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Renewable energy’s potential for the British economy and the hurdles that companies in the sector face were made plain to Vince Cable during his visit this week to industrial sites in the north-east beside the River Tyne.
At the Hadrian Yard in Wallsend, senior management from Offshore Group Newcastle took the business secretary on a drive along the site where they want to build a big factory to make jacket foundations – which look like latticework towers – for offshore wind turbines.
OGN has spent £19m on reopening and upgrading the yard, once the fabrication heart of North Sea oil and gas structures and it wants to develop offshore wind sector work alongside oil and gas.
Its proposed £50m investment in a plant to make hundreds of jackets for North Sea offshore wind developments could, it says, create up to 1,000 jobs. But, currently, it is coming to the end of work on a £150m contract to design and build a North Sea oil production platform and because of this orders gap it is having to make 350 – 400 people redundant.
“There’s going to have to be a lot of capacity created in the UK [for renewables] and at the moment it just doesn’t exist,” Dennis Clark, the chairman of OGN, told Mr Cable.
The problems, said Mr Clark, include inadequate grid capacity, uncertainty over Renewables Obligation Certificates – a government carbon-reduction scheme – and delays in approvals for offshore wind farm developments.
Mr Clark said another difficulty was that offshore wind farm operators, and oil companies, were demanding performance and financial guarantees too large for UK contracting companies, including OGN, to provide
Mr Cable also visited SMD, a company that designs and makes remotely operated vehicles that can work deep under water to lay cables and carry out inspections.
Andrew Hodgson, the chief executive of SMD, told Mr Cable that this year the company expects 30 per cent of its projected £140m turnover to come from the offshore wind industry in the UK.
He told the Financial Times that government policy needs more consistency, including in the ROC system.
Interviewed on top of a sewage sludge tank at Northumbrian Water’s new £35m anaerobic digestion facility, Mr Cable insisted; “A lot of the building blocks are in place: we are already providing support for different types of renewables.”