Post on 21-Aug-2020
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Contents Page
Executive Summary 3
Forewords 4
Introduction 6
Part A: The development process 7
(1) Pre-planning and planning services 9
(2) Construction 10
2.1 Critical works
2.2 Ancillary works
2.3 Support services
(3) Operation & Maintenance 12
(4) Case studies 13
Part B: Technical and other requirements 17
(1) Detailed critical works 17
(2) Generic requirements 21
Part C: Realising local content 23
(1) What is local? 24
(2) Why do developers want to source locally? 24
(3) What barriers are there? 24
3.1 The size of contracts
3.2 Competing developments
3.3 Continued drive for cost reduction
3.4 Supply chain knowledge
3.5 Reluctance to invest
(4) What is the industry doing to overcome these barriers? 28
(5) What do Welsh firms need to do? 32
5.1 Get to know the sector
5.2 Understand requirements
5.3 Understand the procurement process
5.4 Start small
5.5 Explore opportunities for joint ventures
(6) Where to go for assistance and further information 33
Appendix One: Technical and other requirements 34
Estimating the scale of the opportunity
Acknowledgements: 38
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Executive Summary
Onshore wind development opens up opportunities for a wide range of local suppliers. This document sets out the
range of opportunities in the onshore wind sector for Welsh companies and is intended as a guide to suppliers wishing
to enter or expand their presence in the sector.
Wales’ wind sector is growing, and wind energy is now a major part of our electricity mix. As a sector, onshore wind
already directly employs around 700 people in Wales1 and there is a great deal of potential for this to increase.
Part A of this Guide introduces the onshore wind farm development process, and sets out the potential scale of
opportunity for Welsh companies in the sector. Case studies are provided to illustrate the type of opportunities
available.
Part B includes more detail on the technical and other requirements for potential suppliers as well as breaking down
the construction activities into more detail.
Part C sets out the importance of local supply chain content to wind farm developers and the ways in which they try
to source goods and services from Welsh businesses. It also considers some of the challenges developers face in doing
this and highlights some of the actions businesses can take to improve their chances of securing work in the onshore
wind sector.
A summary of our recommendations for Welsh businesses are:
Get to know your part of the onshore wind farm supply chain and the organisations and individuals who could be buying your services. This will rarely be the wind farm developer and is more likely to be one of their prime contractors.
Take steps to understand the technical requirements in your part of the supply chain in good time so that you have an opportunity to develop capacity or work towards any accreditations needed.
Understand the procurement process, the specific requirements of the developer and the manner in which prime contractors may assemble their bidding teams.
Look for opportunities in smaller wind farms first if your company has no wind farm experience.
Explore opportunities for joint ventures (to access the much larger opportunities) with other firms in your
sector to gain the critical mass you may need to bid in your own right or have credibility with prime contractors.
1 RenewableUK
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Foreword from David Clubb, Director, RenewableUK Cymru
2 Source: Renewable UK (2014) Local Supply Chain Opportunities in Onshore Wind: Good Practice Guide
Welcome to RenewableUK Cymru’s
Good Practice Guide, which aims to
encourage the development of the
onshore wind supply chain
throughout Wales.
As the leading renewable trade
association, representing more than
30 Welsh companies, we’re delighted
to have this opportunity to
demonstrate exactly how onshore
wind can be a key driver of local
growth and also benefit the national
economy.
At a time when other sectors have
been contracting, the green economy
has continued to forge ahead: in fact,
it is one of the sectors that the UK can
point to with pride, as having created
a substantial number of jobs.
Onshore wind now provides
employment for nearly 19,000
people in the UK: more than 9,900
are directly employed in the sector,
and a further 8,950 are employed
indirectly, supplying goods and
services2. In Wales, the onshore wind
sector already directly employs
around 700 people and there is a
great deal of potential for this to
increase.
We have produced this guide to
showcase the extraordinarily diverse
range of opportunities available to
firms in Wales to get involved in the
sector, whether they are well-
established companies or new
entrants. The onshore wind industry
is very much open for business: the
market is eminently accessible, but
some companies may need a little
help in finding where and how to
start. As the trade and professional
body, we aim to demystify the sector
for such firms. To achieve this, the
guide breaks down the development
process, using case studies to
highlight how, with the right
preparation, local businesses can
benefit significantly from the
opportunities onshore wind
presents.
The environmental benefits of clean
energy over fossil fuels are well
known, and the public is increasingly
aware of the importance of
developing home-grown, secure
energy sources such as onshore
wind. What has perhaps been under-
appreciated until now is the fact that
this sector is also a powerhouse for
economic growth. Many parents are
currently wondering where their
children will find employment in the
future - the answer may lie in the
renewable energy sector, and its
burgeoning supply chain.
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Foreword: Onshore Wind Industry Developers
Onshore wind is an important economic sector in Wales and there are substantial opportunities for Welsh companies to supply goods and services to the sector. We estimate our current pipeline of onshore wind developments could lead to a total of £1.7bn construction spend and £175m in planning and development by 2025. Of this 35% (£580m) of all money spent during construction and 71% (£125m) of all expenditure during planning and development could be spent in sectors where Welsh companies have a strong competitive chance.
We want to be sure that the economic benefits of onshore wind to Wales are maximised. This means that we need more Welsh firms to supply goods and services to us as developers, or to our contractors. We are already working with some companies in Wales, and a number of Welsh firms have the expertise and scale to act as the prime contractor for large onshore wind farms.
Like us, our prime contractors aim to use the expertise that already exists amongst companies which are local to particular wind farm developments. We always encourage our suppliers to work with local firms where they can. But we and our suppliers sometimes find it difficult to identify and engage with the right companies.
We are committed to maximising the value of our supply chain spend in Wales and will continue to:
Engage with local suppliers in Wales to build up our knowledge and understanding of the capability that exists
in the Welsh supplier base
Encourage our suppliers to use local companies as much as possible
Make linkages between Welsh companies and our prime contractors where we can
Provide constructive feedback to firms which tender for but do not secure opportunities with us to help to maximise their chances in future.
We need businesses in Wales to help us by:
1. Keeping up to date with developments in the sector 2. Being aware of the opportunities on the horizon and the capacity and capability needed to access them 3. Engaging with relevant buyers, both developers and our prime contractors 4. Making sure that they have the right accreditations in place so that there are no barriers to working with us
This guide sets out the range of opportunities for SMEs in Wales in the onshore wind sector and provides the guidance that local firms need to help them to enter or expand their presence in the sector.
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Introduction
Onshore wind is the most cost-effective renewable technology, and is a key component of an affordable and secure
low-carbon energy mix. Its importance is set to grow in the future as the UK strives to meet its renewable energy
targets, set by the European Union.
But not only is onshore wind helping to keep the lights on and energy costs down, it is also a significant business
opportunity for Wales. In 2013, RenewableUK Cymru commissioned research into the economic opportunities for
Wales from onshore wind development3.The study estimated that between 2005 and 2011:
The planning and construction of onshore wind projects in Wales contributed an annual average of £7.8m in
Gross Value Added and 335 Full Time Equivalent jobs;
The operations and maintenance of onshore wind projects in Wales contributed an annual average of £6m of
Gross Value Added per annum and 210 Full Time Equivalent jobs per annum.
The scale of opportunity in the sector over the next 10 years is substantial. The current pipeline of onshore wind
developments could lead to £1.9bn in spend across all stages of the development process by 2025. Around £750m
could be spent in sectors where Welsh companies have a strong competitive presence.
This Supply Chain Guide provides developers, operators, contractors and the wider supply chain with practical advice
on how to capitalise on the commercial opportunities that onshore wind brings, both locally and nationally. We
highlight the approaches taken by developers and contractors in identifying and using local suppliers to ensure that
the environmental benefits of renewable energy are complemented by economic benefits.
This Guide sets out the range of opportunities for companies in Wales in the onshore wind sector, and is intended as
a guide to suppliers wishing to enter or expand their presence in the sector.
Part A introduces the onshore wind farm development process, and sets out the potential scale of opportunity
in the sector for Welsh companies. It is aimed primarily at suppliers with little or no experience in the sector.
Part B includes more detail on the technical and other requirements for potential suppliers as well as breaking
down the range of construction activities into more detail.
Part C sets out the importance of local supply chain content to wind farm developers and the ways in which
they try to source goods and services from Welsh businesses. It also considers some of the challenges
developers face in doing this and highlights some of the actions businesses can take to improve their chances
of securing work in the onshore wind sector.
