The UK should boost its local content target for offshore wind projects to 60%, according to a study led by former energy minister Sir Michael Fallon.
The increase in the target from the current 50% would reflect the progress made in the sector since the original advisory goal was agreed with the industry in 2012, and help foster a UK offshore wind supply chain well placed to export as the sector grows around the world, said Fallon in the report commissioned by sector supplier Wilton Engineering.
The study – which focuses on the benefits in northeast England – also recommends a benchmark of at least 50% of project Capex to be sourced in the UK, and a more transparent system of reporting of expenditure on individual projects.
The 50% local content goal, which is advisory rather than binding, is part of the UK government’s efforts to ensure domestic ‘payback’ for the huge power deals on offer to developers off the country’s coasts – deals that have mainly gone to foreign-owned entities.
Fallon said some, but not all, developers have done a good job of meeting and surpassing the benchmark, singling out Orsted and Statoil for positive work on UK supply chains.
Latest industry figures suggest a 48% local content level has been reached, and it “is timely to consider whether the government should now set a fresh target”.
Fallon said: “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.
“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 northeastern US seaboard.”
Such a move could help deliver 25,000 new jobs in the UK over the next decade, the study claimed.
The former minister wants offshore wind to agree a ‘sector deal’ with the UK government, giving it equivalent status to industrial powerhouses such as automotive and defence.
Speaking for the UK’s Offshore Wind Industry Council (OWIC), Clark MacFarlane, managing director of Siemens Gamesa Renewable Energy UK, said: “We welcome the ambition expressed in Sir Michael Fallon’s report to grow the UK’s offshore wind supply chain. British firms are already exporting goods and services to offshore wind projects around the world, as well as supplying UK projects. The case for Ministerial support is clear, and we are working with Government on a sector deal which would unlock even greater investment in our industry.
“Last week we announced a comprehensive supply chain review, to be carried out by the former McLaren Group CEO Martin Whitmarsh, who will publish a supply chain development plan later this year, specifying ways to maximise the benefits of offshore wind for UK plc.
“Sir Michael’s report will complement the extensive review to be undertaken by Martin Whitmarsh for the Offshore Wind Industry Council. The findings from both reviews will feed into the supply chain development plan.”
Note: Update adds comment from OWIC