Former Prime Minister Gordon Brown’s letter to Belgian contractor DEME Group requesting that they “give back to the community” in terms of BiFab contracts has highlighted a potential crisis of confidence in the Scottish renewables supply chain.
Adam Barber, managing director of analysis and investment organisation A Word About Wind, claims that the local supply chain will need greater support and to not make the same mistakes as the oil and gas sector which preceded it.
Workers unions have voiced concern that the decision by DEME subsidiary, GeoSea, to award the Moray (East) Offshore Windfarm fabrication contracts could damage the reputation of the Scottish renewables supply chain.
Mr Barber said much of the responsibility falls at the feet of government and that greater support begets greater rewards.
He said: “If you look at what’s happened in Scottish offshore wind, and what’s happened within a wider-UK context in the offshore wind market, we’ve had this consistent failure since 2010 to balance out that local supply chain.
“The local content within Scotland has been very low for a while. Michael Fallon actually tried to bring it the subject around 2014, but it’s extremely difficult to legislate it. Supply chain opportunities need to be driven as much as by industry as it is by politics.
“The real issue is how the government can support companies like BiFab to export and trade internationally. It should be less about focussing on the next two upcoming contracts, rather than what does their business development strategy look like beyond that?
“You don’t want to be artificially propping up a contract and stopping a developer, whether it’s an oil giant or a renewable developer, from procuring at a competitive rate. And I think that’s the challenge we’re up against in this particular case.”
Mr Barber also said that the Scottish offshore wind sector supply chain must not make the same mistakes as the oil and gas sector if it is to create a competitive place for itself internationally.
He claimed that rather than measure itself by that same yardstick, the Scottish supply chain perhaps has a unique opportunity.
He said: “If you look at how the mechanics of how an offshore oil rig gets developed and built versus an offshore wind farm, with the oil rig you’ve actually got quite a tight and smooth supply chain and often it’s very heavily controlled by an oil major. The project is really owned by that major corporation.
“With offshore wind it’s actually quite different and that’s where the opportunity comes because we’ll end up with a developer that will secure the right to develop and build out that project and there’s a hidden supply chain associated with that.
“These hidden services are things like services, financial and investment advisory firms – the money behind it. That doesn’t often get reported on because it’s not a tracked measure. What does get reported on are those initial big ticket items, such as turbine contracts.”
Mr Barber did recognise, however, that there was a growing crisis in confidence that Scotland could sustain a competitive supply chain in the face of foreign competition.
He advised that the Scottish Government consider a greater role in the management at the early phase, without becoming protectionist in terms of contracts.
Mr Barber said: “The reticence from government to force developers to put in place specific manufacturing and supply contracts is built around not wanting to contravene EU and wider protectionist rules.
“However, when it comes to creating local jobs, that aspect is absolutely critical when it comes to the way you actually create and build a base support for that sector. The challenge is where that support comes from, and it all comes down to economies of scale.”
Recommended for you
