Is the offshore wind industry about to create a boom in employment akin to the one fuelled by the discovery of North Sea oil? Rob Moore, offshore expert at sector skills council Energy & Utility Skills, takes a deep breath before replying. “In employment terms, probably, yes. North Sea oil brought in an awful lot more cash, but in recruitment terms, I don’t think it’s going to be that far off.”
That may even be an understatement. An EU directive signed in 2009 requires 20 per cent of the total energy consumed by member states to come from renewable sources by 2020. The UK must play its part by reaching 15 per cent by 2020 – up from 3 per cent in 2009 and 6-7 per cent today. The investment this requires is huge, and the UK is putting most of its eggs into one basket: offshore wind.
As Europe’s largest island, we’re making the most of its natural advantages. With 700 turbines installed off British shores, the UK is already a world leader in generating energy from offshore wind. Only China, Germany and Denmark come close. But proposed projects could bring the total to 7,000 turbines (see below) which would make the UK far and away the biggest global investor in this sector, and likely to exceed its 2020 target for all renewables. Scotland alone has an ambitious target for 100 per cent of its energy coming from renewable sources by 2020, while the British government believes 30–45 per cent is possible for the UK as a whole by 2030.
But – and here’s the catch – do we have the skills in the UK to pull this off? In July, Energy & Utility Skills (EU Skills) completed a major sector overview assessing the industry’s skills capability. Working for a Green Britain found that in April 2010, wind and marine energy directly employed 10,600 full-time equivalent employees, having added 4,400 between 2007 and 2010. Only 3,151 worked offshore. To meet the UK’s renewable energy targets, the report predicts that, by 2021, the offshore industry will need to employ between 29,700 and 42,400 people, or up to 67,700 including indirect employees – far more than the numbers by then expected to be working in marine energy and onshore wind combined. Hitting these numbers will require a minimum of 17 per cent growth in the sector every year from now until 2020. Against that backdrop, the “lead” the UK has taken in offshore wind suddenly looks like a standing start.
“You’ve got some enormous targets [to meet] in a really short timeframe, and at the same time a requirement to get an industry off the ground that is relatively new and immature,” says Beverley Walker, head of offshore renewables at engineering consultancy WSP. “All the players are currently on the starting blocks. So there’s an enormous skills requirement... People are suddenly being headhunted left, right and centre, and you’re starting to see ridiculous wage inflation. Companies are looking for anyone with offshore on their CV.”
During 2009/10, 26 per cent of employers in the industry reported hard-to-fill vacancies, and 29 per cent a lack of applicants with the required skills. This skills shortage is cited by EU Skills as potentially the biggest barrier to growth for UK offshore wind. If not addressed, it could throw a spanner in the turbines of the UK’s entire renewable energy project – or, more likely, see the jobs created go to overseas workers.
Carol Frost, HR director at Centrica Energy, which has a renewable energy business established eight years ago, says that the skills the industry will require are not “immediately obvious” in the UK. “Are we skills ready? Absolutely not. Can we grow them? Yes, we can. Can we grow them quickly enough? That’s the challenge,” she says.
How did this happen?
The UK should not be in this position. Back in December 2005, EU Skills published an Occupational and Functional Map of the UK Renewable Energy Sector, outlining what had to be done to ensure the industry had the skills it needed. One such step in 2009 saw a sector skills accord signed by multiple parties, promising national occupational standards, a large-scale apprenticeship programme, and standardised training for all. So why isn’t the sector now reaping the benefits rather than bemoaning shortages?
The quick answer, says Moore, is that “no employer wants to recruit people before they need them”. The longer explanation is that while a number of large organisations hold contracts for offshore development, most are merely “options”. Very little ink has been put to paper to say exactly what will happen when, and many companies are not expected to start recruiting heavily until 2015. The UK government still appears shaky on exactly how big it wants to go on offshore power – currently an expensive technology for relatively little power output. Ministers have yet to announce the rate of the feed-in tariff (the dividend paid for renewable energy), and the ease and cost of connection to the national grid. Without that data, companies are reluctant to step up investment and recruitment, and so, in turn, are both the providers of skills training, and the SMEs who make up the vast supply chain. It’s a game of who jumps first.
