New offshore wind projects poised to contribute to energy transition
Global offshore wind capacity is set to surge to over 234 GW by 2030, from 29.1 GW at the end of 2019, according to the Global Wind Energy Council (GWEC). The GWEC forecasts that through 2030, more than 205 GW of new offshore wind capacity will be added globally, including at least 6.2 GW of floating offshore wind. With these projections, it is clear the sector is set to play a leading role in powering both the energy transition and a green recovery following the pandemic. Regions around the world are exploring how they can make the most of the new opportunities created through offshore wind. Global energy consultancy Xodus has led on several recent projects in Europe and the U.S., conducting comprehensive research into how areas can develop and grow local supply chains.
Local content and socio-economic benefit are often mooted as the likely boon that will arrive alongside renewable energy from offshore wind, but with the unrelenting pressure to drive down costs and deliver value to the consumer, how to pay for the required investment to deliver this is often an afterthought. When delivering a strategy for green growth, it is important for state and national governments to consider their priorities from the industry—making this decision early allows for an incentive system to be developed, which will encourage investment and nurture the local supply chain to grow with the industry.
When left with only a $/MWh KPI to consider, developers will default to using established supply chains, as this is easier, more efficient, and also cheaper at both a capex level and financing level. Using established suppliers with proven capabilities reduces risk on a project, and therefore reduces the overall cost of capital. Therefore, in order to disrupt these relationships, policymakers must consider the reasons for them—and how to best offset the costs, or if possible, mitigate them entirely.
Clustering increases efficiency. However, in some markets, these decisions have been made already—and developers are faced with narrow margins and increasing political pressure to deliver socio-economic benefits that a project can ill-afford. Xodus has, therefore, developed a specialist suite of services to help both developers and new suppliers to maximize local content and minimize waste effort on procurement and communication. Clustering of both local suppliers, and projects and opportunities, allows for a more efficient use of resources when identifying qualified suppliers, as well as increasing visibility of development pipelines to encourage investment.
Regional project clusters can give large suppliers and OEMs the visibility they need to invest in localizing large elements of manufacturing and assembly. Each supplier will have its own metrics for decision-making, but generally, suppliers will look for a visible pipeline of between 3 GW and 5 GW before making a decision to localize supply—with the availability of investment support or incentive being a major factor as to which end of the spectrum will tip the scales. Supplier clusters create a clear space, where developers can access local companies with relevant competencies and capabilities, while also allowing companies to foster innovation and collaboration, in order to increase capability and capacity to deliver services to multi-billion dollar projects.
Headquartered in Aberdeen, Scotland, Xodus has been involved with renewables since its inception in 2005 and has played a key role in many milestones for offshore wind. As lead consultant in the environmental impact assessment (EIA) for Equinor’s Hywind project, the company played a pivotal role in the creation of the environmental statement for the world’s first floating wind array. In recent years, Xodus has grown its renewables team around the world and has specialists across the sector focused on project engineering and development, energy yield analysis (EYA), permitting and consenting, and cables and interconnectors. Through this expertise, as well as access to insightful data, the company has positioned itself at the forefront of research into potential benefits to local supply chains.
Offshore Wind Cluster Builder. Earlier this year, Scottish Enterprise, Scotland’s national economic development agency, appointed Xodus to the role of Offshore Wind Cluster Builder to develop and grow the offshore wind supply chain across the country. Xodus is supporting Scotland’s existing offshore wind clusters (Fig. 1.), DeepWind and Forth & Tay Offshore, in their remit to foster collaboration, drive competitiveness and improve productivity in Scottish offshore wind.
“The Offshore Wind Cluster Builder will be an important project to support the development and growth of the offshore wind supply chain across Scotland,” said Andy McDonald, head of Low Carbon Transition for Scottish Enterprise. “SMEs will have access to services to collaborate, grow and secure business within the offshore wind industry locally, nationally and internationally, leveraging Scottish capabilities to strengthen the offshore wind supply chain for a sustainable industry and net zero future economy. This will align with the existing work of DeepWind and Forth & Tay Offshore, to ensure Scotland benefits from the many opportunities presented by offshore wind.”
