www.RenewableUK.com
A Guide to Measuring the UK Content of Offshore Wind Farms
May 2015
1
Contents Industry Foreword .................................................................................................................................. 2
Executive Summary ................................................................................................................................. 3
Reporting on UK Content – a quick guide ............................................................................................... 4
Data reporting process.................................................................................................................... 5
How to submit information? ................................................................................................................... 6
Which forms to use ............................................................................................................................. 6
Timescales for collection ..................................................................................................................... 7
What we will do with the information .................................................................................................... 7
Ensuring Data Accuracy via Audit ........................................................................................................... 8
Contacts .................................................................................................................................................. 8
Appendices .............................................................................................................................................. 9
Appendix A: Wind farm generating asset owner reporting sheets ................................................... 9
Appendix B: Wind farm transmission asset owner reporting sheets .............................................. 12
Appendix C: Definitions of supply chain elements .......................................................................... 15
Appendix D: Form for calculating UK Content calculation for Supplier and Subsuppliers with a
Contract value over £10 million. ....................................................................................................... 18
2
Industry Foreword
The UK’s wind industry is one that enjoys strong support among the British public. And we are an
industry that is growing rapidly, delivering power into the UK grid and helping create new
employment across the UK. As an industry we can be proud of our achievements, but we must also
recognise that we can go further.
In my role as Co-Chairman of the Offshore Wind Industry Council there are two issues that I am most
asked about. These are about the cost of offshore wind, and the level of UK content. Industry is
working hard on both issues, and the Offshore Wind Programme Board is coordinating action across
the sector to ensure that as an industry we meet our commitments: to get costs down to £100/MWh
by 2020 and to achieve 50% UK content in our offshore wind farms.
But not only is it important that we embrace these challenges as a sector; it is also vital that we
make sure we are held to account. Politicians and the wider public who back our industry and its
continued success have a right to expect that we are open about progress in delivering cost
reduction and increasing UK content.
And of course, we have a positive story to tell. Our industry already reports on cost, and we know
that we are ahead of schedule in work to reach our £100/MWh target. But, as with cost reduction,
we know we have more to do to grow the UK content of our offshore wind farms. I know from
discussions with colleagues throughout the industry that this challenge is being taken very seriously,
helping secure inward investment of top tier manufacturers, and supporting UK companies in
winning work in our sector.
The biggest reason for success in cost reduction has been industry’s shift to larger 6MW+ machines.
And this shift also creates the opportunity for UK manufacturing, as manufacturers make decisions
about where to manufacture this new generation of turbines. Some of these companies are already
committed to the UK, with Siemens and MHI Vestas Offshore Wind now ramping up UK
manufacturing. I hope that in the years ahead we will see more UK successes, as well as more UK
companies achieving export success and becoming increasingly important players in other markets.
But action on UK content cannot come at the expense of cost reduction. We need to make sure the
two go together, which means working hard to make sure that it is UK companies winning work
because they can offer the best value and the best products and services. The UK offshore sector is
home to many significant international energy companies, all of which are committed to supporting
UK companies, and we also work to support a number of important initiatives like the
GROW:Offshore programme and the Offshore Wind Investment Organisation to support companies
wanting to move into offshore wind in the UK.
Our industry is committed to reporting on its progress and being held to account on this important
issue. The reason we do this is because we have a good story to tell already and a commitment to
work together to maximise UK content in the future. This guide, and the accompanying
methodology, help make this process easy to engage with for the UK offshore wind industry and
represent a big step forward in being able to report on UK content in a consistent and transparent
manner.
Benj SykesCo-Chair, Offshore Wind Industry Council
3
Executive Summary The UK’s offshore wind industry is world beating. The UK has more operational wind farms than the
rest of the world put together, with over 5GW in operation or under construction, and a further
10.9GW with consent, and likely to move into construction by the early 2020s.
Yet despite this international advantage, the UK offshore wind sector has not sufficiently capitalised
on its lead to secure UK economic advantage.