This guidance relates primarily to the large scale part of the market, typically multi-megawatt projects where there is
the most interest from local companies in supply chain opportunities. However, smaller-scale projects also benefit
the national and local economy, and are covered in RenewableUK’s Small and Medium Wind Market Report4 and
Supply Chain Map5.
3 http://www.renewableuk-cymru.com/wp content/uploads/2013/10/EconomicOpportunitiesOnshoreWindWales.pdf 4 www.renewableuk.com/en/publications/reports.cfm/Small-and-Medium-Wind-UK-Market-Report-2013 5 Contained within the State of the Industry report. http://www.renewableuk.com/en/publications/reports.cfm/state-of-industry-report-2014
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Part A: The Development Process
The scale of opportunity from the onshore wind sector in Wales is substantial. The current pipeline of onshore wind
developments could lead to a total of £1.9bn capital expenditure from all stages of the development process by 2025.
Of this, around £750m could be spent in sectors where Welsh companies have a strong presence and the chance of
securing contracts.
The Opportunity
The opportunity is particularly significant during the construction phase; previous research commissioned by
RenewableUK Cymru (2013)6 suggests that total average construction costs (spend) per MW of installed capacity are
£1.13m (in 2012 prices)7. In addition to this, planning and development costs (spend) per MW of installed capacity
are around £0.12m, and operation and maintenance costs are around £0.04m per MW of installed capacity. This
investment presents a significant opportunity for Wales: research8 suggests that up to 35% of all expenditure in the
construction phase could be retained within Wales, along with 71% of planning and development spend and 76% of
operational spend.
Based on the current pipeline of consented onshore wind developments in Wales and a range of supporting research
and assumptions we estimate that the current pipeline of onshore wind developments could lead to a total of £1.9bn
of expenditure from all stages of the development process by 20259. This is made up of £1.7bn construction spend,
£175m planning and development spend, and £57m in operational spend by 2025. Of this, around two fifths (£750m)
of all spend could be spent in sectors where Welsh companies currently have a strong competitive presence.
The scale of opportunity from the development process up to 2025 has been estimated from the current pipeline of
onshore wind developments in Wales and the estimated average expenditure per MW of installed capacity, according
to previous research commissioned by RenewableUK Cymru (2013)10.
6 http://www.renewableuk-cymru.com/wp-content/uploads/2013/10/EconomicOpportunitiesOnshoreWindWales.pdf 7 Note: There are margins of error in the estimates as the developer’s survey only reached a sample of all developers and operators of onshore wind farms in Wales. However given the coverage of the developer survey reached 66% of all existing and proposed capacity in Wales and the estimates were then benchmarked against other published sources, the estimates are robust. 8 http://www.renewableuk-cymru.com/wp-content/uploads/2013/10/EconomicOpportunitiesOnshoreWindWales.pdf 9 Renewable UK maintains an up to date list of UK schemes on their website. The searchable facility is here: http://www.renewableuk.com/en/renewable-energy/wind-energy/uk-wind-energy-database/index.cfm 10 http://www.renewableuk-cymru.com/wp-content/uploads/2013/10/EconomicOpportunitiesOnshoreWindWales.pdf
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RenewableUK maintains an up to date list of UK schemes on their website. The searchable facility is here: http://www.renewableuk.com/en/renewable-energy/wind-
energy/uk-wind-energy-database/index.cfm
Note: At the time of publication there was considerable uncertainty about whether Wales would retain its current turbine tower manufacturing capacity. The figures presented
here and the underlying calculations assume that existing capacity in the manufacture of turbine towers will be retained and that a proportion of expenditure on turbine
towers can be safeguarded in Wales. Given the large contribution that spend related to turbine towers makes to the overall spend per MW in Wales, it is important to note
that the scale and nature of the opportunity would differ if turbine manufacturing capacity did not stay in Wales.
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The Development Process
The time between a developer identifying a potential site and the production of the first electricity from the wind farm
can be as short as four years, or as long as ten years. Along the way, the developer procures a range of technical and
professional services while investigating the site, conducting environmental and technical surveys, and refining their
proposals. This activity continues all the way through to planning, construction and operation. Opportunities for
contractors exist throughout this period, and will usually peak once the consent is awarded and construction begins.
During the design and planning stages some developers rely mainly on in-house expertise, but many contract at least
some of their activities, meaning opportunities exist for third parties to tender for work at these stages. This section
covers the areas in which developers may procure external services at each stage.
Figure 1: The development process
(1) Pre-planning and planning services
Pre-planning covers all the stages from site identification to the submission of a planning application. The main
activities at this stage can be broken down further as follows:
Pre-planning: before a planning application is drafted, wind farm developers need services to support site
selection and investigation (including but not limited to wind assessment), scheme financing and planning.
Environmental Impact Assessment: most large onshore wind projects require an Environmental Impact
Assessment (EIA) to be carried out and an Environmental Statement (often known as an ES) submitted in
support of their planning application.11 The EIA process involves the collection and analysis of a large volume
of data relevant to the project’s likely environmental, social and economic impacts. This requires professional
services, often conducted by accredited specialists and support staff12.
Legal and Other Services: other professional expertise is often required to support onshore wind projects. For
example, lawyers and/or land surveyors can be used to help negotiate and secure land option agreements and
longer-term land lease agreements.
Community Engagement and Consultation: community consultation is a key element of the planning system,
and also represents an opportunity for local benefit. Consultation and engagement may be carried out
throughout the development, construction and operational stages.
Onsite Wind Resource Assessment: Assessing the wind profile of a site is a crucial early-stage feasibility activity
for project financiers and developers.
11 Some larger schemes may be just below the thresholds for EIA and ESs. In such circumstances, much of the same information will still need to be provided. The largest schemes or those near European designated sites may also require a Habitats Regulations Assessment. 12 Where a scheme goes to appeal, practitioners in the above fields may also be called upon as expert witnesses to give evidence.
Pre-planning and planning
•Environmental Impact Assessment (EIA)
•Legal and other services
•Community enagagement
•Wind resource assessment
Procurement and construction
•Critical works
•Ancillary works
•Indirect spend
Operations and maintenance
•Site and other maintenance
•Safety and quality
•Community liaison
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Many of these pre-planning services are specialist in their nature and the sector is considered to be relatively mature
in Wales with a range of providers offering a variety of technologies and commercial skills.
(2) Construction
Once a scheme is consented and all conditions have been discharged, a developer will move to pre-construction tasks
and procurement of turbines and contractors for civil and electrical works. Wales based suppliers have a potentially
significant role to play, particularly in Balance of Plant (BoP)13, operation and supporting services, such as provision of
financial services. There are examples of local content accounting for 60% or more of construction spend14.
Procurement can take a number of forms, reflecting different types of contracts (Appendix 1 discusses this in more
detail). While specifications vary for individual developments the main elements for the critical works are similar, and
are detailed in the sections below.
As the industry is around 20 years old, easily accessible sites are becoming rarer. More remote sites are likely to
increase the types and extent of ancillary works required to support the commissioning and operation of a wind farm.
Similarly, the provision of increasingly sophisticated mitigation solutions and environmental enhancement schemes is,
in some cases, significantly expanding the labour, service and supplier requirements of wind farm developments. This
opens up potential new business areas for local suppliers who would not normally be associated with the onshore
wind industry. Given the highly site-specific nature of these ancillary works, however, it would not be feasible to list
them all here, so our list of activities is therefore not intended to be exhaustive.
13 ‘Balance of Plant’ (BoP) is the catch-all term used to describe those parts of spend not related to the manufacture of the wind turbine itself. 14 Source: Renewable UK (2014) Local Supply Chain Opportunities in Onshore Wind: Good Practice Guide
Myth: There are very few jobs supported by the onshore wind industry.
Wind farms are complex developments and require a wide range of technical and specialist expertise to plan,
develop and consent. In Wales, around 700 people work directly in the development, construction and operation
of onshore wind farms. If jobs in the supply chain are included, this number increases substantially.
Myth: Onshore wind is too specialist for most local suppliers and SMEs.
Construction works for onshore wind range from highly specialist activities such as turbine assembly to standard
construction activities like ground clearing and construction of access tracks. In principle, there is no reason why
firms with expertise and experience in other sectors should not be able to compete for work in onshore wind.
Relevant local businesses should therefore view onshore wind as an accessible construction sector like any
other, and many developers work with local suppliers and local business agencies to help companies navigate
contracting and tendering.
