United Kingdom

United Kingdom

Vestas will not proceed with UK production plant

Questions raised about new subsidy rules

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The world’s largest wind turbine manufacturer, Vestas, will not build a component production facility at the Port of Sheerness in Kent. Until now, Vestas had retained the option of proceeding with plans to build a blade and nacelle factory at Sheerness to support production of its V164-7.0MW offshore turbine.

The news will raise questions both about Vestas’ offshore strategy and about whether the UK will succeed in building a domestic manufacturing base for its burgeoning offshore wind sector.

Vestas insists it will maintain a "strong presence" in the UK via upgraded test facilities on the Isle of Wight. It says it will use its Isle of Wight base to construct and test initial components for the V164-7.0, including the turbine’s 80 metre blades. The first prototype will be installed in 2014, with no news yet on when series production might begin.

Click here to find out more!Commenting on its decision to abandon the Sheerness plan, Vestas’ chief sales officer, Juan Araluce, said: "Vestas’ strong commitment to the development of both the offshore and onshore wind industries is not affected by this decision. We will remain active across the two markets in the UK as they both continue to show considerable potential". 

Despite its leading position in turbine manufacturing, Vestas has been in turmoil, with many senior management figures, including the leader of its offshore business, having recently been replaced.

The owner of Port of Sheerness is Peel Ports, which says it will continue with its plan to develop the port as a base for renewable energy manufacturers.

Vestas’ decision about Sheerness is not a comment on the attractiveness – or otherwise - of the UK for offshore wind manufacturing, insists chief executive of trade association, RenewableUK, Maria McCaffery: "Naturally we are disappointed with this decision, but as the world-leader in offshore wind, the UK remains an attractive place for manufacturers and members of the supply chain to have a base."

Fears about UK incentive system
That said, McCaffery acknowledged that interest from other manufacturers in locating in the UK, including Areva (Windpower Offshore 19-06-12), is subject to "market certainty" and the UK government’s planned electricity market reform. "Investors in both projects and employment are poised to follow through on pledges but delivery on green jobs needs certainty and confidence in the market with clarity on implementation arrangements and timescales," said McCaffery.

The UK government’s current system of renewable incentives is based on renewable obligation certificates (ROCs), but these are due to be replaced by a feed-in tariff with contracts for difference (CfD) from 2017. Uncertainty about how CfDs will be agreed risk, making it much harder to achieve financial close on remaining Round 2 offshore projects and early Round 3 wind farms.

Although the UK offshore wind market is expanding rapidly, this growth has yet to result in any new manufacturing facilities for offshore turbine components or foundations. This is in sharp contrast with France, where the energy ministry’s approval earlier this year for the development of just four offshore wind farms was accompanied by manufacturer commitments to create thousands of jobs.

Speaking in London last week, Gamesa’s head for northern Europe, Dirk Matthys, warned the UK government that its plan to build a factory in Leith, Scotland is not set in stone and that a stable and favourable investment climate for offshore wind must be maintained if the plan is to go ahead.

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