As an industry we have a positive story to tell about engineering process and innovation,
decarbonisation and cost reduction. But we need to speak up more loudly to demonstrate that as an
industry we also take delivering UK content and UK economic success seriously. Which is why the
Offshore Wind Industry Council (OWIC) has agreed to begin monitoring and reporting on UK content.
This guide explains the agreed process set out by the Offshore Wind Programme Board (OWPB) for
OWIC. Working on their behalf, RenewableUK will conduct an annual survey of offshore wind
developers, and publish findings, to show how industry is progressing.
Our target, agreed with Government, is to deliver 50% of UK content. Already we have a very
positive story to tell in how it is UK firms leading work in development and operation of wind farms.
UK companies already supply critical components like cabling, foundations such as jackets and
gearboxes. And with turbine manufacturers like Siemens and MHI Vestas Offshore Wind now
committed to UK manufacture, we will soon see a significant increase in UK content in offshore wind
equipment.
So as an industry we need to hold ourselves to account, and also set out what steps we are taking to
go further. To do this, OWPB has worked to establish an agreed methodology, so that as an industry
we are reporting on UK content in a consistent manner across different projects and companies,
which we can also chart over time.
This short guide provides practical information about how to report, and how this information will
be used. It should be used in tandem with the agreed UK Content Methodology developed for
OWPB1 by BVG Associates.
1 Led by The Crown Estate, DECC and RenewableUK on behalf of OWPB.
4
Reporting on UK Content – a quick guide
At the start of each calendar year, RenewableUK will review which wind farms have reached Final
Investment Decision in the previous 12 months. We will then send the relevant wind farm owners a
request, on behalf of OWIC, for them to complete and return a short survey on expected UK
content.
At the same time (except in the first year) we will write to wind farm owners with constructed
schemes to invite them to provide updates if there are any significant changes in UK content since
reporting on FID data.
Developers will be asked to provide data on UK content representing figures for DEVEX, CAPEX,
OPEX and TOTEX.
RenewableUK will then review this information and anonymise it ahead of publication. The data to
be published will be the amalgamated results of wind farms that have reached FID over the previous
five years. So in the first year we will report on projects that have reached FID between 2009 and
2014, and in the second year projects between 2010 and 2015, and so forth. In this way we will track
progress over time, while preserving confidentiality of individual wind farms schemes2.
Following review of data by OWPB (on behalf of OWIC), RenewableUK will publish new data each
summer.
We will also pass anonymised data to Government, to help Government understand how well UK
industry is progressing.
The reporting works primarily on trust. Industry has supported and inputted into the development of
the reporting methodology and the approach, and has bought into the requirement and the
usefulness of making sure this data is publically available. However, Government will reserve the
right to request, via a contracted third party, that developers open up their calculations for review
and audit. Such an audit would be conducted in a way to preserve data confidentiality, but would aid
all parties in ensuring that reporting was accurate and maintaining wider trust in this reporting.
More information on this point is included below.
2 Individual schemes can choose to publish their own reports on an individual scheme’s UK content if they wish.
5
Data reporting process
Wind Farm has reached
Works Completion Date or
reached FID in the previous
calendar year*
RUK requests information on UK
Content or requests updated data if
there has been significant change since
the previous calendar year
Asset Owners complete data
collection process according to
methodology
Data aggregated and submitted
to RUK for publication
No further
action required
Yes
No
*Please note, the first iteration will survey projects from 2009-2014
6
How to submit information?
Following agreement with the Offshore Wind Industry Council to implement a UK Content
Measurement Methodology for Offshore Wind, RenewableUK will be gathering information from
wind farms that have reached Financial Investment Decision in the previous calendar year3. In
addition, earlier stage projects which have reached Works Completion will also be asked to review
existing data, and if necessary update reporting on UK content4.
The 2015 report will be the first time data on UK content of offshore wind farms across the industry
is published. As such, RenewableUK will be collecting wind farm information from Wind Farm Asset
Owners and Transmission Asset owners for projects that have secured FID in the previous five years
and those that have completed construction. Data will be collected for wind farms that have
reached FID and completed construction between the years of 2009 and 2014
For subsequent years5, projects that have submitted data at FID and have subsequently encountered
significant changes between the initial figures submitted at FID and at Works Completion Date will
be asked to recalculate data and resubmit data.