A range of services are being delivered to SMEs, including one-to-one support, events, workshops and market intelligence, as well as facilitating collaboration between SMEs and academia. Xodus will also work to consolidate the offshore wind landscape for SMEs, connecting and simplifying elements of the sector to enable greater engagement by Scottish companies, helping them to capitalize on opportunities presented by offshore wind.
Building a competitive Scottish supply chain. A new offshore wind supply chain survey, developed in conjunction with DeepWind, Forth & Tay Offshore, Scottish Offshore Wind Energy Council (SOWEC) and Scottish Renewables, aims to build a more detailed picture of Scotland’s supply chain to showcase the breadth of capabilities across our companies. David Webster of Forth & Tay Offshore said, “we are looking to build on the opportunity from the growing pipeline of Scottish, UK and global offshore wind projects and the need to grow local content in the sector. We are shaping the resource provided by Scottish Enterprise for the development of a competitive supply chain in Scotland. We aim to increase Scotland’s success in winning orders for projects inside and outside Scotland’s waters and to help support and scale up the Scottish supply chain.”
Paul O’Brien of DeepWind added, “the cluster builder initiative offers our SME members a further layer of support to help them navigate the complex offshore wind supply chain landscape. By working closely with the Xodus team, we can help our members to develop a compelling business case, increase their competitiveness and deliver a sustainable business model. Cluster builder will be an important tool to help build a strong and successful offshore wind supply chain in Scotland.”
Xodus has worked with Scottish Enterprise on several projects to support and grow supply chain capability in Scotland. This work includes supply chain analysis for sensing and remote monitoring in marine renewable energy, offshore wind expert support for SMEs, and the collation of Scottish supply chain databases in the offshore wind and green hydrogen sectors.
Benefits of cluster builder initiative. Scott Hamilton, Renewables Division Manager at Xodus, said, “while we are committed to enabling the energy transition at both a local and international level, our work in local content and supply chain helps to deliver this transition in a way that provides local benefits and equity at a local level. Scotland’s economy has been historically reliant upon oil and gas and fossil fuels. Providing a structured approach to the transition ensures that not only can companies and the workforce access the opportunities from this new and exciting industry, but it also ensures that the industry gains the benefits of decades of relevant scientific, environmental and engineering experience.” The cluster builder project has also strengthened Xodus’ offering to the global offshore wind supply chain across the Atlantic, where the company is conducting similar research projects.
Xodus’ Boston office opened last year as part of the company’s plans to expand its offshore wind services across North America. The team, with input from Scottish colleagues, is assessing the local and regional supply chain around Massachusetts and has also recently won work to carry out a related assessment and gap analysis for Hampton Roads and the southern Virginia region. Virginia is home to the first U.S. offshore wind project, ever, in federal waters. When fully constructed in 2026, the Coastal Virginia Offshore Wind project, anchored in the Hampton Roads region, will deliver up to 8.8 million megawatt hours/year of clean, renewable energy to the grid—powering up to 660,000 homes, Fig. 2.
Creating employment opportunities. This multi-billion-dollar investment in clean energy is set to create hundreds of new, high-paying jobs and position Virginia to host a supply chain that will serve the U.S. East Coast wind industry. Hampton Roads also will support development of Avangrid Renewables’ 2,500-MW Kitty Hawk Offshore Wind project, which is estimated to generate over 800 jobs in the region and have a $2-billion impact on the economy of Virginia and North Carolina over the next decade. The Hampton Roads Alliance is the leading regional economic development organization for the Hampton Roads region of Virginia. It works collaboratively to lead the 757 region in attracting, growing and retaining companies and talent to create a more resilient, inclusive and equitable region of choice.
“With development of these two projects, Virginia is now on a trajectory to lead offshore wind development in the U.S.,” commented Doug Smith, Alliance President and CEO. “The Commonwealth is also a natural fit to become a supply chain hub for the offshore wind industry, with our best-in-class port infrastructure, a centrally located and capable workforce, and a supportive business and regulatory climate. The Alliance’s dedicated offshore wind supply chain development initiative is leveraging these projects to grow the regional economy and position Virginia as a leader in the sustainable energy industry.”
