Offshore wind is a massive opportunity for the UK – not only to meet ambitious climate change targets, but to build a vibrant new industry, create jobs and develop a country-wide supply chain.
The UK is already the largest offshore wind market in the world, with 48 GW of offshore wind sites under way and £200 billion investment predicted over the next ten years.
Tremendous progress is already being made, and this is flowing through the supply chain, with good news on major engineering contracts on a weekly, if not a daily, basis, an increasing number of which are by contractors that have a track record in the oil and gas sector.
This, I believe, is crucial. The UK’s global position in hydrocarbons, and specifically its experience offshore, can have a major impact on offshore wind’s ambitious deployment and cost reduction goals.
My own personal experience began in offshore oil and gas, initially in the fabrication yards in the North of Scotland, then in various locations overseas. I first became involved in offshore renewables in 2005, working for Talisman Energy, as Project Manager on the Beatrice Demonstrator project. Following completion of this project, I was a founding shareholder of Seaenergy Renewables and was appointed Operations Director.
Following a successful three years where the company gained development rights in three major offshore windfarms, the company was sold to Repsol in June 2011. Repsol is a major integrated energy company headquartered in Spain which has its roots firmly in oil and gas. It remains a major player in hydrocarbons – upstream and downstream –but it made a strategic decision to become an energy business by establishing a new energies division in 2010.
The renewables business unit, RepsolNeuvasEnergias, has made major progress in establishing businesses in offshore wind, bioenergy, and sustainable mobility. Our Edinburgh base, now 30 strong, leads on offshore wind. We are development partners in three major offshore windfarms in the UK totalling in excess of 3GW representing a capital investment programme over £3 billion.
This is where I believe our oil and gas heritage comes into play. The Beatrice Demonstrator extolled the virtues of large turbines, jackets and innovative installation methods. It showed that they could be deployed and operated in deeper water farther from shore.
At first these methods, many borrowed from oil and gas, seemed innovative and radical, but today they are considered the norm.
This gives me confidence that the offshore wind industry will move from concept to reality in the second half of the decade.
Cost reduction is a major objective. We have a challenging target of £100 MWh by 2020, and I believe we have three levers to help us meet this ambitious goal:
- First of all, technology. Advances in this area will deliver better equipment, whether it is larger turbines, more efficient foundations or purpose built vessels, all of which will over time contribute to significant cost reductions and increased production.
- Secondly there is productivity. Offshore wind is a repetitive business and experience will lead to significant productivity improvements through the adoption of serial production techniques, many borrowed from the oil and gas sector, combined with standardisation, which will in turn generate significant cost savings.
- And third is improved relationships, ranging from changes in contracting practices to create a more efficient commercial environment, through softer issues, such as interpersonal and intercompany relationships which are being established across the industry. Together they will contribute to improved productivity and lower costs.
Above all, I believe competition will be the key. We have seen this before – not just in oil and gas but in the onshore wind sector, where competitiveness between businesses has driven innovation and reduced cost.
The UK has a mature supply chain, and engineering and technology firms at all levels now recognise the scale of the opportunity.
Other challenges remain. Affordable and timely grid connections and access to significant finance, especially for early projects, are both critical.
But above all, a clear signal from the UK Government, via the draft Energy Bill and electricity market reform, that Britain has a clear, consistent and long-term market for all forms of energy, will be crucial in unlocking major progress in the years ahead.
By 2020, I hope to be looking at a sector with reduced costs, significant GW installed, and visible progress with our next challenges – deep offshore wind, and commercial wave and tidal schemes.
Exciting times lie ahead.
Ronnie Bonnar, Managing Director, Repsol UK