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30 May 2023

Overcoming supply challenges with collaboration

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Collaborative working brings many benefits; shared learning, increased productivity, and accelerated project delivery. Many in the sector are realising that to meet the world’s ever-growing energy needs, collaboration will be fundamental, especially for the offshore wind market.

In an article in Energy Global Cerianne Cummings, Offshore Wind Market Director at Kent, asks the question:

Could collaborative delivery models mitigate global supply challenges in the offshore wind market?
Since the Paris Agreement, global governments and leaders have outlined, defined, and refined their net zero aspirations, targets and, more recently, frameworks. As a result, the last two years have seen a significant increase in the number of global seabed leases being awarded for new offshore wind farms or extensions to existing offshore wind farms.
Due to events in Ukraine, many countries are now accelerating their plans to move away from dependency on other countries to supply their energy needs; notably both the UK and the US have announced commitments to accelerate the installation of offshore wind farms in their respective countries.
New leases have encouraged new offshore wind developers to move into the market. This, alongside the accelerated commitments, mean that the global offshore wind market is looking to those with experience to help navigate these challenging demands. The world is looking at the existing UK and European supply chain to share its experiences and lessons learned; to mitigate repeated mistakes and to move the sector forward at the speed now required.
The recent GWEC report references analysis undertaken by international Renewable Energy Agency (IRENA) of the human resource requirements of the onshore and offshore wind industry. The analysis states that each offshore wind development requires 2.1 million person days of effort for a 500 MW fixed bottom to move from the development stage through to decommissioning. By comparison, only 144 000 person days of effort are required for a 50 MW onshore wind farm. The environmental differences between onshore and offshore developments are clear. As a result, offshore wind developments rely on the harmonious efforts across an extensive number of independent organisations all resulting in points of interface; developers, designers, original equipment manufacturers (OEMs), certifiers, marine warranty surveyors, fabricators, installers, operations, and maintenance teams to name but a few.
The last 20 years of offshore wind in the UK and Europe have demonstrated that the overall success of a project is determined by how well aligned and managed project interfaces are. There are a significant number of specialist companies and organisations that need to align for each project to be planned, designed, fabricated, installed, and operated. There is no time in the history of offshore wind that this challenge has been more important to overcome than now.
The increase in demand is putting significant pressure on all parts of the existing supply chain, whether that is in the shape of available installation vessels, suitable fabrication facilities, availability of component parts or material, capacity and suitability of ports and harbours, or suitably qualified and trained people. It is no surprise that the market is heading towards colossal supply and demand challenges and the additional costs that demand will bring. Perhaps the reducing cost base seen in offshore wind is about to change?
In addition to mobilising the experience developed and gained in the last 20 years in the fixed bottom offshore wind industry, the global markets are in parallel pushing forward with the more novel floating offshore wind. Whilst floating wind is seeing similar challenges to fixed bottom, there are a few differences; of note, different manufacturing, assembly, and WTG integration requirements. In combination with the high levels of uncertainty on hull size, shape, and WTG size, how does the supply chain know where to invest? There is some good work being led by ORE Catapult Floating Offshore Wind Centre of Excellence to begin to address this, but the reality is the floating offshore wind journey is still at the beginning.
So how can the offshore wind market share the lessons of experience, manage, and provide the required resources and meet the aspirations and targets as set out to be net zero?
Early supply chain engagement
Most projects recognise the need for early supply chain engagement and alignment. Identifying and agreeing project requirements at the earliest opportunity saves time and money, reducing the number of iterations and permeations. The key is facilitating, co-ordinating, and contracting parts of the supply chain to come together at the optimal time in the developments programme. In recent months, as a direct result of the known limitations in vessel availability and fabrication slots, and to mitigate potential programme risks, many developers are coming to market before renewable energy auctions have completed. This approach has had some limited success. Is this engagement too early?
With a need to prioritise enquiries, the supply chain is naturally focusing its efforts on those enquiries that will have the most chance of leading to contract awards. All enquiries require resource to be deployed at the supply chains costs, and, whilst business models recognise the need for the investment at the enquiry stage, the reality is that parts of the supply chain no longer have the resource availability to respond to the number of enquiries that are being released into the market place.
One solution that appears to be addressing some of these challenges is partnering.
Those following the offshore wind media channels will likely have noticed that frequent new memorandum of understandings, partnerships, investments, or framework agreements are being announced. Examples include:
  • FSSE’s financial backing of the Port of Nigg factory.
  • FØrsted’s commitment to EEW to develop a new monopile production facility in New Jersey.
  • FImplenia and WindWorks Jelsa agreement to construct floating concrete platforms.
These commitments have been required to manage and share risk and provide confidence to the supply chain.
Appropriate risk allocation
All projects, developers, and businesses consider risk and where risk should be allocated. It is taught that risk should be allocated to those most able to mitigate and manage risk. To date, it is easy to argue that this has not always been the case in offshore wind. Each year, some company annual financial reports record challenges that business has seen in the offshore wind market and the impact those difficulties have had on business performance. People hear about claims that have been made resulting in court cases when they could not be settled. With the reduction in supply and the increase demand in the market, now more than ever, businesses are assessing the ‘attractiveness’ of new contracts based upon the contracts risk allocation. The supply chain is no longer willing to agree to contracting terms that push all of the risk into the market place. Now is a good time to review, assess, and refresh contracting terms to ensure appropriate risk allocation and the fair and reasonableness of the contracting terms. Fair and reasonable contracting mechanisms will facilitate true collaborative working.
True collaborative working
True collaboration requires those collaborating to be committed to maximising joint performance in order to achieve the same objectives; it takes significant investments of time and effort but the potential rewards from collaborative working are numerous. Collaboration enables improved delivery of integrated services, often with efficiencies and savings, allowing the sharing of knowledge and information. It is worth noting that separate organisations can maintain their independence and collaborate.
Collaboration in the offshore wind market would allow organisations with resource and expertise to offer assistance to others with lesser experience. Interfaces aligned to meet the same objectives will share and discuss challenges and align on how to overcome the difficulties to the benefit of the project as a whole; in the meantime, educating and informing each other of different perspectives. Collaborative teams become agile and bond over shared goals. This is likely to lead to comradery, increasing productivity, and perhaps, more importantly, improving mental health in the world of work. Ultimately this could also lead to accelerated project delivery and improve resource retention.
It is therefore no surprise during this year that there have been announcements encouraging and supporting collaborative working; the Scottish Offshore Wind Energy Council’s Collaborative Framework Charter is a demonstration of the commitment of ScotWind projects to work collaboratively, and the Global Offshore Wind Alliance from IRENA, GWEC and the Danish Government, which is aimed at becoming the go to enabler for unlocking resources. Whilst these commitments are being outlined and endorsed at the highest levels of the offshore wind supply chain, now is a good time to think collaboratively top to bottom, end to end.
In summary, if the global net zero and government targets are to be met, and the Paris Agreement satisfied an environment needs to be cultivated that allows the offshore wind supply chain to openly share the lessons of experience, manage, and provide the required resources to ultimately thrive and grow.
This will only happen if the sector and projects foster a more transparent working environment. Consideration needs to be given to: right time supplier engagement, partnering to provide investment confidence, appropriate risk allocation resulting in fair, and reasonable contracting terms, all of which will result in shared end goals and encourage true collaborative working.
Collaborative working brings many benefits; shared learning, increased productivity, and accelerated project delivery. Many in the sector are realising that to meet the worlds ever growing energy needs, collaboration will be fundamental.

Read the article in Energy Global:

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