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2.1 Critical works
The exact works required by a development will vary on a site-by-site basis. They can be categorised as follows,
together with examples of the sorts of activities involved. A more detailed discussion is included in Section B, together
with a more comprehensive table of typical activities and materials.
2.2 Ancillary works
In addition to the main onsite works, onshore wind projects may require off-site and ancillary works. These works are
often driven by requirements to mitigate certain impacts or otherwise enable the construction and eventual operation
of the wind farm, and provide new and more extensive business opportunities. As more wind farms are built and the
more straightforward sites are completed, there is often a greater need for these works. These can include:
Habitat creation, enhancement and management: when a scheme is likely to impact habitats of protected or
other species of flora and fauna, developers can mitigate these impacts through habitat creation or
enhancement. This can be a condition on planning consent (often formalised through a Habitat Management
Plan) or discretionary on the part of the developer. Examples of these activities are hedgerow planting, the
introduction of certain types of flora, or creation of new scrapes or ponds. The opportunity exists to employ
local specialists who will provide a valuable insight, e.g. local wildlife experts.
Screening: screening through tree planting is one method of mitigating visual impacts on nearby properties or
recreational areas, leading to work for forestry-related businesses.
Highway works: as part of consent, a developer often has to satisfy specific legal agreements (called Section
278 or Section 38 agreements) relating to required highways works (for example, road widening or access
improvements). The local community will often be the beneficiary of these works, which may be over and
above what the local highways authority would otherwise have undertaken.
2.3 Support Services
During peak construction activity, there will be dozens, or, for the largest schemes, hundreds of extra workers in the
vicinity of the site. For a rural community, this can represent a significant increase in users of local facilities. It is
common for local hotels, B&Bs, shops, restaurants, cafes and pubs as well as taxi and car hire companies to be busy
during the construction phase.
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(3) Operation & Maintenance (O&M)
Although much of the operation of turbines can be undertaken remotely, there remains a need for crucial ongoing
services to support the smooth, safe and efficient operation of a site. This can take various forms. The level of on-site
presence needed to support the operation of a wind farm will vary roughly in proportion to the size of the project, but
will also depend on the amount of in-house O&M resource the wind farm owner retains and the type of O&M contract
they enter into with the turbine supplier. Some smaller sites may be serviced by staff who split their operations across
a portfolio of wind farms. Larger sites may require dedicated on-site presence, which can be provided by the developer
or procured through dedicated O&M companies.
Typical activities include: control room operations; site management; routine turbine maintenance and testing;
electrical equipment maintenance; site maintenance (e.g. track maintenance, snow and ice clearance); crane hire for
large component repair; component refurbishment; small engineering works; consumables and tool supply for minor
works; tool calibration; lab work for metallurgy; engineering forensics; and independent safety and quality inspections.
Ongoing activities can include security (where required), ecological management, community liaison and community
fund management. Principal Designers and other roles relating to health & safety (such as certification of harnesses
or testing chains) may also be required. As with pre-construction activities, O&M opportunities are most likely to be
in employment rather than in materials or supply.
Having voluntary community benefit funds is now standard practice in the onshore wind industry, particularly for
schemes of 5MW or greater. Although the beneficiary decides how these funds are used, they can represent significant
levels of investment in local areas, and over a project’s lifetime the amounts add up.
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Case Studies
The following case studies highlight some Welsh companies that are supplying services to the onshore wind sector.
8MW wind farm in South Wales
This 8MW wind farm had a construction budget worth over £10 million, nearly 45% of which was spent in
South Wales (see chart below). Significant contracts were placed locally for turbine tower supply, grid
connection and a variety of civil construction activities, including construction of the substation. Local plant
hire firms and aggregate suppliers also won contracts.
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Ysgellog Wind Farm, Anglesey: Proactively Promoting Local Supplier Opportunities
Airvolution Energy Limited’s 4.6MW wind farm at Ysgellog Farm in Anglesey comprises two turbines, measuring
92.5 metres to blade tip, which are estimated to generate enough electricity to power the equivalent of 3,100
homes each year. Construction started in October 2012 and the turbines started generating electricity in March
2013.
Airvolution is fully committed to working with local businesses in all of its developments, and maximising the
number of contracts that are awarded to local suppliers. This helps local businesses, but also makes sense for
Airvolution because of the commercial and logistical benefits of having contractors close by.
The company regularly holds ‘meet the buyer’ events with local companies to discuss the opportunities that could
come from their development projects. At Ysgellog, 71% of the construction budget was spent within Wales, and
35% (£316,000) was spent with Anglesey based businesses. The commitment to local sourcing resulted in the
Ysgellog development winning the category for Outstanding Green Energy Project at the 2013 Wales Green Energy
Awards.
Raymond Brown Renewables, based in Bridgend, won the prime contract for overseeing construction of the
project, and it was instructed by the developer to use Welsh or Anglesey based suppliers wherever it was possible
to do so. While it was not possible to award contracts locally for more specialised activity, there were numerous
opportunities for local building contractors, aggregates suppliers, hospitality businesses, and businesses providing
support services such as equipment hire and fencing.
Figure 1: The value of contracts placed with Anglesey based businesses
Several of the local businesses that won contracts for Ysgellog had not worked for the energy industry before, and
the experience has generated long term benefits for their businesses. One example is local house builders,
Pritchard Brothers, which secured the £75,000 contract for construction of the site’s substation building. The firm
is based just 2.5 miles from Ysgellog Farm. Hywel Pritchard, Senior Partner believes that Pritchard Brothers has
made new contacts and won additional work through the Ysgellog development.
CMP Plant Hire secured a contract for plant hire and aggregates. Ysgellog Farm was the business’s first
experience of working in the onshore wind sector. While it still only accounts for a small proportion of its
business (c. 5%), the importance of the sector is expected to grow as a result of other planned wind farm
developments in Anglesey. The contract for Ysgellog also meant it was able to safeguard the job of one of its
employees.
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Bridgend based Apex Holdings: Seizing New Business Opportunities in the Onshore Wind Sector
Apex Drilling has been providing drilling services to various sectors since 1992 and first started supplying the
onshore wind sector in the late 1990s. Apex had built a reputation through work in other sectors and was
commissioned by Jones Bros for drilling services as part of the construction of the Carno Wind Farm in the late
2000s. Since then Apex has had a steady stream of wind farm work and provided drilling services to a large
proportion of the onshore wind farms in South Wales, including the Pen y Cymoedd wind farm.
Apex works mostly for civil engineering contractors (although it does occasionally work directly for developers)
and its wind farm related clients include major civil engineering companies such as Balfour Beatty, Jones Bros and
Walters UK. Onshore wind farm related services now accounts for a steady stream of work and accounts for around
5% of Apex Drilling’s £5m annual turnover. Although a small proportion of the overall business, this work has been
particularly important over recent years, especially when work in other construction sectors shrunk during the
recession.
Apex set up a ground and concrete testing business (Apex Testing) three years ago to respond to opportunities
arising in the wind sector. Apex Testing offers a range of material and geotechnical testing services and has a large
contract to test the stability and strength of turbine bases for the Pen y Cymoedd wind farm. Apex Testing allows
Apex to offer its wind farm clients a broader range of services in addition to drilling. By offering linked services
such as this, Apex Holding’s overall turnover has grown. Apex Testing currently has a turnover of around £250k per
annum, half of this is linked to the onshore wind sector. Apex is optimistic about the growth prospects for this
business and expect opportunities in the onshore wind sector in Wales and elsewhere in the UK to play a role in
its future growth and profitability.
Anglesey Based CMP Plant: Transferring General Construction Skills to the Wind Farm Sector
CMP is a construction and plant hire company which employs around 30 people in the Anglesey area. Wind farm
related work has been an important income stream for 20 years and has safeguarded employment for a number
of skilled and apprentice workers in Anglesey. Its work in the wind farm sector has come about through a
combination of its relevant skills and expertise and the locational advantages it offers to client’s construction of
wind farms in Anglesey. CMP gets the majority of wind farm work via civil engineering sub-contractors to wind
farm developers.
CMP was able to access opportunities to supply stone, machine hire and landfill services to the Ysgellog
development with only limited new investment in equipment or capability. The skills and machinery required are
not specialist and its general construction skills are entirely transferrable to the wind farm sector and the firm
already has the health and safety and insurance accreditations needed to work on a wind farm site. CMP has
therefore been able to benefit from this work through building on the skills and expertise within its existing
business.
