Hope for Offshore Group Newcastle amid £10bn pipeline of offshore wind contracts

Things are looking good for for businesses operating in the offshore wind industry in the North East with order books filling up and expansion plans underway or already being implemented. Some £10bn of Government supported orders have injected confidence and certainty into the industry with some major developments underway in UK waters.

This future pipeline of work was boosted again with the recent budget plans announcing the Governments commitment to supporting the industry beyond 2020.

At a time where many oil and gas companies are struggling their is a shift in focus towards renewable energy in the hope of replacing lost orders. One company doing this is OGN of Wallsend which as a consequence of the oil and gas freeze has lost many orders.

OGN is currently waiting to hear if it has been successful on bids for work for two major UK offshore wind projects. Namely; the first stage of the massive 7.2GW East Anglia scheme, which is being delivered by Scottish Power and the 588MW Beatrice scheme in the Moray Firth by SSE Renewables.

With the turbines heading into deeper waters, underwater jackets to support turbines in depths of over 100ft are required; with each jacket weighing in at around 1,000 tonnes.

OGN’s chairman Dennis Clark said: “The Government seems to have a great deal of faith in offshore wind and is in it for the long-haul. In many ways it has no choice, as there is no appetite in the market for new gas-power stations. The system seems to be in meltdown and grid margins are getting smaller.”

He said the Government’s Contracts for Difference (CfD) method of securing offshore wind capacity seemed to be working and is benefiting the UK supply chain.

He continued: “As things stand UK industry is not yet geared up to do offshore wind. Most of the equipment for the previous schemes has come from abroad, but the CfD process means the market is being stretched and this is giving the UK supply chain the opportunity to gear up to meet this demand.”

As things stand the UK is set to have 6GW of installed capacity by the end of the year and 10GW by 2020 - which would be equivalent to 20% of total UK electricity supply.

The first CfDs were set at strike prices of £150 per MWh, the two subsequent ones came in at less than £120/MWh and the Government has maintained this downward pressure by stating it wants CfDs awarded for delivery after 2020 to be less than £105/MWh.

As well as maintaining downward pressure on price the Government has requested British content of at least 50% of total project spend.

While almost all of the turbines and blades, to date, have all been made overseas Siemens is opening a £300m turbine blade production facility on Humberside.

Earlier this month DONG Energy took a major stride in embracing its UK content promises by, for the first time, awarding all cabling and protection contracts to the

homegrown supply chain.

The good news for the North East is that these contracts for its Race Bank scheme were awarded to three regional companies.

The installation of the cables will be undertaken by DeepOcean, of Darlington. This is a major boost for the company which made redundancies last year due to the oil and gas downturn.

Source: Chronicle Live

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