If offshore wind is going to stay in the ring of power generation, it simply has to get to grips with the challenge of cost reduction — and it has to choose its diet and training regime wisely.
Bulking up the supply chain is the equivalent of industrial weight-training — hitting the gym in order to establish strength in the manufacturing base, capable of delivering cost reduction punches over time through economies of scale in production and learning effects in construction.
But rather like cash-strapped gym-subscribers who give up the training and membership, the UK and German governments have scaled back market size, which has in turn diminished supply-chain confidence.
Despite this, and against a background of stuttering installation rates over the past few years, the offshore wind industry has now reached the point where it has acquired its own supply chain - one that is largely decoupled from the previously competing needs of the onshore wind and offshore oil and gas sectors.
A solid, if limited, range of experienced and credit-worthy contractors is now available for wind-project developers in the procurement market. The industry appears to have reached some level of critical mass in establishing the underlying industrial infrastructure needed. Perhaps "mega market scale" was not the panacea some held it up to be.
Competition alone is not enough
But many would argue that scale is also needed to stimulate healthy levels of competition, ensuring that cost savings are both incentivised and passed through the value-chain. Unleashing the white heat of competition can be seen as the surgical solution for weight-loss, with the market stripping away layers of fat in the value-chain, like a liposuction machine in overdrive. While a nip and a tuck here and there might well be warranted, to rely on competitive pressure alone to deliver cost reduction is risky. We only need to go back to the early days of offshore wind in the mid-2000s, when an over-heated market led to inappropriate risk allocation and, ultimately, insolvency for a number of specialist players.
At this stage in the life of the offshore wind industry, competitive pressure must be balanced against effective industry collaboration. The latter provides the safety net that the sector needs as it matures. It is not as dramatic as the previous two options. In the analogy of weight-loss, it is the boring third option: dieting. And it is more easily achieved when everyone around you is doing it too. Weekly weigh-ins are not just about group humiliation. They also provide a forum for those facing similar challenges to exchange experiences on what works and what doesn't.
Similarly, standardisation committees and joint industry projects (JIPs) might be unglamorous, but they are the foundations for a mature industry; one that finds ways around commercial barriers to share best practice, thus avoiding past mistakes; one that delivers the lowest cost of energy by adopting an integrated and collaborative approach to design, engineering and procurement.
Several recent examples indicate that offshore wind is indeed on the path to a leaner future via collaborative and integrated practices, including the UK Crown Estate's Sparta project, producing a database to share anonymised offshore wind farm performance and maintenance data to find cost savings and operational improvements across the sector. This and similar initiatives perhaps indicate that the industry is now mature enough to shed a few kilos by determinedly doing the difficult and dull stuff.
Losing excess weight and improving fitness levels are rarely easy. There are no quick fixes or magic pills. It requires discipline and determination, underpinned by a culture that values collaboration as much as competition.
Joe Phillips is head of strategy & policy services - renewables advisory at DNV GL - Energy