Matthew Chinn of Siemens outlines the challenges and opportunities for the UK’s wind energy industry

October 30th, 2011 by Events

Siemens were core sponsors for the RenewableUK annual conference held in Manchester from 25 to 27 October 2011.

Matthew Chinn, Managing Director, Siemens Energy Sector in the UK and North West Europe, welcomed RenewableUK delegates to Manchester on behalf of Siemens.

Matthew Chinn of Siemens addresses delegates at the RenewableUK annual conference in Manchester on 25 October 2011 (click image to expand - ©RLLord)

“Manchester is a special town for Siemens,” he said.  Of the 19,000 people Siemens employs in the UK, 2000 are here in Manchester.

Siemens has recently started construction on its Renewable Energy Engineering (REE) centre, which within the next 12 to 18 months will employ an additional 340 engineers dedicated solely to building out, and creating solutions for connecting wind farms to the grid here in the UK, and in Europe, and also in North America.”

“We’re here because of energy and specifically electricity,” he said.  A picture of earth at night shows how reliant we are on electricity. You can see the lights going on all over the world.

“Most of the human race today cannot survive without electricity. It gives us light.  It gives us heat. It moves hundreds of millions of people from A to B everyday.  It drives the pumps that give us water in our cities, and it powers the computers that do all the logistics that ensure that food and clothing is available to the majority of us.”

“In a world population of 7 billion it is amazing that there are still over 1.5 billion people that still don’t have access to electricity.  And there are over 3 billion people that don’t have access to what we would call reliable electricity.  The vast majority of those people live today in the world’s fastest growing economies.  And those governments are spending hundreds of billions of pounds upgrading their electrical infrastructure systems so that they have the best electricity systems in the world to ensure that their people can have the same aspirations as us, and so that their businesses have world class competitiveness to support their economies.”

“Globally renewable energy now is playing a major part in meeting that demand.  It is no longer a side player. Renewable technologies, particularly wind and solar, are playing a major role in meeting that demand for electricity, which I think is a big step-change in what we have been talking about when it comes to wind energy in the last four or five years.”

Here in Europe and in the UK, renewable energy is playing an increasingly important part, not necessarily just to meet the gigawatt demand, but for the sustainability of supply.  Our future supply has to be sustainable.  We know that fossil fuels are limited by Nature.  Should the supply of fossil fuels start to be disrupted, run-out, and the lights were to go out over the world, having a diverse energy policy and a strong renewables policy will ensure that the lights stay on here.

I am convinced that Renewables is the new game in town.  I have spent 25 years in this industry and every time I spoke to my friends, and they asked me what I did and I said “power stations’ and they groaned.  Now I say to them that I do wind turbines and my friends are impressed and want to talk about it.  For the first time ever it has become a sexy industry and I am very proud to be a part of it.

Now, the UK has a plan for Renewables. The UK government has made it very clear and very simple.  By 2020, 15% of our energy will be generated from renewable sources and by 2050 the UK will want to have reduced carbon emissions by 80% from the 1990 level through decarbonisation of generation.

What needs to be done to make that plan a reality?

Siemens thinks there are a few issues that are essential:

  • Short-term confidence.  We are being battered at the moment by the financial crisis. There is actually a short-term confidence crisis at the moment and that has definitely got to stabilise if we don’t want to push-out the timetable for achieving our objectives on renewables.
  • We need a market.  If we want people to invest we have to be able to see a market and that market has to be transparent and the opportunities within that market have to be very clear to potential investors.  The UK Department of Energy and Climate Change (DECC) announcement last week on the Renewables Obligation Certificate (ROC) banding review is helpful.  It is a step forward.  It gives us visibility albeit only up to 2016.  The next key milestone is getting as early as possible visibility on the incentive mechanisms to be used post-2017.  The supply-chain needs to take some long term bets and having visibility on that long-term market is absolutely essential if we want to encourage people to make these long-term bets.
  • The Market has to be continuous.  What we don’t want is a stop-start market. That is really bad for manufacturers – flat-out, nothing-to-do, flat-out, nothing-to-do…. This doesn’t do any favours to people trying to invest in manufacturing.  There’s still a lot of work to be done to streamline the planning and consenting process so that we can ensure that there is a consistent pipeline of projects coming through that the pipeline can see and make the necessary investments.
  • The cost of electricity – there’s two parts to this.  The first part is perceived fair price for the consumer to pay, and the second part is actually the cost of, for example, off-shore wind, which we know at the moment is expensive.

The perceived fair price for electricity – the reality is that we enjoy some of the lowest consumer energy prices in the whole of Europe.  I think that gap between perception and reality has to narrow if renewable energy is to be widely accepted.

