Is the UK Government suffering from commitment phobia?

Following significant government investment in England and Scotland in 2010 to strengthen the two countries' port and manufacturing facilities, as well as their supply chain provision for manufacturing offshore wind turbines, a number of engineering giants - including Siemens, Samsung and Mitsubishi - are taking their first steps towards setting up offshore wind manufacturing plants in UK ports.

Not only could these projects help the UK meet ever-nearing decarbonisation targets, confirming its position as a leader in the renewable energy field, they could also provide much needed jobs, regenerate fading areas as ports are revitalised and, ultimately, impact upon the wider UK economy in an extremely positive way. Indeed, Siemens' potential project in Hull alone could create more than 700 jobs while supporting thousands of others, placing the Humber at the heart of the UK's renewable energy industry.

There are, however, several factors - not least the confusion and uncertainty surrounding the UK Government's level of ambition when it comes to the future of offshore wind - that could delay, or even entirely halt, the significant investment that companies are currently considering bringing into UK ports.

"While on the one hand, we've had positive announcements and the general sense that UK ports could be brought on board, at the same time, we have this complex evolving legislative framework and uncertainty as to how the Electricity Market Reform Package will be wrapped up," says Nick Medic, director of offshore renewables at RenewableUK. "These two opposing forces are tugging in different directions."

A lack of ambition for wind power?

In 2010, the UK Government pledged £60 million of funding to establish world-class offshore wind manufacturing across UK ports, with Prime Minister David Cameron admitting that "we need thousands of offshore turbines in the next decade and beyond, yet neither the factories nor these large port sites currently exist".

He added: "It's a triple win: it will help to secure our energy supplies, protect our planet and the Carbon Trust says it could create 70,000 jobs."

In the same year in Scotland, the £70-million National Renewables Infrastructure Fund was announced to secure Scotland's place at the forefront of the global offshore wind industry, its aim: to strengthen port and manufacturing facilities, and supply chain provision for manufacturing offshore wind turbines and related components.

Since then, Siemens has been working with Associated British Ports (ABP) to develop the £210-million Green Port Hull facility, which would manufacture and assemble components for offshore wind turbines, Samsung has started constructing the world's biggest wind turbine in Methil port, north of Edinburgh, and Mitsubishi is helping cement Scotland's leading position in the generation of cutting-edge offshore wind technology with its 7MW demonstrator project at Hunterston.

However, none of these projects have yet progressed beyond the very early stages. Siemens, for example, since signing a memorandum of understanding with ABP in January 2011, has yet to announce whether or not it will invest a projected £80 million in the Hull project, despite Deputy Prime Minister Nick Clegg's insistence that the government is doing everything it can to secure the investment.

"I know the secretary of state for energy and climate change is doing a huge amount to try and secure... the long-awaited and much discussed investment from Siemens in the Hull area, which will transform the local economy, and I can certainly assure you that those endeavours will continue," he said in October 2013.

Commitment to wind essential

For Medic, however, despite these claims, the government is not doing enough in terms of stating its commitment to the future of the offshore sector up to 2020 and beyond. In fact, targets seem to change on a year-by-year basis. In 2011, the Department of Energy and Climate Change (DECC)'s 'UK Renewable Energy Roadmap' stated that up to 18GW of offshore wind could be deployed by 2020, with over 40GW possible by 2030, but this was downgraded in its 'central scenario' published in October 2012 to a much less ambitious path, leading to just 11.5GW by 2020 and 16GW by 2030.

More recently, in November 2013, Secretary of State for Energy and Climate Change Ed Davey said that the UK Government was committed to reaching 16GW by 2020, and is aiming to have 39GW of capacity installed by 2030, but failed to be drawn on whether the government would push for a concrete target for renewables beyond the 2020 commitment.

Understandably, large turbine manufacturers such as Siemens, Samsung and Mitsubishi are thus concerned about investing in large projects that will necessitate a 20-30-year commitment on their part, and are holding out until they are more certain about the offshore wind industry's future.

"What ports and manufacturers need is some kind of firm commitment from the government that they are dedicated to an ambitious offshore roll-out programme, as well as the legislative framework that will enable this roll-out - for example, support for contractors and so on," Medic remarks.

Incentivisation: the virtuous circle

The advantages to the UK economy of securing investment from global engineering giants are clear. Not only will the input of these companies cement the UK's position as the top player in the offshore wind sector worldwide, it will also significantly benefit individual ports. Indeed, if plans go ahead, Medic emphasises that the country will see "large industrial customers who are committed to a port and a region in terms of supply chain for the next few decades to come".

This then offers a huge incentive to port developers to upgrade critical infrastructure; to provide the construction and assembly facilities necessary to create an effective supply chain. And a virtuous circle results: more turbine manufacturers are encouraged to set up shop in the UK, competition drives down prices and the number of jobs available in the UK engineering sector significantly increases, improving the country's overall economy.

Indeed, the UK offshore wind industry could contribute up to 0.8% of national GDP by 2030, according to research published by economics consultancy Cambridge Econometrics, but only if the imported content of UK offshore wind farms falls rapidly from 63% to 37% - in other words, only if a domestic supply chain is developed, and quickly. If the imported content were to remain at its current high level, the UK offshore wind industry would contribute just 0.2% to GDP by 2030, the report also notes.

"When you look at current scenarios, projections and targets, the sense is that you need a strong pipeline to enable at least one manufacturer to build a factory here in the UK," Medic says. "But, ideally what you want is competition - you want more than one. For a fully mature sector, you need to have in place not just the supply chain to provide one turbine manufacturer and one large logistics provider, but rather a mature supply chain that encourages competition."

In the 'Pump up the Volume: Bringing Down Costs and Increasing Jobs in the Offshore Wind Sector' report, published in July 2013 by the Institute for Public Policy Research, it is stated that at least two turbine manufacturers, preferably more, are needed to start the process of building a strong domestic supply chain.

"The political capital gained through attracting these companies, and the jobs they create," the report explains, "would engender a virtuous circle and breed greater support for the industry."

In addition to this, the UK would need to continue to support and build upon its existing strengths in the supply chain, namely its "huge stores of expertise and manufacturing capability in both the onshore wind and the North Sea oil and gas industry", and the UK Government would need to support export opportunities for British firms as they build up their expertise.

Of course, none of this is, by any stretch of the imagination, easy to achieve, but, according to Medic, one simple step could set the ball rolling.

"The spark needs to be a strong enough commitment from the UK Government about the role offshore wind will play in the long term," he stresses. "It's not just about a basic minimum target; we need a concrete target up to 2020, which will be the catalyst for that supply chain growth. Then an ambitious 2030 target would encourage other participants to join in."