2008-11-09-Bain-Employment_opportunities_and_challenges_in_the_context_of_rapid_industry_growth_16页_370kb

Summary of Wind, Wave & Tidal Energy Development in the UK

Core Content

This report by Bain & Company provides an in-depth analysis of the development of the wind, wave, and tidal energy sectors in the UK, focusing on employment opportunities and challenges in the context of rapid industry growth. It outlines three development scenarios for the wind industry and explores the potential of wave and tidal energy as high-growth sectors. The report also details the methodology used to model employment scenarios and highlights key steps that can be taken to address growth barriers.

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Main Points

Wind Industry in the UK

• Current Status: The UK wind industry has grown significantly since 2002, when the Renewables Obligation (RO) was introduced. By 2007, installed onshore wind capacity had reached 2.2 GW, growing at over 35% per year.
• Employment: As of the report, the UK wind industry employs around 5,000 people, primarily in development, construction, and installation, with a strong presence in the domestic value chain.
• Challenges: Despite growth, the UK remains a follower in the wind industry, with most turbines imported. Major challenges include grid connectivity, site approval, and skills shortages.
• Future Outlook: The UK aims to add 260 TWh of renewable energy by 2020, with wind energy expected to contribute 35–40%. This could lead to 36,000 jobs in the solid progress scenario, 57,000 jobs in the dynamic scenario, and 23,000 jobs in the static scenario.

Employment and Skills Supply

• Demand for Talent: The wind industry is facing a significant skills gap, particularly in roles such as project managers, electrical engineers, and turbine technicians.
• Training and Development: There is a need for both public and private sector investment in training and education to build a sustainable workforce. Current engineering graduate numbers are expected to remain flat, so in-house training and recruitment from other sectors (e.g., oil & gas, construction) are critical.
• Incentives for Talent: To attract skilled professionals, the wind industry must level the playing field with traditional sectors, potentially through tax incentives and career promotion.

Wave & Tidal Energy

• Potential: Wave and tidal energy are seen as high-potential sectors for the UK, with the ability to provide up to one-fourth of global and one-fifth of UK electricity.
• Current Projects: Several prototypes are in testing and piloting phases, including Wave Dragon, Pelamis Wave Power, Wavegen, Marine Current Turbines, Open Hydro, and Hydra Tidal.
• Development Timeline: The report suggests that commercial viability for wave and tidal technologies could be achieved by 2015 if they can build similar momentum to the early wind industry. However, it could take longer if growth parallels that of solar PV.

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Key Scenarios for the Wind Industry

Scenario	Wind Capacity (GW)	Cumulative Investment (£B)	Employment (Jobs)
Solid Progress	27	26B	36,000
Dynamic	34	57B	57,000
Static	22	19B	23,000

• Solid Progress: Assumes clear political support, market leadership in offshore development, and a limited degree of export.
• Dynamic: Assumes stronger political support, UK as a global center of expertise, and significant self-supply and export.
• Static: Assumes lack of political support, no offshore leadership, and continued reliance on imports.

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Barriers to Growth

1. Grid Connectivity

   • Limited grid capacity in high-wind areas.
   • Transmission infrastructure development can take up to 10 years.
   • A long-term grid strategy and governance code amendments are needed.

2. Site Approval

   • The UK is one of the most challenging countries in Europe for planning consent.
   • The process can take up to five times longer than in best-practice countries.
   • Offshore site approval is less complex and will reduce the significance of this bottleneck over time.

3. Employment and Skills Supply

   • A shortage of skilled professionals, especially in project management and electrical engineering.
   • High intrasector mobility and wage increases due to competition.
   • Need for investment in training and education to meet future demand.

4. Supply Chain

   • Shortages in key components like turbines, vessels, cables, and offshore substations.
   • European manufacturing capacity is expected to grow, but UK must invest in its own supply chain.

5. Offshore Operations

   • Unique challenges due to harsh marine conditions and remote sites.
   • Larger turbines and more remote installations will increase these challenges.
   • Experience and time will be needed to build expertise in offshore operations.

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Recommendations

For the Government

• Extend and Improve Support Schemes: Extend the Renewables Obligation and set obligation levels out to 2020 with a headroom mechanism.
• Long-Term Grid Strategy: Develop a long-term grid strategy and amend the grid governance code to improve efficiency.
• Stimulate Local Support: Return some wind farm tax revenue to local communities to foster local acceptance.
• Streamline Site Approval: Provide clear guidance to public sector stakeholders to reduce delays.
• Invest in Education: Support university grants and technical colleges to build a skilled workforce.
• Create Sector Clusters: Develop manufacturing and R&D clusters to stimulate supply chain growth and attract investment.

For the Private Sector

• Focus on Clusters: Develop and support the growth of a single offshore wind cluster to simplify decision-making and attract suppliers.
• Improve Communication: Enhance clarity and communication during the site approval process to increase success rates.
• Recruit from Other Sectors: Actively recruit skilled personnel from adjacent industries like oil & gas and construction.
• Invest in Training: Build in-house capabilities through training and HR initiatives.

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Employment Model

The employment model considers five key variables:

• Capacity (installed and cumulative)
• Labour intensity (FTE per MW)
• Cost reduction (learning rate)
• Local content
• Export market share

These variables are used to project employment across the value chain (planning & development, design & manufacturing, construction & installation, operation & maintenance, financial, technical, and legal services).

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Conclusion

The UK wind industry is at a critical juncture and has the potential to create 50,000 new jobs by 2020 if the right measures are taken. However, this requires overcoming significant barriers to growth, including grid access, site approval, and skills shortages. The report emphasizes the importance of public-private collaboration, long-term policy commitment, and sector-specific investment to realize this potential. Wave and tidal energy, though still in the early stages, also offer promising opportunities for the UK to establish itself as a leader in the renewable energy sector.