CMP expects the importance of the wind sector to grow as construction activities in the onshore sector expand.
Building upon its track record in the onshore sector, it also provided services to Gwynt y Mor, an offshore
scheme close to its base in Anglesey.
Carmarthen based Burke Contracts: Shifting Focus to the Onshore Wind Sector
Burke Contracts started out as a general construction company in the 1990s. Its work in the onshore wind sector
started in the late 1990s following an approach to provide ground works and construction services to a wind
farm in North Wales. The importance of onshore wind to Burke Contracts has grown steadily since then and work
in the sector (in Wales and elsewhere in the UK) now generates ground work contracts worth around £3m per
annum. This work has been particularly important over recent years when other construction sectors have been
less buoyant. Onshore wind related work has helped Burke Contracts to maintain employment and now accounts
for 80% of annual turnover.
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Neath Port Talbot based Express Reinforcements: Steel reinforcement for Pen y Cymoed The foundations for the 76 turbines at Pen y Cymoedd will need more than 6,000 tonnes of steel. This is being
supplied by Neath-based company Express Reinforcements. Its Managing Director, Andy Lodge, said: “We're
delighted to have been contracted to supply steel for such a significant project so close to our home base.
Furthermore, in line with the values of the Pen y Cymoedd wind energy project as a whole, our raw materials
have been sourced from within the UK, and the steel itself is being made in Cardiff."
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Part B: Technical and Other Requirements
This section follows on from the discussion in Part A and provides more practical advice on the sorts of operations
involved and the likely requirements that subcontractors and suppliers will need to demonstrate in order to bid for
work. We follow the division of works in the graphic in Figure 2.
(1) Detailed critical works
The following tables break down typical activities and materials/plant requirements for each category of works.
Examples of specific technical requirements that developers and primary contractors may need to see evidence of are
included, and an extensive list of generic requirements is included at the end.
Table 1: Detailed works
Construction Stage and Description
Activities Materials, plant and third-party services
Specific technical requirements
Feasibility: Wind resource assessment
A potential site is assessed for its suitability to host a wind farm by gathering meteorological data, often for two years.
Delivery of mast
Ground works
Onsite assembly of mast
Erection of mast
Servicing
Haulage vehicle
Excavator
Hydraulic winch/crane
Cable/lifting rope
Mast
Meteorological equipment
Feasibility: Geotechnical
Geotechnical and geological surveys describe the terrain to inform decisions on foundation type, access roads and other construction activities. Typically this involves a combination of desk-based and field studies.
Desk-based research
Borehole drilling
Trial pits
Testing of samples
Topographical survey
Backhoe
Drilling rigs
Low ground pressure access machines
Fuel
Laboratory services
Suitably qualified geotechnical team
Site preparation: Ground works
Topsoil is removed and stored, and embankments and cuttings are made. Ground may also need to be densified. Required for foundations, access tracks, crane pads and any control buildings.
Excavation of topsoil
Movement and storage of topsoil
Excavation of cuttings
Construction of embankments
Densification of ground
Removal of waste
Excavator/bulldozer/ scraper
Grader
Dump trucks
Compactor/roller
Waste removal vehicles
Waste disposal facility
Fuel
Site preparation: Tree felling
Commercial forestry sites can be suitable for wind farm development. ‘Keyhole’ felling may be used to reduce felling requirements. Commercial harvesting (CH) or in-situ chipping (ISC) techniques are generally used, and require different equipment.
Felling of trees
Onsite transportation (CH)
Offsite transportation (CH)
Chipping/mulching of timber (ISC)
Removal and disposal of waste (ISC)
Transportation of logs/waste (CH/ISC)
Harvester/cable crane (CH)
Flail/chipper (ISC)
Forwarder/skidder
Log transport vehicles (CH – specifications apply15)
Waste removal vehicles (ISC)
Waste disposal facility (ISC)
Fuel
15 www.ukfpa.co.uk/pdfs/TTF_Code_of_Practice.pdf
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Site management
As part of a project, a number of ancillary services are needed. Developers will need to build a site compound, hire cabins for offices, etc., and will also need to contract for services such as security.
Establishing site compound
Hire of cabins, generators, etc.
Cleaning
Security
Waste management
Hi-ab transport vehicles
Balance of Plant: Access and onsite tracks
Tracks to access the site from the main road network are often required. Additionally, tracks are needed for construction and maintenance of the wind farm and access to any control buildings, substations, and so on. Tracks need not necessarily have a sealed surface. In peat-rich ground conditions, floating roads may be used. Watercourse crossings may require bridge construction. Stones for use in construction of the tracks can be sourced onsite where available.
Site preparation (see above)
Drainage (culverts or ditches)
Quarrying
Transport and laying of aggregates
Laying of geotextile/geogrid fabrics
Laying and compaction of aggregates
Excavators
Aggregates (sand, stone, etc. – may be subject to specification, e.g. Type 1 stone)
Roller
Dump trucks
Grader
Culverts
Fuel
Specific requirements for BoP tend to come from the turbine supplier, and will therefore vary on a site-by-site basis. Early engagement to ascertain suitability is therefore crucial.
Balance of Plant (civil): Crane pads
Crane pads are hard-standing areas to enable the assembly and erection of the turbines.
Site preparation (see above)
Drainage (culverts or ditches)
Quarrying
Transport and laying of aggregates
Laying and compaction of aggregates
Excavators
Dump Trucks
Roller
Grader
Plate testing equipment
Fuel
As above, turbine suppliers will specify design and quality criteria.
Balance of Plant (civil): Foundations
Foundations are made from steel-reinforced concrete in excavated pits. Different designs can be used, and will be determined predominantly by the ground conditions on site and the design load of the turbines. This may include piling operations. Bolts at the top of the foundation connect the first tower section to the foundation.
Site preparation (as above)
Laying of subgrade
Installation of concrete mudmat
Installation of steel rebar
Installation of anchor gate
Delivery of concrete
Pouring of concrete
Backfilling of soil
Excavators
Dump Trucks
Rollers
Aggregates for subgrade
Aggregates for concrete
Cement for concrete
Batching Plants
Delivery truck
Mixertrucks
Concrete Pump rig
Steel reinforcement bars (and delivery)
Bolts
Fuel
Plate testing equipment
Concrete testing labs
As above.
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Balance of Plant (civil): General
General services and equipment to support construction activities will be required.
See next column Administrative support
Catering
Security fencing
Safety/security stewards
Traffic management
Snow/ice clearance
Project Management
CDM – Principal Designers
Civil Designers
Electrical Designers
Recognised qualifications or standards may be applicable to individual roles and services.
Balance of Plant (electrical): Substation
A substation (collector) is used to step up the voltage of the energy produced for export to the grid or distribution network. The substation also contains equipment for operating the wind farm, for example switchgear and export meter.
Substation design
Construction
Testing and certification
Design and optimisation
Domestic electrics
Heating
Fire/security alarms
Building
Excavator
Dump Trucks
Fuel
Delivery vehicles
The necessary electrical elements of the substation will define the civil requirement. Engineering Design Standards are provided by DNOs.
Balance of plant (electrical): Cabling
A series of medium-voltage cables connect the turbines to the substation. The circuits will need to be designed to suit the conditions on site. Cables tend to be trenched and sizing varies, though factors such as soil resistivity and ampacity requirements are key factors in determining sizing requirements.
Circuit design
Excavation of trenches
Laying of cables and connection
Testing
Backfilling trenches
Design and testing services
Installation
Cable supply
Cable delivery
Excavator
Fuel
Cable jointing
Cable termination
Cable testing
Cable diameters and specifications will vary depending on the capacity of the turbines.
An export cable will connect the wind farm to the distribution network. Developers can, in certain circumstances, undertake these works (the appointed company has to be a Lloyds registered Independent Connections Provider) The grid connection can be either overhead (OH) or buried cables (C) (or partly underground), which in turn may require directional drilling or other excavation techniques.
Connection design
Excavation and backfilling of trenches (C)
Assembly and erection of trident poles/pylons (OH)
Laying of cables (C)
Wiring of poles/pylons (OH)
Testing
Substation works
Design and testing services
Installation
Cable supply
Cable delivery
Excavator (C)
Supply of poles/pylon materials (steel, conductors, bolts, fittings) (OH)
Delivery of poles/pylons
Cherry picker (OH)
Crane(OH)
Fuel
Cable jointing
Cable terminations
Lloyds registered and DNO/TO approved companies are required.
