Offshore Wind Round 3: On your marks… Get set…

The allocation of the Crown Estate’s Round 3 zones is nearly upon us.

After what seems like a life-time of anticipation, the commercial negotiations are now going on between the Crown Estate and the wind energy consortiums, to finalise the allocation of offshore zones in Round 3 of the UK’s offshore development. I have spoken to a number of contacts in the industry this week, who confirmed that things are very close to kicking off. Now is the time to fasten your seatbelts, we are about to get very busy!

Massive demand for Development Skills.

Everyone to whom I speak acknowledges the fact that, should they be successful in securing a link in the supply chain towards delivering a new round of offshore wind, they will need to build their teams accordingly to make sure that they can deliver upon their commitments. From EIA specialists, to planning and consents analysts, and technical due diligence engineers, there is all of a sudden going to be a massive demand for talented individuals who can help to turn an allocated area of the sea into a massive power generating asset.

I was speaking to a specialist in Environmental Impact Assessments for Offshore Wind farms yesterday. He has been involved since Round 1 of offshore developments, and is known as one of the few real experts and heavy hitters in that arena. He is already very busy, and is anticipating his work load only to increase as time develops. Immediately the best of the best in this industry, those that have lived and breathed offshore wind already, are going to be seriously in demand.

How will you attract the best?

In a question of weeks and months, there are going to be up to 9 consortiums suddenly competing to secure the best teams in a short period of time. All of these groups of companies currently have key players already on board, but the development of a multi-MW wind farm demands significant resource and expertise. Employers, have you thought about how you are going to attract further players to your team? I’ve spoken to several people in the last few months who have claimed “we know who we want to hire already”, but have you considered that other people want to hire the same experts?

How will you create and implement a hiring strategy which allows you to identify quickly and efficiently the right people for your company, and then ensures that you are able to attract them without going through unnecessary to-ing or fro-ing, and most importantly without entering into a bidding frenzy?

How will you retain the best?

Have you also considered that other companies out there may have identified members of your existing team as the people they want to hire? How will you ensure that you retain your key players? Retention means ensuring that they are 100% comfortable where they are, and will not start to entertain your competitors’ flirtations of promotion, better benefits, more money, or increased responsibility?

Head-hunters are going to be all over this space. And whilst some of us do so with discretion, and with the best interests of all parties at heart (i.e. we have more values and ambition than just to make a quick buck), I warn you now that there are many who don’t.

You need to make sure that you have a strategy in place to hire the right people, and to retain the right people.

If you would like to discuss how you are going about this, please don’t hesitate to give me a call on 0845 241 4810 or email clare.buxton@ecosearchglobal.com.

By Clare Buxton

Wind Energy Sector Lead, EcoSearch

Follow @CEBUX on Twitter

The Titans of Wind

Last week saw the announcement of some very exciting plans for future offshore wind farms in the UK: Two consortiums of colossal size and power have been created with the aim of winning rights to develop large scale wind power generation farms in alignment with the Crown Estate’s proposed high potential zones off the coast of the UK.

Where there is nothing stopping an individual company bidding on its own for a zone, there has been much talk in the industry over the last 6 months or so about the sensitive process of forming partnerships, JVs and consortiums. However, the weight and power of those consortiums was really hammered home this week, with the announcement of two of the newly created consortiums bringing together giant European players in the energy industry: Airtricity (recently acquired by SSE) will join RWE npower renewables (the UK subsidiary of RWE Innogy), Statkraft and StatoilHydro to prepare a joint bid under the consortium name of Forewind, project managed by Peter Raftery, a well respected heavy weight and long-term employee of Airtricity. To compete with them, DONG Energy, E.ON and Fred. Olsen Renewables has also announced that they have formed a consortium to bid for a piece of the offshore wind action.