“Without the skills we can’t grow the industry, but unless the industry grows, who is going to invest in growing the skills?” asks Rachel Disney, HR manager, UK, at RWE npower Renewables, which employs over 400 people at projects including the Gwynt y Môr, one of the largest offshore wind farm developments currently in construction in Europe.
“It’s a high risk environment for us to be operating in,” she continues. “The industry is committed to training and development, but we cannot afford in the current economic climate to be holding double the headcount we require because we may not need half of them in five years. Imagine if government policy changes? That concern trickles down into how much organisations are willing to commit in the long term. How are the smaller companies in the supply chain going to be comfortable investing two to three years ahead of time in skills if they don’t have any guarantees?”
Rising to the challenge
Despite these questions remaining unanswered, it is clear that big projects will happen – just how big and how soon remains to be seen. The Working for a Green Britain report predicts that even in the face of “failure” on the government and industry’s part, the offshore wind workforce will still need to quadruple to 11,800 full-timers. The good news is that much can be done in preparation.
“We are not necessarily looking at a need for lots of brand new skills,” says Moore. “The renewables industry has not invented a whole new range of competencies. We have a history of electrical, mechanical, hydraulic engineering... the competencies exist in the UK.” All the energy company HR managers that PM spoke to for this article agreed that retraining people from other industries, also known as transitional training, was the key to future growth. And at a time of downsizing in many related industries such as construction, fossil-fuel energy and the military, it looks feasible.
“Most of the people who will be in employment in five years’ time are already in employment,” says Disney. “We do have a number of areas of UK industry where, if there is structured transition training on offer, there are going to be great opportunities to enter the renewables industry.” Centrica’s Frost points to the large swathe of coal power stations due to close in 2015, releasing “significant numbers of people onto the market with the skills we need at about the right time.”
Moore offers this breakdown: “The general feel is, approximately 10 per cent [of the skills needed] will come through apprenticeships, 10-15 per cent through graduates, and the remaining 75-80 per cent either from existing or associated industries.”
While the biggest of these percentages is cause for the biggest concern, employers do seem confident that the potential talent is there. The government agrees. In October, business secretary Vince Cable announced a £20 million investment to the Growth and Innovation Fund (GIF), including the rather precise sum of £579,583 to establish a Renewables Training Network (RTN), specifically focusing on transition training. The RTN will work with employers, universities and colleges to create 2,000 places on training courses for skilled workers wanting to switch to the renewables sector. This could prove the fillip the industry needs, given the unwillingness of many employers to invest in training in the current climate.
The smaller percentages – for apprenticeships and graduates – are easier for government policy to influence. In 2011 alone, the Department for Business, Innovation and Skills has invested £1.4 billion in apprenticeships across all industries, including 400 through GIF. But the most impressive numbers come from Scotland, where first minister Alex Salmond has long championed the nation’s role in a low carbon future. Walker of WSP, which is based in Scotland, believes the Scottish government’s investment is an exemplar: “The fund for Scotland’s National Renewables Infrastructure is up to £70 million. There is a research alliance across all Scottish universities, including 250 academics and 600 researchers... there’s 8,000 energy undergrads at the moment, 3,000 energy-related postgraduates, and special energy doctorates with an investment of £4.2 million... there’s been an enormous amount of support from the Scottish government.”
Some – but not all – organisations still fear that the UK industry could be held back by a lack of basic skills among school leavers or insufficient maths and engineering graduates. But as a BIS spokesperson told PM: “The latest data in fact shows a substantial increase in postgraduate and undergraduate students qualifying in engineering subjects – respectively, a 9 per cent increase and an 18 per cent increase from 2005/06 to 2009/10.” He added that while government can set the tone, universities and employers must work together.
However, students and workers will only train or retrain if there is a job at the end of it, and employers will only employ people when projects are given a green light. The industry impatiently waits for the government to set a more certain tone for the Round 3 offshore wind projects. Only then will the true size of the skills gap become clear. The clock is ticking.
