Blog 06 Mar 2024

The first in a series of offshore wind masterclasses, organised by the Energy Transition Zone in collaboration with the Energy Industries Council, Scottish Enterprise and others, took place in Aberdeen today. The topic was the secondary steel opportunity arising from the ScotWind and INTOG projects as they start to enter construction from 2027 and the early 2030s.

Representing the developer perspective was TWP’s Supply Chain Manager Gavin MacKay, who introduced TWP’s projects and the unique make-up of our joint venture, which has a Tier 1 contractor, in the form of DEME Offshore, “baked in” and, crucially, sharing TWP’s Scottish supply chain commitments. He also outlined the vision for bringing local businesses through to DEME’s contracts in Scotland and a global portfolio worth more than £3 billion per year (according to the recently published financial results from DEME Group).

What is secondary steel?

Adam Swainbank of Scottish Enterprise gave a detailed description of what qualifies as ‘secondary’ steel, which can also be found in a comprehensive and useful factsheet on the SOWEC website. In short: secondary steel comprises all the components that attach to the primary components – the towers and foundations – of a wind turbine.

As Adam pointed out, the need for secondary steel is not inconsiderable in volume as it will clock up £64 million in contracts for a 1GW project (which both our Ayre and Bowdun projects are). Cumulatively, ScotWind and INTOG could exceed £1.9 billion in secondary steel contracts, and while not all of these can be delivered in Scotland, the opportunity for local businesses is not unrealistic given that the conference today was attended by many players with the necessary competencies and experience.

This sentiment was echoed by a speaker from Harland & Wolff, who noted that ‘secondary’ components like pile templates and grippers are not insignificant in size either, weighing in at 400 – 2,000 tonnes per item.

Why is TWP looking at Scottish businesses for secondary steel?

Gavin explained the motivation for TWP’s presence today: secondary steel is seen as one of the ways of maximising the Scottish supply chain in our projects, as the local competencies already exist. “The challenge is in transitioning these competencies to the serial production needed for offshore wind and reconfiguring local facilities,” said Gavin. “Many of these competencies are currently focussed on the lower volume, small batch contracts characterising oil and gas.”

TWP is also “looking for local businesses who have already done all the tricky stuff offshore in secondary steel” who can be pulled into the TWP and DEME Offshore procurement process where they can be helped in preparing for offshore wind contracts.

“There are people working hands-on, on the tools, who have all the skills needed to work with equipment for serial manufacture and automated processes, which will enable the supply chain to do more with less,” commented Gavin.

Discussion in Gavin’s Q&A focussed on defining the key drivers for bringing the secondary steel opportunity in Scotland to fruition. “Availability is the key driver from our point of view. By the time we enter the construction of our wind farms (from 2029), there will be constraints on supply, so going to the same old sources for parts like handrails and pile grippers will not be as easy for ScotWind developers. We need new entrants to this market, especially those with a proximity to the projects, which is particularly crucial for floating wind components, which have to be assembled locally.”

However, as one participant pointed out, there is as yet no standardisation around items as simple as handrails, as design varies depending on whether they are internal or external, and the materials cover a spectrum too. As Gavin noted: “If we can standardise – converge around a few design envelopes  – we will create an opportunity that local businesses can respond to.”

Achieving local content – the French model

Gavin took some questions on a success story from TWP founder Qair in achieving almost 100% local content at the Eolmed Floating Wind Park, which is currently under construction in the Mediterranean.

“There are different policy drivers at play in France, and the entire leasing and consenting process is very different from what we have in the UK, which makes it difficult to make direct comparisons or draw lessons.

“What we know is that support mechanisms for local supply chain come in earlier in many European countries, and the UK’s CfD is imperfect as a driver for local content as it kicks in too late in the development process, though the introduction of the Sustainable Industry Rewards (SIR) is walking developers towards earlier engagement with local businesses.

“We can also talk about ‘French envy’ of Scotland when it comes to offshore wind: firstly, envy for the scale of ambition of ScotWind and then the home-grown construction and engineering expertise here in Scotland, which means we are not going from a standing start.”

“Levelised Cost of Energy (LCOE) is King in procurement decisions in offshore wind at the moment, but we will watch how these upcoming SIRs in the CfD begin to reward early engagement and commitments to local supply chain.”

“That does not mean we need to wait: this engagement is already underway for TWP, and our founder DEME is now working with a Scottish business on pile gripper production. The opportunity is there to pull local businesses into the design innovation too.”

Finally, the phrase “secondary follows primary” was highlighted by Gavin in his presentation and Q&A, noting that attracting these primary component manufacturers (like the recent Sumitomo announcement on the cables front) will be a key driver behind the development of the secondary steel market for offshore wind.



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