I don’t know why it surprised me so much, but the brute force of these players all working together really hammered home to me the sheer volume and seriousness which this next round of offshore wind farm development will bring to the UK’s renewable energy capacity. Developing renewable energy projects is very expensive and requires a great deal of initial capital. The application process alone, to gain consent for a multi-MW wind farm can cost up to £200,000 and the current acceptance rate is only one out of three applications, so it is no surprise really that it will be the larger and richer organisations who are leading the bids. With giants like these joining forces how can the smaller, less cash rich, specialists even try to compete?

The 10 Scottish offshore zones (with a combined potential capacity of nearly 6.5GW) that were released in February, have also been dominated by the European Utility giants – Airtricity (SSE), Dong, E.ON, Npower and Scottish Renewables all being awarded zones. It is good to see that Fluor (working with Airtricity), SeaEnergy (working with Airtricity and with Npower) and Mainstream – ex-Airtricity boss O’Connor’s new baby – have also seen a share of the action. Mind you, Fluor may not be such a big name in Wind Energy, but as a Fortune 500 company with 60 office locations in 6 continents, it is hardly an SME! Will the second tier players (in terms of size, not speciality) also get a share of the English offshore action, or will it be dominated by the titans of energy generation? And does it really matter? It might be nice to see more variation of asset owners, but given the expense that is obviously going to be needed (just look at the quoted prices for DONG/E.ON/Masdar’s London Array project) it’s hardly any surprise that it will be the companies with the deepest pockets (and the proven track records) who will be footing the bills!

The round 3 projects are going to be high value, high visibility and high importance projects that will be absolutely crucial to helping the UK deliver its 2020 renewable energy targets.

By Clare Buxton
Sector Lead for Wind Energy

Councils Challenge the Crown

Should local Councils have been consulted about the Crown Estate offshore zones before the bids go in?

I read this morning on the BBC that four Borough Council’s have issued a statement in which they have called for an open debate on the future of the offshore “West of the Isle of Wight” Crown Estate zone, off the South coast of Dorset.

Image by phault

The four Boroughs have clubbed together to say that they are “collectively disappointed” as they believe they should have already been consulted to be able to express “[their] views and the views of local residents partners and businesses”, about the proposed area of “economic potential for wind farm development”.

I understand that as part of the development phase for any wind farm, or major development for that matter, consultation with the local community (often represented rightly or wrongly by the Council) is absolutely fundamental. However, at this stage this is just a “zone” (literally just an area of the sea bed) which has been identified as potentially suitable for an offshore wind farm, in the aim to generate 25GW of offshore wind energy by 2020. There’s still a long way to go, in terms of environmental assessment, local consultations, grid connection and I hate to think how many other hurdles that I do not even know about!

It seems to me that the local councils are getting ahead of themselves somewhat. If an individual was planning to construct a new building, they would have the right to buy (or lease) the land before they go through the process of getting planning permission. This is the very first step in the process and at present the zones have simply been identified. Utilities and specialist Developers are currently putting together proposals for how they would go about developing the site (i.e. the full process, including liaising with local governments and communities) which will be submitted to the Crown Estate very shortly. But they are only proposals. In fact, The Crown Estate go so far as putting a disclaimer on their website:

The Crown Estate does not warrant or accept liability for either:
a) The suitability of any area identified for the purposes of specific windfarm developments
b) …

In their official presentations and documentation (which is all downloadable from their website), they say that zone allocation will happen after the SEA (Strategic Environmental Assessment). As far as I’m aware even that has not happened yet, so there is always a risk that some of the zones will not prove suitable for the offshore wind farm proposed. This is a hugely risky business, and in order to encourage the development of clean energy projects in the UK, the Crown Estate is helping to shoulder some of that risk (which is, let’s be fair, pretty generous). The Crown Estate will fund up to 50% of Round 3 development costs through co-investment.

An individual I was speaking to today summarised it nicely for me. Why is it that everyone is so excited about and supportive of green energy, until they realise they might actually be affected? If we’re going to hit these objectives, the local government is going to have to support the developments which are being initiated by national and European governments.

Right, I’ll get off my soap box. For now.

By Clare Buxton
Sector Lead for Wind Energy