Content figures will be published using a rolling five year timetable; the aim being to track changes
over time rather than year to year variations. This means that it may be necessary for Wind Farm
Asset Owners to submit data for individual wind farms as opposed to aggregating all assets into one
final calculation.
Which forms to use Data will be collected using three forms; the first will include questions regarding the wind farm in
question, the second will allow for the calculation of UK content according of the wind farm and the
third is a consolidated breakdown of UK content according to DEVEX, CAPEX, OPEX and TOTEX.
Appendices A and B outline the forms to be used by Wind Farm Asset Owners and Transmission
Asset Owners when reporting UK content.
The UK Content Methodology developed by BVG Associates should be used as to calculate the UK
content data that is required to complete the three forms.
To fulfil agreed industry reporting only forms 1 (outlining key project information) and 3
(consolidated UK content data) need to be submitted. However, developers are invited to submit
form 2 (detailed UK content breakdown). Appendix C provides a list of definitions that can be used
to help define values for form 2. Completing form 2 provides the data breakdown from which data
in form 3 can be calculated) alongside this information. Provision of this additional detail will to
inform an industry commentary which accompanies the report (for example highlighting those
successes in UK content such as blade manufacturing). This information will also be forwarded to
DECC so that it can understand where UK is enjoying success, and where further Government supply
chain support is required via bodies or programmes such as OWIO and GROW:Offshore Wind. No
information relating to key components relating to individual sites will be published.
3 Our first request for information will be for projects reaching FID or completion between 1st January 2009 and 31st
December 2014. Many schemes have already provided information to BVG as part of UK Content Methodology development; if unchanged this information can simply be resubmitted.
4 Each year we will ask projects which have previously reported post FID, but which have reached works completion in the previous calendar year, to review and if necessary to update their UK content reporting.
5 In 2016, we will seek information on projects reaching FID between 1st January 2015 and 31st December 2015.
7
Timescales for collection
Date
Forms for data collection sent to Developers As soon as possible
Deadline for data to be sent back to RenewableUK 3rd June 2015
RenewableUK analysis and follow-up 3rd June – 10th June 2015
Final aggregated results published at Global Offshore Wind 24-25th June 2015
What we will do with the information
Following the collection, aggregation and anonymisation of the results, an initial report will be
presented to OWIC via OWPB. Alongside the anonymised data, an analysis conducted by
RenewableUK will also be produced in order to provide context to the headline figures that will be
published.
The final aggregated results will be published each summer. Where possible, RenewableUK will use
its annual Global Offshore Conference to present this information to industry and interested groups.
No figures linked to individual wind farms will be published. However, owners themselves will be
able to report publically on individual wind farms, if they so wish.
The published report will provide a percentage total of UK content, and a derived estimate of £UK
expenditure/investment. There will not be an estimate of Gross Value Added to the UK economy as
a result of this expenditure.
The report will provide data based on total expenditure (TOTEX), and also break down this top-line
figure into development expenditure (DEVEX), capital expenditure (CAPEX) and operational
expenditure (OPEX).
The report will publish figures and percentages relating to the average of the UK offshore wind fleet,
based on schemes reaching FID in the last five years. So the first report will give an average of UK
content for schemes reaching FID between 2009 and 20146. Our second report in 2016 will give an
average for schemes reaching FID between 2010 and 2015. And so on. From the second report
onwards we will chart progress across reporting years so that we can build up a record of industry
progress.
In addition, the reporting will provide a brief commentary on progress, as well as a summary of what
actions industry and Government (via groups such as OWIC and OWPB) are doing to improve on UK
content figures.
6 This averaging across years is important to ensure that data tracks progression over time, rather than focuses on
short term variability due to individual construction projects in a particular year. This also ensures that data can
remain anonymised even in years with low levels of delivery.
