Sitting on my return flight from South Korea recently, having spent a week advising local companies on risk management solutions for the world’s largest offshore wind farm, I was struck by their complete determination to use local content. Everyone I spoke to was adamant that they’d be using local contractors, consultants, vessels, technology and methods for the US$9 billion, 2.5-gigawatt (GW) project off the country’s southwestern coast.
Despite my insistence that insurers are looking for ‘experience’, ‘proven technology’ and ‘established methodologies’, it was clear to me that these projects will be done the South Korean way, the same way they have turned themselves, in a relativity short amount of time, into the leading ship building and semiconductor industry in the world—by investing in local.
Homegrown Wind Power
The South Korean government are insisting upon this homegrown approach in offshore wind for the first 2.5GW, to ensure the local industry can develop without outside competition, allowing it to export this new industry in time to Europe and beyond, and I have no doubt such an approach will work. I have already seen the South Korean turbine manufacturers enter the European market with compelling business cases, which will be even more compelling with credible offshore experience in five years I am sure.
Having seen this approach in the German, and more recently French, offshore wind sector (particularly for turbines) it leaves me wondering why the UK has not invested in such a approach as the long-term advantages seems obvious to me.
UK Should Emulate its Neighbours
When you look at the Round 3 plans in the UK, there is a great opportunity for UK industry and manufacturing, yet I fear the current approach will see a typical project built using French cables, South Korean vessels and German turbines.
Even our ports are under competition from ports in Germany and Denmark, specifically designed for offshore wind development and O&M—an attractive and fairly close alternative for many developers looking at offshore development in the UK.
I have no doubt the insurer’s preference is not for local but for the most experienced. However Germany is an example that with the right investment and time, you could have both. Something the South Koreans already seem very well positioned to take advantage of in years to come!
Guest blogger Tim Halperin-Smith is the Divisional Director of Renewable Energy, in Willis Global Markets International division.