Wednesday, 16 April 2014

15-year contract demands damaging offshore wind industry

SIEMENS became the first offshore wind turbine manufacturer to confirm it plans to set up a base in the UK when it announced it was establishing a blade manufacturing base in Hull, creating 1,000 jobs.

In recent years four of the world’s other main turbine players have signalled their intent to establish factories at UK ports, however none have yet committed, with the length of leases required said to be a major drawback.

Industry insiders say that many of the turbine companies want leases of no more than five years, but the ports, which will have to make substantial investments in berths and other infrastructure, need a 15-year timetable to make it work for them.

One industry expert said: “The strike prices have been set, and the Government wants local content in the supply chain. But the turbine manufacturers looking at building factories in the UK are being put off by the length of leases they are being asked to sign.

“If it was a five-year lease that wouldn’t be a problem, but a 15-year lease is, and if the market does not develop in the way expected this would add insult to injury.

“While the Government has shown its commitment to renewable targets up to 2020, there is no visibility beyond then.”

Associated British Ports has agreed to invest £150m upgrading its port facilities as part of the Siemens deal, although details of the length of lease agreed between the two parties has not been released.

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