM’s report adds to doubts, saying offshore wind deployment is limited to about 350MW a year because of manufacturing capacity and a lack of installation vessels. This equates to only 70 5MW turbines a year, but SKM says that to meet the renewable energy strategy’s target the UK needs to install nearly 3,000 5MW turbines - some 250 a year.

The UK would also need 1,500 kilometres of high-voltage AC and 7,300km of high-voltage DC subsea cables to meet its aims. Yet manufacturers are booked for the next five years and there are no domestic suppliers. A subsea cabling plant would cost £35 million and take three years to build.

Recent announcements suggest some bottlenecks may be overcome. For example, in July Dutch company Vroon said it will invest £280 million in two new installation vessels to be run by its North Yorkshire-based subsidiary, MPI Offshore, which already operates Europe’s only purpose-built offshore wind installation vessel.

The two ships will be completed in 2011, but SKM says four to five more vessels are needed to meet the UK’s offshore wind target.

Gordon Edge, the British Wind Energy Association’s director of markets and economics, said Douglas-Westwood’s analysis is "very pessimistic", especially its view that only 1.5GW of offshore wind will be installed a year by 2020. "Given the long-term potential of up to 33GW of offshore wind in the UK, surely investment will give higher build rates?"

But others think the analysis is sensible. "Multibrid, REPower and Bard have all announced plans to produce 100 5MW turbines a year by 2010, but that’s supposed to supply all of Europe and it isn’t enough to go round," said Richard Court, wind technology specialist at the New and Renewable Energy Centre (NaREC). "BERR can’t just set a target and then assume developers will overcome the supply chain constraints to meet it."

NaREC, based in Blyth, Northumberland, already runs a blade-testing facility for offshore wind turbines. It intends to extend this shortly and build a "drive-train" testing facility and offshore testing centre to encourage turbine manufacturers to the UK.

Both Mr Edge and Dr Court said BERR needs to incentivise UK companies in the aerospace and automotive sector to diversify into the offshore wind market. It also needs to encourage investment from abroad, they said. The government is doing this, especially through its Energy Technologies Institute (ETI) (ENDS Report 380, p 11 ). But these efforts seem focused on pilot technologies, such as the 7.5MW turbine Clipper Windpower is to build at its Blyth facility. This will be bought by the Crown Estate to examine the challenges of operating in deep water.

The ETI this autumn is expected to announce investment in six offshore wind projects, also aimed at bringing novel technologies from the pilot stage through to commercialisation.

But the Douglas-Westwood report makes it clear the UK is unlikely to attract much investment beyond research and development. The lack of engineers capable of working in the renewables industry "threatens" the delivery of the 20% renewables target, it says. This is "symptomatic of a historic lack of national investment in all levels of skills development in engineering".

According to interviews undertaken for the report, the renewables industry is struggling to keep experienced staff, especially in the face of competition from oil and gas companies.

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