Assessing U.S. supply chain opportunities. The Hampton Roads Alliance partnered with Xodus and BW Research to conduct a major offshore wind supply chain study, which will be used to build out the U.S. offshore wind industry in Hampton Roads and identify key opportunities for economic expansion. The partnership will deliver an in-depth offshore wind supply chain assessment and gap analysis for the Hampton Roads metropolitan area and wider southern Virginia. The study will be based upon the requirements of both offshore wind developers and tier-one suppliers, as well as gauge the capabilities of local companies to become key suppliers to the industry.
International collaboration—a win-win situation. This work will identify Hampton Road’s supply chain assets, as well as uncover any gaps to help the Hampton Roads Alliance in its economic development efforts to support offshore wind. Jeff Tingley, Xodus’ U.S. Head of Strategy and Market Development, said, “we’re in the rare position of providing genuine international partnership opportunities for local companies through our Scottish and U.S. clusters, and we’re seeing a steep rise in this type of work, as more and more regions explore the opportunities available through offshore wind. Our renewables team provides a 360o view on how to develop successful energy projects and can draw upon the skills from the integrated discipline divisions across our international offices.”
The offshore wind supply chain assessment entails scoring the supply chain requirements, identifying and assessing key sectors, and analyzing the strengths and limitations of Hampton Roads. It will lead to a set of recommendations for a measurable, strategically focused offshore wind development plan, based on available strengths and market forces, including roads for potential investment.
Mr. Tingley added, “the size of the U.S. offshore wind market creates a need for the development of an entire new U.S. industry, and Hampton Roads will play a major role in its development. This work aims to help both the industry and Hampton Roads improve efficiency and reduce costs, as the scale of development grows, while helping local communities further realize the economic benefits associated with offshore wind. With an aggressive strategy to ramp up offshore wind activity, this is a fantastic opportunity to create a sustainable local supply chain, which can deliver a responsible energy future.”
Massachusetts planning for the future. Last year, Xodus and BW Research Partnership also partnered to conduct a research project to assess the local and regional supply chain in support of the growing offshore wind industry in and around Massachusetts. Working on behalf of the Massachusetts Clean Energy Center (MassCEC), Xodus and BW Research, in coordination with Greentree Consulting and the Massachusetts Manufacturing Extension Partnership, delivered a comprehensive offshore wind supply chain assessment and gap analysis. This was based on the requirements of both developers and tier-one companies, and the capabilities, qualifications and interest of Massachusetts companies and neighboring states.
MassCEC’s 2018 Massachusetts Offshore Wind Workforce Assessment found the estimated direct impact (development and construction) of 1,600 MW of offshore wind energy on state economic output ranges from $675 million to $800 million. The assessment further estimated indirect (supply chain) impacts of $360 million to $775 million, and a total economic impact between $1.4 billion and $2.1 billion (direct, indirect and induced). With much of the offshore wind facilities currently manufactured and produced overseas, MassCEC is supporting efforts to develop a robust local supply chain in Massachusetts, and throughout the region, that can manufacture and produce turbine components and associated equipment at a scale necessary to serve planned and anticipated offshore wind projects.
“Massachusetts is committed to supporting the expansion and development of the local and regional supply chain to meet the needs of the growing offshore wind industry,” said Steve Pike, MassCEC CEO. “To do so, we need more detailed understanding of the specific capabilities that exist in Massachusetts and the region, and we are pleased that Xodus and BW Research are bringing their experience and expertise to help Massachusetts companies capture as much of this new business opportunity as possible.” Such measures aim to help the industry improve efficiency and reduce costs as the scale of development grows, while helping local communities further realize the economic benefits associated with offshore wind.
Creating a regional supply chain cluster. Jamie MacDonald, Xodus’ director of operations in Boston, said, “our outreach campaign provided an in-depth assessment of the offshore wind supply chain to identify the strengths of Massachusetts and neighboring states. This was a big step in the right direction in working towards a multi-state regional supply chain cluster, offering the industry a wide network and the best of what each state has to offer. Our aim is to create a local sustainable supply chain to ensure offshore wind, as an industry, can be more efficient in the future, providing significant economic impacts for the region. “Overall, our mission is to deliver a responsible energy future. This means achieving a future where energy projects are sustainable from a technical, social, environmental, ethical and economic perspective.”
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