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Turbine supply
Turbines tend to come as a complete package from turbine manufacturers, though there may be opportunities to procure some of the required elements locally or nationally. Blades, tower sections and internal electrical parts are delivered for onsite assembly.
Delivery and storage of turbine components
Onsite assembly
Erection of turbine
Installation of electrical and operational components
Commissioning and testing
Transport of turbines
Crane hire
Onsite assembly and erection of turbine (specialist engineering)
Internal transformers and switch gear
Electrical engineering
Ladders and platforms
Ventilation
Foundation fixings
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(2) Generic requirements
This section provides an overview of the kind of information suppliers can be expected to provide when pre-qualifying
or bidding for work. Individual developers or primary contractors may have specific requirements in areas like Health
& Safety, and should always be contacted for definitive information. Requirements are likely to differ depending on
the nature of the services being procured. For example, an administrative function with no presence on site will have
different health & safety requirements to on-site construction.
Table 2: Generic requirements
Topic area Example requirements Comments
Company details
Registered name and address, incuding subsidiaries
TAX registration no.
Contact details
Key contacts for management, H&S, quality, etc.
Financial Bank name and details
Turnover and pre-tax profits (multiple years)
To determine whether the contractor is financially stable and does not present a financial risk.
Insurance Details and copies of certificates of relevant policies, e.g. employer liability, public liability, contractor all risks, professional indemnity, goods in transit
The cover amount will need to be sufficient for the purposes of the activity, and should therefore be discussed with developer/primary contractor.
Experience Background of previous relevant contracts, including geographical extent, numbers of employees managed, etc.
References
Previous experience need not always be in relation to onshore wind construction. For new entrants, it is worth discussing the relevance of previous contracts with developers/primary contractors. References will often be taken up, so please make sure your reference client has agreed.
Health & Safety H&S policies, including any improvement targets and training programmes for employees
Details of any safety certificates
Environment Management Policies (EMP)
Evidence on use of incident book
Waste disposal policies
Historic accident and incident data
Sample risk assessment and method statements
H&S standard may refer to BS OHSAS 18001 or similar. Environmental standard ISO 14001 (or simlar) may be referenced. Third-party vendor accreditation may be required for a specific scheme, as may inclusion on specific registers of safe contractors. Safety certificates held by operators may be CSCS or similar. RenewableUK has also published Wind Turbine Safety Rules, which relevant suppliers should familiarise themselves with16. NICEIC certification (or similar) may be required for any electrical function. The client will want to ensure that a contractor is competent to produce good quality Risk Assessment and Method Statement documentation to avoid problems on site. Risk assessments should follow relevant HSE guidance.17
Quality management
Details of Quality Management System/policy (QMS), including:
Certification
Complaints handling procedures
Customer satisfaction surveys
Certification may be to ISO9001 or equivalents, or via third-party assessments. Clients are looking for contractors who review their performance and are always looking to improve.
16 See www.renewableuk.com/en/our-work/health-and-safety/wind-turbine-safety-rules.cfm 17 www.hse.gov.uk/risk/controlling-risks.htm
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For suppliers of components (e.g. fabricators, machine shops)
Details of inspections carried out
Testing performed
Records of testing
Claim rates
For design functions
Organisation, experience and qualifications of design staff
Design review processes
Hazard elimination methodology
Construction Design and Management Regulations are likely to apply, so evidence on compliance with these should be provided.
For organisations looking to take on the role of CDM Principal Contractor (PC)
Experience of acting in a PC role
Clients are likely to request to audit a site where the role of PC is being performed.
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Part C: Realising Local Content
There is a genuine desire amongst wind farm developers to see the local benefits from onshore wind maximised. Local supply chain content is a central element of this and it offers benefits to the developer as well as the Welsh economy more widely.
This part of the Guide looks at how developers try to involve local firms in their supply chains. It explores the challenges
that developers, principal contractors and supply chain companies can face in boosting local supply chain content. We
highlight some of the barriers that exist here and set out some examples of positive steps that various parties can take
to maximise supply chain opportunity.
A summary of our recommendations for Welsh businesses are:
Get to know your part of the onshore wind farm supply chain and the organisations and individuals who could be buying your services. This will rarely be the wind farm developer and is more likely to be one of their prime contractors.
Take steps to understand the technical requirements in your part of the supply chain in good time so that you have an opportunity to develop capacity or work towards any accreditations needed.
Understand the procurement process, the specific requirements of the developer and the manner in which prime contractors may assemble their bidding teams.
Look for opportunities in smaller wind farms first if your company has no wind farm experience.
Explore opportunities for joint ventures (to access the much larger opportunities) with other firms in your sector to gain the critical mass you may need to bid in your own right or have credibility with prime contractors.
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(1) What is local?
Wind farm developers are committed to maximising the local content of their supply chains but it is important to be clear what ‘local’ means in the context of a wind farm supply chain. For each development the definition of ‘local’ must be agreed with reference to the location of available, competent and competitive suppliers. The lack of appropriate suppliers in some areas might mean that developers have to look further afield for some goods and services than they do for others.
As part of the planning consent process, developers may decide to work with local authorities to agree what ‘local’ means for their development. This will be informed by an analysis of the nature of the business base in the vicinity of developments and what this could mean for the geography of the supply chain. These discussions could involve more than one local authority if a particular development is close to local authority borders.
The supply chains of individual wind farms will always be the focal point for efforts to boost local sourcing. But it is important not to lose sight of the fact that developers want and need the Welsh wind farm supply chain to develop as a whole, rather than in particular localities around specific development sites.
(2) Why do developers want to source locally?
We know that the onshore wind sector has already created substantial economic benefit in Wales and we expect the sector to continue to make an important economic contribution. Wind farm developers look to these economic benefits to help to develop positive relationships with communities close to their developments, but local content creates more than just positive PR and good feeling – it offers real operational benefits to wind farm developers.
Developers want and need to benefit from the knowledge (for example of local ground conditions and site access) that exists within Welsh firms. They are also keen to develop links with local suppliers to help reduce lead-in times for particular goods and services and reduce the cost of transport and logistics for larger components and equipment.
When all other things are equal, these benefits can give local suppliers an edge over competitors from outside Wales, particularly when taking the steps to maximise local supply chain content is a condition of a development’s planning permission. But firms still need to be able to prove they have the relevant accreditations and can do the job well at a competitive price.
Local Content Agreements It is often a condition of planning consents for onshore wind farms that developers will take the steps to maximise local economic benefits. The nature of these conditions varies. Often, they state that developers and their contractors should work with local suppliers wherever possible. More recent planning consents have been more prescriptive on this issue and dictated that a specific proportion of supply chain spend should be invested with firms within a particular radius of the site. How such conditions affect local supply chain sourcing in practice depends on the nature of the agreement. But while these agreements are important, their existence does not automatically guarantee companies in the local area gain contracts. Firms still need to have an appropriate track record, financial standing and accreditations, as well as a competitive price, to access this work.
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(3) What barriers are there?
Local supply chain content offers undoubted strategic and operational benefits to developers but it can be difficult for
developers to influence the geography of a development’s supply chain. Construction activities for major wind farms
tend to be procured in the first instance via a small number of large contracts.
Developers can implement three main types of contract structure. The choice between them will be determined in
part by the demands of the project itself (particularly perceived construction risk), the developer’s preferred method
(including availability of in-house resource) and financiers’ preferences. The approach to maximising local content will
differ depending on which structure is used, reflecting the developer’s ‘distance’ from suppliers lower down the chain.
These dynamics, discussed in more detail below, ought to be borne in mind by developers seeking to maximise local
content. Potential suppliers should also be aware of the proposed contract structure and the different dynamics
involved, in order to make sure they know who to engage with, and who will be responsible for what once contract
awards begin. The main contract types are:
Engineering, Procurement and Construction contract (EPC): Also known as turnkey contracts. The developer
will issue a primary contract to a single company for delivery of the whole operational wind farm, including all
design, purchasing and construction activities. There are a range of companies in the UK operating as turnkey
contractors. Such companies are likely to already have a significant database of suppliers across the country,
and may therefore need to do little in the way of scheme-specific identification. Ensuring a sufficient level of
local and UK content will therefore depend strongly on the wording of the invitation to tender for the contract,
and the contract itself. New suppliers should consider engaging directly with primary contractors in this sector
to understand the criteria for acceptance onto approved supplier lists, including pre-qualification
requirements.