The growth in UK offshore wind
In December 2000, Round 1 of the UK’s offshore wind farm development began. Aiming to instill a knowledge and expertise base in offshore wind technology – previously tried only in Denmark – it started with 30 turbines on 18 sites leased from the Crown Estate, giving a combined capacity of up to 1.5 gigawatts (GW). Two years later came Round 2, tendering commercial scale projects in three areas: the Greater Wash, the Thames Estuary and Liverpool Bay. Fifteen successful projects were awarded agreements for sites that, when they become fully operational, will take offshore wind up to a combined 7.1GW – in broad terms, enough to power four million homes.
Then, in May–June 2008, came the “big bang” for UK wind energy, when Round 3 sites in England and Wales, and Scottish territorial waters (STW) were announced and a total of 19 Crown Estate “development zones” put out to tender. On a scale far exceeding anything seen before, these sites have a combined potential output of around 30-35GW from some 6,400 turbines, and mean that over a third of the UK’s electricity needs could be met by offshore wind power by the 2020s.
Round 3 zones have been awarded to various project partnerships, largely a mix of UK and European companies, including RWE npower and Centrica Renewable Energy. These projects represent a potential expenditure of £100 billion, half of which will come from the private sector and half from the public purse. The contracts are currently options to build, rather than obligations to build. Investment status, government policy, the feed-in-tariff regime and details on costs of connection to the National Grid remain unclear and could prove potential barriers. Construction on the majority of these projects is not expected to begin until 2015.
To fill in the gap as the industry awaits Round 3 and STW projects coming into being, the UK government announced in July 2009 the opportunity to extend Round 1 and Round 2 projects. Known as Round 2.5, the aim is an “easy win” of increasing the current contribution of wind power to UK energy needs while also offering the industry a reliable and continuous stream of projects leading up to Round 3.
Too close to the sun?
While offshore wind will make the single largest contribution to the UK’s renewable energy targets, solar power has also greatly increased. As a source of micro-generation, typically fitted to homes and small buildings, nearly 38,000 solar photovoltaic (PV) installations received the feed-in tariff (FITs) payments by the end of May 2011. And, because of falling costs, over 16,000 new installations were fitted in September alone, according to the Department for Energy and Climate Change (DECC).
Jacquie Kirk, HR director at solar panel installation company EvoEnergy, talking to PM in October, described a booming industry: “Keeping up with demand is a huge challenge for HR. EvoEnergy has grown from seven people four years ago to over 300 today. Last year turnover was £11m, this year it will be £29m.
“Since 2009/10 when the government introduced FITs, the industry has escalated significantly. “There isn’t a history of experienced solar workers; we’re recruiting fully-qualified and experienced electricians and adding in the solar technology side.”
However, shortly before PM went to press, DECC announced proposals to halve the feed-in-tariff payments, potentially as early as mid December.
Climate change minister Greg Barker admitted the cut “will be a big challenge for many firms,” but argued that the average cost of domestic PV installation has fallen by at least 30 per cent since April 2010 and that the current scheme could add £26 to annual domestic electricity bills in future.
Meanwhile, representatives from the solar industry marched on Westminster on 22 November to highlight the 25,000 jobs that they argue are now under threat. Further evidence, if needed, of just how reliant renewable energy industries are on government policy.
“The new rate is a challenge,” said Kevin Hard, EvoEnergy’s CEO. “But we’ve faced challenges since day one – that’s the nature of the industry we work in.”
The key offshore wind jobs to come
- Project developers – to work on “licences and consents” with relevant agencies
- Procurement staff – to source building materials and manage relationships with suppliers
- Construction crew and site managers – the biggest numbers involved in any offshore wind project
- Jack-up barge operators – to manoeuvre and erect the turbines at sea, and carry out maintenance
- Onsite operations and maintenance staff – to look after turbines post construction
- Logistics specialists – to store replacement equipment and ensure components can be delivered quickly where needed
- Personnel transfer vessel (PTV) operators – to transport maintenance staff using modes of transport such as helicopters
- Port operators – able to support maintenance crews and vessels, and ensure the supply of replacement parts needed for efficient operations
Source: Scottish Enterprise, EU Skills, and various.