8
Ensuring Data Accuracy via Audit Collection of data by RenewableUK depends on individual schemes following the UK wide approach
agreed by OWIC, and implemented by the OWPB. As an industry we have agreed to work together to
be held to account.
However, to ensure that trust is maintained in this process, it was agreed by industry and
Government that an independent audit will be conducted periodically. At least once every three
years, DECC plans to commission an independent organisation to audit reporting of at least one wind
farm, to check that high level information submitted to RenewableUK on UK content tallies with
more detailed records held by UK project developers. As such developers will be asked to hold
records on UK content, should DECC request participation in such an audit.
No data will be published or passed onto Government as a result of such an audit. However if
significant differences do become apparent, the developer will be asked to resubmit data to
RenewableUK for inclusion in the next annual report, and the independent audit company will write
to DECC highlighting that a discrepancy has been found and identifying the relevant issue with the
audited project.
Participation in such an audit is recommended by OWPB to ensure confidence is maintained in this
agreed industry reporting framework.
Contacts For further information or any queries please contact:
Oankar Birdi
Supply Chain Policy Officer, RenewableUK
[email protected] or 0207 901 0690
9
Appendices
Appendix A: Wind farm generating asset owner reporting sheets
Appendix B: Wind farm transmission asset owner reporting sheets
Appendix C: Definitions of supply chain elements Appendix D: Form for calculating UK Content calculation for Supplier and Subsuppliers with a Contract value over £10 million.
Appendix A: Wind farm generating asset owner reporting sheets
Form 1: Wind farm generating asset owner reporting sheet- Required information
Data is to be submitted as percentages to one decimal place.
OPEX figures are to be reported as undiscounted data at the values of the day.
Forecast wind farm lifetime (years from works completion)
Wind farm generating asset owner reporting sheet
Reporting date and stage
Date:
Please choose from: Final Investment Decision (FID), Works Completion Date (WCD), Post-Works Completion Date (Post-WCD)
Name of wind farm
Works completion date (calendar year)
Name of wind farm generating asset owner
Wind farm rated capacity (MW)
Final investment decision (calendar year)
10
Form 2: UK Content Measurement Tool- Participants invited to submit data
Developers are invited to formally submit this in addition to forms 1 and 3. Provision of this
additional detail will to inform an industry commentary which accompanies the report (for example
highlighting those successes in UK content such as blade manufacturing). This information will also
be forwarded to DECC so that it can understand where UK is enjoying success, and where further
Government supply chain support is required via bodies or programmes such as OWIO and GROW:
Offshore Wind. No information relating to key components relating to individual sites will be
published.
Data is to be submitted as percentages to one decimal place.
OPEX figures are to be reported as undiscounted data at the values of the day.
Forecast (F),
interim (I) or
out-turn (O)
data
UK content (%)Non-UK
content (%)
Subtotal (%) (of
DEVEX,
CAPEX, OPEX
Total (%) of
lifetime
expenditure
100%
100%
100%
100%
100%
100%
100%
100%
Average for previous
five years*100%
Lifetime F 100%
Average for previous
five years*100%
Lifetime F 100%
Average for previous
five years*100%
Lifetime F 100%
Average for previous
five years*100% 100%
Lifetime F 100% 100%
F 100% 100%
100% 100%
Other
generation
asset
operational
expenditure
Total
percentage
operational
expenditure
Generation asset decommissioning
expenditure
Total lifetime
Turbine
operation,
maintenance
and service
Generation
asset balance of
plant
maintenance
Wind Farm Asset: UK Content Measurement Tool
* = To be completed for first report following the introduction of this methodology and if post-WCD reporting is
introduced
Permanent generation asset onshore
infrastructure
Generation asset installation
Total percentage capital expenditure
Post-FID generation asset project
management
Turbine supply
Foundation supply
Array cable supply
Generation asset development to FID
11
Form 3: Consolidated data- Required information
Item UK Content
Percentage of
TOTEX
DEVEX
CAPEX
OPEX
TOTEX 100%
Consolidated data
12
Appendix B: Wind farm transmission asset owner reporting sheets
Form 1: Wind farm generating asset owner reporting sheet- Required information
Data is to be submitted as percentages to one decimal place.