Dual contracts (DC): Dual contracts split the supply and erection of turbines from Balance of Plant (BoP)
(namely, all other activities). As with EPCs, there is a mature market for provision of both services. The dynamic
between developers and subcontractors is also similar.
Multi-contract structure (MC): MCs break the construction activities down into several distinct streams (five
or six, for example), with the developer managing the interface between all primary contractors. MCs are
often a higher-risk approach than EPCs or DCs, but, because the developer is ‘closer’ to the subcontractors
and suppliers lower down the chain, they arguably provide more leverage to look at local/UK commitments at
the point of contract award. Where an MC is being used, suppliers and subcontractors should consider
engaging early with the developer, as well as with any candidate primary contractors, to discuss possible
opportunities and future requirements.
In many cases and particularly for larger developments the number of Welsh firms with both the particular expertise
needed and the financial standing necessary to access large prime contracts will be limited. This means that prime
contracts can be placed with firms outside of Wales (although this is not always the case). The purchasing decisions of
prime contractors are central in driving the local supply chain content. Developers have to work with and through
their prime contractors to deliver their aspirations around local supply chain content.
There are a number of barriers that developers and their contractors must negotiate:
3.1 The Size of Contracts
The developer’s prime contractors will let a variety of contracts of their own for goods and services to support wind
farm construction. Depending on the size of the wind farm and the procurement approach being taken the second
(and sometime third) tier contracts may still be very large. This can narrow the field of companies who would be able
to compete for these contracts.
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For example, the Balance of Plant contract for the Pen y Cymoedd development was won by Welsh contractor Jones
Bros and global infrastructure group, Balfour Beatty. Jones Bros had the track record, accreditations and reputation
that Vattenfall was looking for while Balfour Beatty supplied the financial capacity required for the project. Vattenfall
was looking for while Balfour Beatty supplied the financial capacity required for the project.
3.2 Competing Developments
The availability of contractors locally (and for some components and services, nationally) is sensitive to the range and
type of other developments that are underway. If other developments are drawing upon available capacity then it can
be more challenging to achieve local content aspirations within programme timescales. The scale of wind farm
construction programmes means that timetable slippage is costly (and contractors can be faced with steep financial
penalties if they miss milestones). Any short-term bottlenecks in local capacity can mean that developers have to look
further afield for contractors.
3.3 Continued Drive for Cost Reduction
Onshore wind is a price sensitive industry and there is a long term requirement for continual cost improvement in the
sector so that economic returns and the need for subsidy can be retained over time. This continual downward pressure
on costs is a double edged sword for companies in Wales. On the one hand, it means that developers and their prime
contractors need to build long term relationships with their supplier base and work with them to deliver cost
reductions. But the focus on price makes the sector very competitive. For some components, local firms will be
competing with overseas companies, sometimes from low cost economies. For Welsh suppliers, it is essential to
consider costs carefully and get a full understanding of the costs, capability and responsiveness that their clients are
looking for and to make their ability to meet these requirements clear in their contract bids.
Jones Bros and Balfour Beatty: A Joint Venture to Access a Large Opportunity
Jones Bros and Balfour Beatty’s joint venture bid for the Balance of Plant contract for Pen y Cymoedd has helped
to secure substantial economic benefit for Wales. Jones Bros is a large company with a substantial track record in
onshore wind, and formed a joint venture with global infrastructure group Balfour Beatty to bid for the project’s
Balance of Plant contract.
Jones Bros and Balfour Beatty had worked together before and saw Pen y Cymoedd as a particularly good
opportunity to work as a joint venture again, particularly as Vattenfall was encouraging Welsh content and actively
looking to support joint ventures.
This is a good example of how contract structure can support benefits in Wales. In addition to the work which
Jones Bros has directly captured itself, the firm’s existing Wales supply chain has positioned the joint venture well
to meet Vattenfall’s local labour and sourcing requirements.
The main challenges have been related to the size of the work. The scale of the work on this development and the
financial requirements and penalties can be particularly challenging for smaller firms. There is no reason why
smaller firms can’t work together and mirror the approach that Jones Bros and Balfour Beatty have adopted. Most
of the work in the onshore wind supply chain, outside of the turbine manufacture, is not particularly specialist.
Having said that, firms still need to be able to demonstrate wind farm experience. Track record is always a big
consideration. But there is scope for firms to build up experience on smaller turbines and then scale up to larger
turbines and then larger developments.
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3.4 Supply Chain Knowledge
It can take time to build up a full knowledge of the capability that exists in local firms. Developers and their principal
contractors might not always have perfect knowledge about the range of firms that exist locally, what goods and
services they can provide and the level of capacity that they can offer. Although there are a range of activities that
developers can get involved in (e.g. supplier registration, meet the buyer etc.) it can still be challenging to identify all
of the relevant firms in a particular area.
3.5. Reluctance to Invest
Wind farms are major construction projects and companies need to be able to demonstrate that they have the
particular skills required. There are various technical and more general accreditations needed. For example, in all parts
of the supply chain there are various Health and Safety accreditations that firms need to work in different parts of the
site. The accreditations needed will vary for different developers and in different parts of the supply chain, but the
requirements are non-negotiable. The accreditations can take time to work towards and involve investment in training
and up-skilling.
The investment needed to develop particular technical expertise, work-winning skills and / or accreditations might not
necessarily match a company’s interpretation of the scale of opportunity in the sector. Developers report that it is
much easier to interest local companies in supplier opportunities when there is a cluster of activity in a particular
location. When developers or prime contractors are able to offer a steady stream of work, the justification for making
investments to help these potential suppliers to access this work becomes more compelling.
Similarly, firms need to have an awareness and experience of major procurement exercises to be able to put together
a competitive bid.
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(4) What is the industry doing to overcome these barriers?
Developers and their prime contractors are working hard to make it easier to identify and work with appropriate Wales
based suppliers. There are already a number of examples of successful approaches which have made it easier for local
companies to access opportunities (see for example the Pen y Cymoedd case study). Developers’ approaches will differ
from one development to the next, but many of the developers in Wales are committed to best practice approaches.
This means that they are investing substantially in activities to develop their local supply chain knowledge and identify
where key businesses are, what their capabilities are and the level of capacity available. This information gathering
activity is taking place at early stages in project planning and developers are committed to communicating
opportunities to local firms.
Developers are improving their approaches to communication with potential suppliers and ensuring that key
information about developments is communicated early so that potential suppliers have time to consider their
suitability for opportunities and take any steps needed to put themselves in a competitive position (such as
certification, training or even capital investment). For the Pen y Cymoedd development this engagement activity began
at the pre-planning phase and this is thought to have been important in securing local content.
Developers have traditionally used more passive approaches to this activity (e.g. registration portals and websites etc.)
but increasingly developers are recognising the benefits of more active and targeted approaches which engage
businesses and allow for a more detailed dialogue in which the nature of opportunities and the process for
procurement can be discussed in more depth.
Meet the buyer events have proven particularly helpful in this regard and these have been held as part of the Pen y
Cymoedd, Mynydd y Gwair and Ysgellog schemes. The format for these events varies. Sometimes the developer and
primary contractors host these together, for other developments they start to take place before primary contractors
have been appointed. They provide benefits for potential suppliers because they allow an early discussion about the
nature and timing of opportunities and the capability and certification requirements of the development. For
developers these events help to deepen their knowledge of the local supplier base. They have also been used to
encourage the development of local consortia bids.
The relationship between the project developer and the primary contractors is very important. Developers might
specify in their procurement of prime contractors the importance of a commitment to using local suppliers. There are
recent examples of developers making the commitment for local supply more explicit and contractually binding, for
example requiring primary contractors to ensure that a certain percentage of their supply chain spend is in a particular
locality / area. This depends on whether the developer thinks that there is sufficient local presence of particular firms
to make a commitment in this way.
All developers active in Wales are committed to monitoring and reporting on the local content of their supply chains.
This will help to strengthen approaches in the future. Developers are also committed to communicating the scale of
opportunity in the sector and the progress of their individual developments through the planning system.
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The Developer View: RWE’s Approach to Maximising Welsh Supply Chain Content
RWE Innogy UK is a major developer and operator of onshore wind farms in Wales and currently has three large
schemes in Wales that are consented and in the pre-construction phases (Mynydd y Gwair, Brechfa Forest West
and Clocaenog). RWE has been considering the Welsh content of supply chains for these schemes for a number of
years and is optimistic they will provide real opportunities for Welsh companies.