Maria McCaffery, Chief Executive of RenewableUK, said it is a relatively minor add-on, but it is blown all out of proportion at the moment so there is a degree of reality that needs to come in if we are to get broad acceptance.

The other side of cost is the true cost.  And I think we all know it is expensive.  Off-shore wind is particularly expensive largely because we are at the beginning of the learning curve.  We have been working for over two years now on a very structured program to create innovative ideas that will help drive down that cost and it is not all about the original equipment manufacturer (OEM). We are working with our customers.  We’re working with potential constructors.  We’re working with key players in the supply chain.

And we break it down very simply into four parts:

  • The first part is the CAPEX of the technology.  So we are constantly investing in new technology.  We have just moved to direct-drive technology.  We now have our 6 MW direct drive off-shore wind turbine with 50% fewer components and substantially lighter in weight.  That all helps drive down the unit cost, the CAPEX for each turbine, but the turbines are actually a relatively smaller percentage of the overall cost of building an off-shore wind farm.
  • The next big area is what we call the other CAPEX.  This is the foundations, the transmission pieces.  It is the cost of construction. And it is the time of construction.  And we are working very hard with all the stakeholders to see how we can drive that cost down, how can we drive the time down, how can we drive the risk down, because risk equates to cost as well.
  • The third area is looking at the OPEX.  And the OPEX is figuring out how you do less maintenance, how can you do the maintenance cheaper? How do you do it more effectively? How can you drive up the reliability of the turbines?
  • And alongside all that we are constantly developing new ideas on how you can drive more energy out of the units over the life cycle of the turbines.

Bringing all that together is the program we are driving to bring down the levelised cost of energy (LEC or LCOE).

Matthew Chinn, Siemens Managing Director for the Energy Sector in the UK and North West Europe, speaks of the opportunties for developing wind energy resources at the RenewableUK conference in Manchester on 25 October 2011 (click image to expand - ©RLLord)

It is phenomenal where the wind industry has come from.

About thirty years ago a 22 kW turbine was installed in Denmark and I believe it is still running today. This turbine is about 20 metres high. By comparison Siemens 6 MW direct drive unit has a rotor diameter of 120 metres.  The sheer physical size of the technology has exploded. The technology has moved along incredibly fast but the new challenges are equally large.

When you get that type of technology it then creates deployment challenges and logistics challenges. The nacelle of the new wind turbines are physically huge compared to earlier units. The scale of these challenges is now getting bigger and bigger.  These are deployment challenges.  The solution to these will not come upfront but as the result of a learning process.  And to do that we need people.  The RenewableUK forecast is that 88,000 people will be needed in this industry by 2021.  Today there are about 10.5 to 11,000 people in the UK industry. So we have an enormous challenge to bring young people into this industry.

How do we give these new people the skills so that they will come up with the answers for how we will construct this quicker, cheaper, safer?

Siemens invested £10 million last year at Lincoln University. We helped the university put together the first new engineering school in the UK in twenty years.  We are spending another £10 million this year giving bursaries and grants to young, smart people coming out of school to try and attract them into engineering.  We spent £8 million at Newcastle building a renewables energy training centre giving people the skills specific to this industry to how to install turbines, how to service them, how to climb them safely, how to access them safely.

We are now putting about 400 students a year, not just Siemens people but for our customers, through that program.  We have one hundred apprentices now in Siemens energy businesses in the UK, and this year we are targeting 70 graduates, because obviously we need managers of the future as well, in our graduate program.

You add that all up towards the target off 88,000 for 2021 and it’s a drop in the ocean, so Siemens can do some training, but the whole industry really has to step-up to take this challenge seriously if we want to turn students into, for example, Rope Access Technicians (RATs) who have a highly skilled job, and it is not for everybody.

These are the main challenges.

When you look at the UK from a global position, and you then look at Europe, there’s a once in a lifetime opportunity here for UK PLC.  I don’t know if anyone has heard of Desertec.  This is a project that is being pushed, which will use the sunbelt of North Africa as a zone for solar power to feed the southern half of Europe with sustainable energy.

There’s a real opportunity to make the North Sea the ‘Windtec’ of Northern Europe.  The business opportunity is phenomenal. If you add up the 100 GW that is expected to be built out in the North Sea – 50 GW in UK waters and another 50 GW elsewhere comprising 20,000 wind turbines, which will require 12 mega-tonnes of steel, 25 jack-up installation vessels and a €250 billion investment.

Every spare fabrication yard on the North Sea could potentially be full building jackets for platforms, and substations. It could potentially create 200,000 jobs in Europe.

If we go first and learn the lessons first, the UK is in a marvelous position to help the rest of Europe build this infrastructure using our expertise.

“I have been in this industry for years and it has always been a dull industry when you talk to people but now it is sexy and I really want to see it a success.”

 

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