OPEX figures are to be reported as undiscounted data at the values of the day.
Wind farm transmission asset owner reporting sheet
Reporting date and stage
Date:
Please choose from: Final Investment Decision (FID), Works Completion Date (WCD), Post-Works Completion Date (Post-WCD)
Name of wind farm
Name of wind farm transmission asset owner
Wind farm rated capacity (MW)
Final investment decision (calendar year)
Works completion date (calendar year)
Forecast wind farm lifetime (years)
13
Form 2: UK Content Measurement Tool- Participants invited to submit data
Data is to be submitted as percentages to one decimal place.
OPEX figures are to be reported as undiscounted data at the values of the day.
Forecast (F),
interim (I) orout-
turn (O) data
UK content (%) Non-UK
content (%)
Subtotal (%) (of
CAPEX, OPEX
or DECEX
Total (%) of
TOTEX
100
Average for previous
five years*
Lifetime F
Average for previous
five years*
Lifetime F
Average for previous
five years*100
Lifetime F 100
F 100
100
Total percentage
operational expenditure
Total percentage transmission asset
decommissioning expenditure
Total lifetime
Export cable supply
Substation supply
Transmission asset installation
Total percentage capital expenditure
Transmission asset
balance of plant
maintenance
Transmission Asset: UK Content Measurement Tool
Transmission asset
operational expenditure
* = To be completed for first report following the introduction of this methodology and if post-WCD reporting is introduced
Transmission asset development to FID
Post-FID transmission asset project management
14
Form 3: Consolidated data- Required information
Item UK Content
Percentage of
TOTEX
DEVEX
CAPEX
OPEX
TOTEX 100%
Consolidated data
15
Appendix C: Definitions of supply chain elements
Table C.1 Allocation of development expenditure by supply chain element.
Element Scope Guide
Generation asset
development to FID
All work and project management costs for the wind farm asset owner from the
award of development rights to the WCD, including wind farm asset owner
staff overheads associated with managing engineering studies, planning
applications and environmental impact assessments, and construction
contract management activities, assuming a multiple engineer, procure and
construct contracting approach to wind farm procurement
Environmental surveys including ornithological species surveys and collision
risk assessments, commercial fishing studies, benthic species surveys, and
pelagic species surveys
Geophysical and geotechnical surveys including the geophysical surveying of a
wind farm area, and a geotechnical survey
Removal of unexploded ordnance, if relevant
The meteorological station, including design, procurement and installation of a
fully equipped meteorological station
Engineering studies includes pre-FEED studies, which include concept design
and constraints analysis undertaken prior to FID, FEED studies, covering
array layout, foundation sizing and choice, electrical array architecture and
installation methods undertaken after FID, and
Development costs associated with onshore infrastructure.
Note that initial development work for multiple phases or a zone is associated
with its first wind farm.
Transmission asset
development to FID
As for generation asset project management, but for transmission infrastructure
only.
Table C.2 Allocation of capital expenditure by supply chain element.
Element Scope Guide
Post-FID generation asset
project management
Project management costs from FID to WCD, either conducted internally or
contracted out, including services to support project delivery
Excluding the project management costs
Turbine supply
The supply of components comprising the nacelle, rotor and tower, including
internals, warranty provision and transport to last port before installation.
Turbine foundation supply
Includes the foundation, sea bed fastening, transition piece, secondary steel
such as J-tubes, vessel landing systems, davit crane and warranty provision,
and
The transportation of the components to last port before installation.
Array cable supply Supply and factory testing of cables, accessories such as terminations and
hang-offs, and warranty provisions, and
The transportation of the components to last port before installation.
Operation, maintenance and
service (OMS) infrastructure Pontoons, vessels, operations base and their warranty provisions.