RWE expects to procure construction activities for these wind farms via three groups of work packages; the turbine
and related components, towers and balance of plant. RWE expects the greatest concentration of opportunities
for Welsh firms to be associated with balance of plant activities. With the exception of high voltage cabling and
manufacture of switchgear and transformers, most of the work in this part of the supply chain is not particularly
specialist.
Although there are companies in Wales that could act as upper tier Balance of Plant contractors for smaller
schemes, there are few firms of sufficient financial standing to win upper tier contracts for schemes with more
than 20 turbines. RWE therefore reflects its commitment to local supply chain content through its contractual
relationships with its upper tier contractors. For example, planning requirements related to local content are
reflected in contracts with upper tier suppliers and there are examples (such as Mynydd y Gwair) where
requirements related to local content will be passed down to contractors in lower tiers of the supply chain.
A substantial number of Welsh companies could tender competitively for contracts relating to plant hire,
aggregates, steel for concrete reinforcement, ground investigation services and security services, particularly as
there are locational advantages for suppliers located close to the wind farm for these services. To help to boost
the ability of upper tier contractors to source from within Wales, RWE is proposing to:
Where possible and appropriate, ensure that upper tier suppliers have local content requirements
reflected in their contracts with RWE.
Actively raise awareness of the nature and timing of opportunities associated with these developments
amongst Welsh companies in relevant sectors.
Ensure that Welsh firms have timely information to allow them to make any investments (e.g. in
accreditations or skills) necessary to boost their chances of winning work.
Continue to develop relationships with Welsh firms and pass this information to upper tier contractors to
support them in their efforts to maximise Welsh supply chain content.
Carefully monitor the Welsh supply chain content of its wind farms.
There are various activities that would help RWE to meet its aims around local content. It would be particularly
keen to see collaborative bids from Welsh firms to access some of the larger contracts which will emerge from its
developments. It is also keen to see Welsh firms approach the sector strategically and build up experience
working on smaller developments (3/4 turbines) to gain a track record. There is a greater need for support
through the procurement process, which Welsh firms should be actively lobbying for. It is not just about doing
the work – Welsh suppliers need the accreditations and bid writing skills to enable them to compete effectively
for it.
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A Local Sourcing Success Story: Vattenfall’s Pen y Cymoedd
Vattenfall’s 228MW Pen y Cymoedd project in South Wales is a £400 million investment, and will be England and
Wales’ largest wind farm on completion in 2017. Construction began in 2014 and work worth more than£45 million
has already been contracted with businesses in Wales, with over 50 Welsh companies and 600 jobs supported by
the project, which is expected to be worth over £1 billion to the Welsh economy over its lifetime.
The strong presence of Welsh firms in Pen y Cymoedd’s supply chain has not come about by chance. Vattenfall
and the Welsh supplier base have worked together to ensure the scheme creates economic benefits in Wales.
Vattenfall’s early dialogue with Welsh companies has played an important role here. Local businesses made it clear
to Vattenfall before the scheme received planning consent that they needed to understand the nature and timing
of opportunities, the contracting strategy and the specific requirements and accreditations needed. As a result,
Vattenfall hosted briefing sessions for South Wales companies before planning permission for the scheme was
granted. These sessions opened up lines of communication and started to raise awareness and understanding of
the nature of opportunities and the requirements of the scheme. Once Vattenfall had appointed its prime
contractors the engagement continued and Meet the Contractor events were organised so local contractors could
engage with lead suppliers before the tender processes for their work packages commenced.
This early and ongoing engagement was important but perhaps the most crucial factor was Vattenfall’s
commitment to write local supply chain engagement into all tender documents. Vattenfall requires all of its upper
tier contractors involved in Pen y Cymoedd to maximise use of local contractors and develop a local supply chain
plan. This means its contractors are contractually required to source goods and services from within Wales where
they can.
The approach of Vattenfall’s prime contractors has also played a role in securing local economic benefits. For
example, Vattenfall report that ABB (the prime contractor for the wind farm’s grid connection) have awarded
significant contracts to Welsh companies. The joint venture between Jones Bros and Balfour Beatty for the Balance
of Plant contract has further enhanced local sourcing on the scheme. As a Welsh company, Jones Bros’ existing
supply chain was already well developed in Wales, but the requirement to source locally where possible has helped
to secure further benefits for Welsh companies. To date, 13 suppliers and 11 sub-contractors businesses in South
Wales have been awarded contracts as part of the supply chain for the Balance of Plant works. Contracts include
a range of on-site services, including site supplies and aggregate, surfacing, security and traffic management.
Firms in the Wales supply chain have proven willing and able to act on the information Vattenfall has provided.
The scale of the Pen y Cymoedd development has had a part to play here – firms have shown themselves willing
to make investments in accreditation and skills to access the large opportunities it presents. The availability of
complementary support developed and delivered by Neath Port Talbot County Borough Council has helped
businesses looking to upskill and helped them access opportunities.
Vattenfall is keen to highlight the importance attached to the development of local supply chains and states that
“Maximising supply chain opportunities and employment benefits to Wales has been a project priority. Our
contracting has worked to secure that our contractors work with us and the Welsh supply chain to achieve the
best possible objectives. Many benefits have been secured through our approach – from local employment and
apprenticeships, to major contract awards to Welsh companies big and small.”
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The Prime Contractor’s View: Walters UK’s Take on Balance of Plant Opportunities
Walters UK has acted as the prime Balance of Plant contractor on a number of wind farm developments in Wales,
including Pant y Wal, Fforch Nest, Maesgwyn and Mynydd Bwllfa. As the prime contractor on these developments,
Walters UK was responsible for the discharge of planning conditions and the design and construction of civil
engineering works (including turbine foundations, crane platforms and access roads).
Opportunities for local sourcing are much more developed in the civil engineering sector than they are for other
parts of the supply chain. The skills and expertise needed tends to exist locally to specific sites. The opportunities
for local suppliers tend to be related to plant hire, aggregate supply, concrete, reinforcement, formwork
reinforcement concrete, concrete pump hire, assembly of bolt cages, security contractors, site investigation.
Walters has also successfully sub-contracted design services to local subcontractors in some instances.
Because of the nature of the work in the civils sector, there tends to be contractors locally with the relevant
expertise and the size or capacity of firms has not proven to be a challenge. Its central assumption is that it will
consistently use local suppliers unless there is a significant commercial reason to go outside of Wales.
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(5) What do Welsh firms need to do?
Although developers take the issue of local supply chain content seriously and are putting actions in place to maximise
this, there are still barriers to overcome. To maximise the potential to access opportunities, the industry needs Welsh
companies to:
5.1 Get to Know the Sector
Developers are naturally the focal point for activity around wind farms but their relationships with suppliers tend to
be limited to a small number of prime contractors. These tend to be very large businesses and they may not necessarily
be located in Wales, although many are.
For smaller businesses, the opportunity for work in the onshore wind sector is most likely to come from these prime
contractors or their sub-contractors. Welsh companies interested in opportunities in onshore wind need to get to
know who the main buyers for their services are likely to be. Developers will play their part by bringing their
contractors together with local firms (e.g. at Meet the Buyer events) so it is still important to register on the
developer’s supplier portal and look out for updates. In addition, Welsh businesses can maximise their chances by
keeping an eye on wider sector developments, including which contractors are winning work in their area.
5.2 Understand Requirements
Wind farm developers want to maximise the local content of their supply chains but cannot make exceptions when it
comes to technical requirements and accreditation. The technical requirements and accreditations needed to access
work in the sector differ across the supply chain and are summarised in Part B of this guide. These are essential
requirements that can take time and money to achieve. This underlines the need to explore opportunities early to
allow time to take the necessary steps towards the accreditations needed.
5.3 Understand the Procurement Process
The procurement process for wind farm developments can be complex and time consuming, especially at the upper
tiers of the supply chain. Developers want to work with local contractors but to compete effectively, Welsh firms
need to be able to present their offer convincingly in the form of a high quality bid. The requirements and how bids
will be judged will be clearly stated. These are often related to (i) cost (ii) competence and technical accreditation;
and (iii) health and safety accreditations.
Companies might find it helpful to tender for similar work in the near term to become familiar with the tendering
process.
