The UK government should establish a new 60 percent UK content target for British offshore wind projects, according to former UK Energy Minister Michael Fallon.
In his report – Winning Locally, Going Global – Fallon said that as the current 50 percent target is close to being met by some wind farm developers, the higher target to be set for the remaining GBP 550 million spend to 2025.
Within the 60 percent target, which will include operating expenditure, he recommends at least 50 percent of capital expenditure to be sourced within the UK.
Expenditure on each wind farm development should be reported in a more transparent way that includes added value in both jobs and local skills, Fallon said.
The report also recommends the UK offshore wind industry should agree a sector deal , placing it at the heart of the government’s Industrial Strategy and giving it equal status with sectors such as pharmaceuticals, defence and aerospace.
To support this proposal, the report highlights the need for a supply chain accelerator programme , as recommended by the Offshore Wind Council, which would encourage greater collaboration, innovation and support new entrants to the market with exporting technology and services.
This would build upon the government’s new Supply Chain Competitiveness Programme, which should be used to target areas like the North East, which should become the leading centre for new offshore wind technology.
The report also highlights the challenge facing the supply chain in terms of business planning and investment, due to uncertainty surrounding dates of future licences and Contracts for Difference (CfD) auction rounds.
Given that public spending is already allocated up to 2025, Fallon recommends the government set out the full timetable for each future auction , helping the sector to plan, invest and recruit.
He recommends the government should confirm the quarter in which the 2019 auction will take place and that the next auction will be held in a specific quarter no more than 18 months later, combining these announcements with fixed dates for further leasing rounds from the Crown Estate and the Crown Estate in Scotland.
“This is a pivotal moment for offshore wind. The huge investment to date has repaid the confidence shown by the Government in its future over the last six years,” Fallon said.
“But some of that investment has gone to European companies with no consequent impact on UK skills and productivity. The priority now must be to ensure that more of this investment leads to the bigger prize, a genuinely competitive UK industry that can help build the wind farms now being envisaged in the Indian Ocean, the Sea of Japan and off the north eastern US seaboard.
Commissioned by Wilton Engineering, the report considers the detail of contracts undertaken by the firm and its partners in evaluating the effectiveness of the government’s UK content policy. Fallon also consulted companies and organisations from across North East England and the wider UK offshore industry to compile the report.
“Strong UK supply chains and innovative high technology SMEs are the keys to winning these new contracts. Brexit offers fresh opportunities to use our freedom from artificially restrictive EU procurement rules to develop a world-beating industrial sector,” Fallon said.
“If the sector is able to invest as a result of higher local content, it can grow and export throughout the world. Given the explosion of interest in offshore wind in overseas markets, positive policy, strategic planning and early investment could deliver more than 25,000 jobs in the UK over the next decade.”