Merry Christmas everyone. Yes I know it’s a tad early but I’m in a festive mood. Why am I feeling so positive? Well it’s all down to an interesting piece of not very widely reported news regarding the Glasgow-based Weir Group.
Weir is a company that we associate mainly with the oil and gas and other big system energy markets but it’s now demonstrated determination to grow its renewable energy business by buying US company which makes turbines for hydro-electric power stations.
Based in Pennsylvania, the American Hydro Corporation (a great name by the way) employs about 130 people in the design, engineering, and manufacturing of key components for hydro-electric turbines, had sales of £26.9million last year and gross assets of about £18.3million.
It is therefore already a reasonable size business and one that I’m pretty sure Weir will grow over time.
What really interests me about this deal though is that at last we have a Scottish company on the renewables acquisition trail.
For a while now I’ve been trying to say in the nicest possible way that building an indigenous renewables technology/manufacturing sector from scratch is going to be difficult. The ongoing lack of availability of risk equity capital, red tape and the attitude of our lousy banks are all big obstacles to renewables technology entrepreneurs.
So, when a Scottish company does take the risk and invest in renewables we should celebrate it and congratulate them on their vision and enterprise. Well done Weir – I hope you’re the first of many.
That apart I happen to believe strongly that there is still huge scope for additional hydro power in Scotland. Every time I drive over the river Dee or the Don I can’t help but wonder how much energy potential they represent. These and the other many rivers around Scotland’s coast must represent massive amounts of potential hydro energy that could, should and probably will be tapped.
We need to revive the art of building dams and we probably also need to look at the idea of west coast tidal barrages. These are relatively simple but very effective.
Water is of course a major resource and I was interested that on a recent TV programme the presenter said that in recent years the summer rainfall in Scotland had risen by 60% and winter rainfall by 20%. That’s one heck of an increase but it raises the question as to what we might do with it all apart from bottling/exporting.
Additional hydro power is certainly one very strong possibility but we also need to remember that water is a source of hydrogen and hydrogen can be used for a range of applications including fuel cells and internal combustion engines for transportation and fuel cells for power production.
I’m personally not very pro electric vehicles but fuel-cell powered vehicles that can be rapidly refuelled strike me as a better option than battery-powered ones.
So could we become a major producer and supplier of hydrogen and who or what should do that? For example – should it be Scottish Water? Could be an interesting way for that company to broaden its business interests. In fact maybe it should also be Scottish Water that develops more hydro power as well.
Just musing of course but, like the Weir Group, Scottish Water exists so has at least some clout – financial and otherwise – that it could apply to grow new income streams. Another generator in the market would also improve competition.
In the middle of December there’s going to be a “summit” in Aberdeen involving oil and gas seniors and leading figures from the renewables in order “to drive forward collaboration between the two sectors”.
Ian Wood of the Wood Group and Ian Marchant, chief executive of Scottish and Southern Energy, will co-chair this summit and it will be attended by representatives of leading companies from both sectors.
According to the summit announcement “an estimated 38% of the cost of an offshore wind project is spent on marine installation and associated sub-structure activity – where considerable strengths lie in the oil and gas supply chain”.
Now maths never was my strong point but surely that means 62% of the cost is spent elsewhere and presumably on big lumps of value added hardware most of which is imported.
Much of the attention is focused on offshore wind developments but of course the potential for wave and tidal energy to be an important part of our future energy should not be overlooked and indeed neither should other renewables sectors.
But I was so intrigued by some comments regarding the potential for transferring skills in offshore oil and gas maintenance and inspection into the offshore wind sector that I decided to do a little investigation of my own.
I called an acquaintance of mine who works for a company that is a very major investor and operator of windfarms both on and onshore and asked him about their inspection and maintenance routines.
What he told me was that maintenance schedules are based on six and 12-monthly routines which for large offshore turbines take roughly two and three days respectively. So each turbine gets about five days of maintenance time per year. For a large offshore windfarm this represents a lot of time but that’s not actually the end of the story.
All turbines are fitted with instrumentation that trigger an alarm when the turbine exceeds its operational parameters. These alarms have varying severity and can sometimes be reset remotely but about 40% of the time thy actually require a visit. On average the turbines require a visit two to three times per month. For offshore turbines the number of visits needed could be as many as three per month.
So, actually, the opportunity is pretty big although it’s fair to say that the market isn’t going to be anything like as big as the oil and gas business is now.
However, given the news from the Weir Group I wonder whether we’re actually limiting ourselves by talking mainly about offshore wind. I think I’d like to see companies across all sectors considering how they can get involved in the renewables sector.
Water I’ve mentioned already but shouldn’t we be encouraging companies in the bio technology sector to be considering an involvement in the growing bio-energy business? Bio-fuels, bio-mass, anaerobic digestion and others are all areas in which the bio-tech sector could play a part but then so could oil and gas companies involved in building process systems.
Let’s not limit our imagination to sectors such as wind. Let’s look at everything we need and see what else we might achieve. We also need more companies to take the Weir approach. If we’re not going to create the companies we need then let’s buy them.
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