5.4 Start Small
With no experience in the wind farm sector it will always be difficult to win work on larger developments. For larger
schemes, developers will be looking for a track record in the wind sector, even if this has been built up on smaller
schemes.
5.5 Explore opportunities for joint ventures
There are some examples of Welsh companies accessing opportunities in onshore wind by bidding in consortia with
other firms, or as a joint venture with another firm. Jones Bros and Balfour Beatty’s joint venture for the Balance of
Plant contract on Pen y Cymoedd is perhaps the most recent example. This appears to be limited to the upper tiers of
the supply chain so far, but there could be opportunities for firms lower down the supply chain to work together to
access large opportunities.
Owners of these businesses should proactively approach developers to find out if they have particular requirements.
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(6) Where to go for assistance and further information
There is a range of information available to help to you to understand and improve upon your competitive position
in the onshore wind industry. Business Wales is able to provide advice on the range of support services that are
available and can be contacted on 03000 603 000. Further information is also available at
www.business.wales.gov.uk
Local Chambers of Commerce and Economic Development Teams in Local Authorities will also be able to help to
access support and advisory services.
RenewableUK Cymru is the trade body for renewable energy in Wales and may have details about individual wind
farms and developers. They can be contacted at cymru@renewableuk.com or on 029 2034 7840. Further
information is available at www.renewableuk-cymru.com
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Appendix One: Technical and other requirements
Estimating the Scale of Opportunity
The estimated 1,465MW of additional installed capacity up to 2025 (see below) and the per MW supply chain spend and sourcing estimates have been used to estimate the
total scale of opportunity from the onshore wind sector in Wales up to 2025.
Current Pipeline
RenewableUK records all wind farms that are in construction, consented or in the planning system. The data reveals there is currently an operational capacity of 560MW in
Wales, as well as a strong pipeline of development capacity. The table below illustrates the current development pipeline and estimated additional capacity coming
forward.
Table A1: Current Operational capacity and Development Pipeline
Stage Total MW Capacity
Currently Operational 560
A: Currently in planning 780
B: Currently consented, construction not commenced 400
C: Currently in construction 340
Total additional capacity coming forward (A+B+C) 1,500
In addition to the above capacity pipeline, there is also around 460MW at pre-planning, on hold or going to appeal. However it is highly unlikely that all of these will all be
approved, and indeed some are mutually exclusive.
Looking at the current pipeline of developments which have been approved in Wales:
There is currently 740MW of approved additional capacity: 340MW in construction and 400MW approved but not yet constructed.
RenewableUK Cymru has provided pipeline data that provides an indication of the likely start data of operations. This suggests that the majority of
approved capacity in the pipeline will become operational by 2018.
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Bringing all of this together, this equates to an annual average of 185MW per annum of additional capacity over the four year period (2015-2018). However, the recent
approvals are heavily skewed by the Pen y Cymoedd scheme (228MW). There are no other schemes of a comparable size in the planning system at present. It is therefore
not realistic to project forward on this basis.
Excluding Pen y Cymoedd from the recently consented schemes indicates an annual average additional capacity of 121MW per annum. Projecting forward on this basis would
yield 1,210MW of installed capacity by 2025; leading to a total additional installed capacity figure of 1,465MW by 2025 (once the Pen y Cymoedd scheme (228MW) has been
added to the final additional capacity figure).
Supply Chain Spend and Sourcing
The construction and development phase expenditure benchmarks used in this study are shown in the table below. These are informed by the research and developer’s
survey that underpinned the 2013 RenewableUK Cymru report18, which have been benchmarked against other published sources and tested with industry representatives.
At the time of publication there was considerable uncertainty about whether Wales would retain its current turbine tower manufacturing capacity. The figures presented
here and the underlying calculations assume that existing capacity in the manufacture of turbine towers will be retained and that a proportion of expenditure on turbine
towers can be safeguarded in Wales. Given the large contribution that spend related to turbine towers makes to the overall spend per MW in Wales, it is important to note
that the scale and nature of the opportunity would differ if turbine manufacturing capacity did not stay in Wales.
The research suggests that total average construction costs per MW of installed capacity are £1.13m, and total development costs are £0.12m, in 2012 prices19. The research
also suggests 35% of all expenditure in the construction phase is on average expected to be retained within Wales, along with 71% of planning and development spend.
Table A2: Average Expenditure per MW of Installed Capacity for Development and Construction Phase, and % Sourced from Wales (in 2012 prices)
£ per MW (total) % in Wales £ per MW
Wales
Development and planning £120,000 71% £85,000
18 http://www.renewableuk-cymru.com/wp-content/uploads/2013/10/EconomicOpportunitiesOnshoreWindWales.pdf 19 Note: There are margins of error in the estimates as the developer’s survey only reached a sample of all developers and operators of onshore wind farms in Wales. However given the coverage of the developer survey reached 66% of all existing and proposed capacity in Wales and the estimates were then benchmarked against other published sources, the estimates are robust.
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Construction
Project Management of Construction £58,000 82% £47,000
Wind Turbine Nacelle, Rotor and Blades £528,000 0% -
Wind Turbine Tower £140,000 76%* £106,000
Wind Turbine Transport, Assembly & Installation £67,000 61% 41,000
Civil Engineering Works £147,000 76% £112,000
Electrical Engineering Works £85,000 28% £24,000
Grid Connection and Related Works £90,000 55% £49,000
Forestry & Environment Services (inc habitat management) £18,000 92% £17,000
Total Construction (not inc. planning) £1,133,000 35% £396,000
Source: Survey of Developers and Operators
Note: Figures may not sum due to rounding
* Note: whilst this represents developers’ intentions, in the modelling we have reduced this to 50%, in order to be conservative.
The operations and maintenance phase expenditure benchmarks used in this study are shown in the table below. These are informed by the research and developer’s survey
that underpinned the 2013 RenewableUK Cymru report20, which have been benchmarked against other published sources and tested with industry representatives. The
research suggests that total average operational costs per MW of installed capacity are £38,600. The research also suggests that on average 76% of all operational expenditure
is expected to be retained within Wales.
Table A3: Average Expenditure per MW of Installed Capacity for Operation and Maintenance Phase, and % Sourced from Wales (in 2012 prices)
£ per MW (total)
% in Wales Wales £ per MW
Employment Costs:
Wind Farm Operations and Management 3,600 79% 2,800
Turbine Maintenance 5,700 89% 5,000
Other Activities 500 75% 400
20 http://www.renewableuk-cymru.com/wp-content/uploads/2013/10/EconomicOpportunitiesOnshoreWindWales.pdf
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External Costs/Bought In:
Equipment and Spares 8,400 22% 1,800
Forestry and Environment (including habitat management) 600 97% 500
Insurances 1,500 28% 400
Land Rentals/Access Payments 12,000 100% 12,000
Business Rates 6,400 100% 6,400
Total Operational Expenditure 38,600 76% 29,400 Source: Survey of Developers and Operators
Note: Figures may not sum due to rounding
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Acknowledgements
The authors would like to thank the many contributors to this report:
Airvolution Energy www.airvolutionenergy.com
Amegni Renewables Ltd
Apex Drilling Services - www.apexdrilling.co.uk
Apex Testing Solutions - www.apextestingsolutions.co.uk
Balfour Beatty – www.balfourbeatty.com
Burke Contracts - www.burkecontracts.ltd.uk
CMP Plant - www.cmpplanthire.co.uk
Express Reinforcements - www.expressreinforcements.co.uk
Jones Bros - www.jones-bros.com
Raymond Brown Renewables – www.raymondbrownrenewables.co.uk
RES - www.res-group.com
RWE Innogy UK - www.rwe.com/web/cms/en/1113816/rwe-innogy/about-rwe-innogy/rwe-innogy-uk
Vattenfall - www.vattenfall.co.uk/en/index.htm
Walters UK - www.walters-uk.co.uk
39
RenewableUK Cymru is the Wales branch of the UK’s leading renewable energy trade association, RenewableUK. Its
vision is of a sustainable Wales which makes full use of its renewable energy resource. RenewableUK Cymru
represents all renewable technologies in Wales, along with energy storage, with membership ranging from individual
installers to large companies.
RenewableUK Cymru acts as a central point of information and a united representative voice for its membership. It
provides market intelligence and business leads: finds solutions; organises events, facilitates business development;
and lobbies and promotes renewables to Government, industry, the media and the public.
For more information on how to join the UK’s leading renewables association, please go to www.renewableuk-
cymru.com