Global expenditure on offshore wind could reach £210 billion over the next ten years - find out how your company can make the most of this growing opportunity.
These are challenging times for our oil and gas industry. And we're working hard with partners across the sector to support our supply chain.
But we also know that our oil and gas supply chain companies have the skills and experience to make the most of opportunities in new sectors and industries.
In offshore wind the opportunities for Scotland's oil and gas chain are huge:
- Global offshore wind capacity has more than trebled in the past five years, reaching 11.7GW in 2015
- Global capacity is forecast to reach 40GW in five years and over 60GW in the next ten years
- Global capital and operational expenditure is forecast to reach around £210 billion over the next ten years
For Scottish companies the opportunities are close to home - 92% of current offshore wind deployment is in Europe with expenditure predicted to hit £60 billion over the next five years.
Offshore wind is a proven technology. But the industry remains reliant on policy support and governments across Europe are looking to the industry to reduce costs.
This combination of global growth and a desire to reduce costs makes offshore wind hugely appealing for Scottish oil and gas companies looking to diversify into new sectors.
Interested in offshore wind opportunities for your oil and gas company?
Our experts can help
The opportunities for oil and gas companies
Offshore wind: key facts
- By the end of 2015 around 4500 offshore wind turbines with a capacity of 11.7GW were installed
- A further 3.8GW is due to be installed in 2016
- By the end of 2025 a further 7000 turbines and 46GW is forecast to be installed
- Global expenditure on offshore wind between 2016 and 2025 is forecast to be around £210 billion
We've identified nine key areas where oil and gas companies can find opportunities in offshore wind.
1. Project management
Oil and gas companies have the skills to manage complex projects offshore.
2. Array cables
Manufacturing array cables for offshore wind requires similar skills and equipment to oil and gas umbilical manufacture.
3. Substation structures
These are typically one-off designs - similar in scale to oil and gas platforms.
4. Turbine foundations
The fabrication skills used in oil and gas can be harnessed to produce serially manufactured structures.
5. Secondary steelwork
An accessible market for companies with the capacity to for foundation manufacture, entering this market might not require new coastal facilities.
6. Cable installation
Most contractors in this market have oil and gas experience and have learned to adapt to the significant new challenges that the complexity of offshore wind contracts presents.
7. Installation equipment
A significant number of companies have diversified from oil and gas into areas like cable handling equipment and trenching and burial tools.
8. Installation support services
Many of our oil and gas companies have experience of working offshore - that can bring real benefits to the offshore wind industry in subsea services like diving and ROV service and onshore activities like marine consultancy.
9. Maintenance and inspection services
Oil and gas experience of offshore logistics can shape evolving strategies in offshore wind.
Learn from TNEI: making it big in offshore wind
Finding offshore wind success
Our service is tailored to the client's specific needs. By providing early input at the development stage, we can ensure that wind farm designs are cost effective and buildable, minimising potential delays and cost over-runs later.
Rachel Hodges, managing director, TNEI
Energy consultancy TNEI began to increase its focus on offshore wind in 2007 and was acquired by oil and gas giant Petrofac in 2010.
The Moray offshore wind farm is one of the company significant projects in the sector.
Rachel Hodges, managing director of TNEI, said:
"If you are a supplier or consultancy looking to break into offshore wind, it is paramount that you market yourself and attend as many industry events as possible.
"We produce a number of industry papers and join professional industry enabling organisations wherever possible - we have found this to be extremely effective for growing our presence within the sector."
Global opportunities for your oil and gas company
Offshore wind is a global industry.
We've identified the top seven global markets based on market size, accessibility to overseas suppliers, political support and the planning and regulatory environment.
The UK is the world leader in offshore wind with 5.1GW installed by the end of 2015 with capacity expected to reach around 15GW by 2025.
The government requires developers to provide a supply chain plan demonstrating their commitment to UK innovation and skills before applying for the main renewable energy funding mechanism.