Generation asset installation Installation work for support structures, turbines and array cables, including
scour and cable protection
16
The transportation of the components to last port before installation
Storage and laydown of components at port
The pre-assembly work completed at a construction port before the components
are taken offshore
Mechanical and electrical completion works and commissioning of turbines and
array cables
The chartering of turbine, array cable and foundation installation vessels and
support vessels, and specialist installation equipment
Construction project management, and
Equipment and materials procured for the wind farm such as cable protection,
navigation aids, grout and scour protection material.
Post-FID transmission asset
project management
As for generation asset project management, but for transmission infrastructure
only.
Export cable supply
Supply of subsea and onshore export cables, accessories and warranty
provisions, and
The transportation of the components to last port before installation.
Substations Assembled offshore substations including topside, foundation, electrical and
accommodation and warranty provisions
Onshore substation structures, electrical components and construction
materials and warranty provisions
Excludes work undertaken on transmission network side, and
The transportation of the offshore components to the last port before installation
and delivery to site of the onshore components.
Transmission asset
installation
The chartering of export cable, and substation topside and foundation
installation vessels and support vessels, and specialist installation equipment,
and sea bed preparation of foundation
The transportation of the offshore components to last port before installation
Construction project management
Equipment procured for the wind farm such as cable protection and navigation
aids
Electrical completion works and commissioning of cables and substation
Onshore cable installation, civil engineering and site facilities, and
Work undertaken on transmission network side specifically related to the grid
connection.
Table C.3 Allocation of operational expenditure by supply chain element.
Element Scope guide
Turbine OMS
Maintenance and service costs (excluding fulfilment of warranty obligations),
and
Owner’s internal asset and site management.
Generation asset balance of
plant OMS
Survey, maintenance and service of foundations, array cables, and
Chartering of vessels and maintenance of OMS base and quayside
infrastructure.
Other generation asset OMS The Crown Estate rent, insurance, environmental impact surveys, rates,
community stakeholder relations, and other miscellaneous expenditure.
Transmission asset OMS Survey, maintenance and service of onshore and offshore export cables and
onshore and offshore substations.
17
Table C.4 Allocation of decommissioning expenditure by supply chain element.
Element Scope guide
Decommissioning of
generation asset infrastructure
Removal of turbine and subsea structures and array cabling above the sea
bed, but
Excludes any recycling transactions.
Decommissioning of
transmission asset
infrastructure
Removal of offshore substation topsides and removal of substation support
structure and export cabling above sea bed
Decommissioning of onshore substation, but
Excludes any recycling transactions.
18
Appendix D: Form for calculating UK Content calculation for Supplier and
Subsuppliers with a Contract value over £10 million.
The following form will be shared in order to calculate UK Content for contracts about the £10
million threshold. The numbers in italics indicate where a judgement of UK Content has been made
without requesting further information from Suppliers. The darker shaded cells remain empty. Note
that some figures have been rounded.
Contract
Contract
value
(£million)
% of base
cost in
contract
UK
content
in
contract
(%) Subcontracts
Subcontract
(£million)
% of base
cost in
subcontract
UK content in
subcontract
(%)
Contribution
to UK content
of contract
A1 6.0 55% 85%
A2 4.0 36% 55%
A3 1.0 9% 45%
Margin 1.0
B1 9.0 43% 20%
B2 6.0 29% 75%
B3 3.0 14% 45%
B4 3.0 14% 75%
Margin -1.0 -5%
C1 7.0 52% 25%
C2 4.5 33% 50%
C3 2.0 15% 20%
Margin 1.5
D1 4.0 44% 40%
D2 3.0 33% 5%
D3 2.0 22% 5%
Margin 2.0
E 8 10% 46% 4.6%
F 7 9% 85% 7.4%
G 4 5% 65% 3.3%
H 3 4% 90% 3.4%
Base cost 80
Margin 20
Total 100 50.0%
C 15 19% 33% 6.1%
D 11 14% 21% 2.8%
11.8%
A 12 15% 70% 10.6%
Template for calculating UK content for Suppliers and
Subsuppliers with a contract value over £10m.
B 20 25% 47%