With 3.4GW currently installed, the German government hopes to reach 11GW of offshore wind capacity by 2025.
Although Germany has a strong domestic supply chain, UK companies have already enjoyed success in the German offshore wind market.
With nearly 500MW of offshore wind capacity currently installed, the Dutch market is anticipated to grow to 4.7GW by the end of 2025.
Although the Dutch market is open to European suppliers, a strong domestic supply chain might make it difficult to access certain areas of the offshore wind market.
Although France had no offshore wind at the end of 2015, forecast installed capacity is forecast to reach 2.5GW by the end of 2025.
China had about 1.4GW of offshore wind capacity at the end of 2015, with significant new capacity expected to be installed in 2016 and total capacity expected to reach 13GW by 2025.
UK organisations like DIT are actively working to help introduce UK supply chain companies to the growing Chinese market.
The Japanese offshore wind industry is at an early stage of development with only 50MW of capacity installed at the end of 2015.
Although the focus has been on floating offshore wind, Japan's New Energy and Industrial Technology Development Organisation recently announced that 270MW of fixed foundation capacity will be supported.
The first US offshore wind farm is currently under construction with additional projects expected to lead to installed capacity of around 5GW by 2025.
Learn from W3G Marine: making it big in offshore wind
Aberdeen-based W3G Marine was formed by oil and gas marine and subsea experts in 2010 with the aim of making the most of growing opportunities in offshore wind.
We provided innovation funding for the company's HydroNAS underwater noise mitigation concept.
Alan West, CEO of W3G Marine, said:
"The offshore wind industry has been very supportive and encouraging in the development of HydroNAS. There is a definite appetite for robust, simple and cost-effective solutions in this new market. We are ready to deliver them.
"Introducing disruptive innovations to a maturing industry, such as offshore wind, can be a risky and timely process so we have maintained a presence in the oil and gas arena until our concepts are fully adopted by the wind industry. Do not expect instant gratification.
Your strategy for diversificatiom
The offshore wind industry is growing, with the potential to generate expenditure of £210 billion over the next 10 years. Scotland's oil and gas supply chain companies are well placed to make the most of these opportunities.
But it's important to note there are differences between the sectors.
And you'll need to work out if you've got the capabilities that the offshore wind industry needs:
- Manufacturers have to be able to carry out serial production efficiently
- Installation and operations contractors must be able to repeat high-risk operations over a large area
- Suppliers must be able to standardise their offering across multiple projects to maintain profitability as the industry looks to reduce costs
- Flexibility is a valuable assets, the offshore wind industry is focused on innovating to reduce costs giving oil and gas companies the chance to introduce new technology and products to the industry
There's no doubt that offshore wind is an exciting opportunity for oil and gas companies.
By serving both markets companies like yours can spread risk and mitigate some of the current challenges faced by the oil and gas industry.
Strategies for diversification include:
- If your focus is the supply of capital items aim to work on multiple projects and seek out framework opportunities
- Customers are keen to create sustainable supply chains with local companies - with a track record of servicing assets in offshore environments, oil and gas companies are well placed to make the most of long term opportunities
- Oil and companies need to offer the offshore wind industry cost competitive or innovative solutions to displace the existing supply chain
- Emerging opportunities like floating turbines will offer opportunities for oil and gas suppliers based on the high synergy of offshore structures in both sectors
- Be aware if the differences within the sector and plan a market entry strategy accordingly
Ready to access offshore wind opportunities?
Scotland's oil and gas companies have a fantastic opportunity to access the offshore wind market ahead of the predicted £210 billion global deployment boom.
And we can help.
Our offshore wind expert support programme can help your company build a diversification strategy.
We'll help you explore:
- Market entry requirements
- Market/supply chain positioning
- Your company's capabilities and how these can be used in offshore wind
- Suitability of products and services to the offshore wind sector
Apply for offshore wind expert support now
Want to learn more about the opportunities for your oil and gas company in offshore wind?
Read our full guide (PDF, 1MB)