Energy and Climate Change Committee - Draft Energy Bill: Pre-legislitive ScrutinyWritten evidence submitted by Seajacks
About Seajacks
Seajacks is the leading UK-based operator of purpose-built offshore wind turbine installation vessels. We currently own and operate three self-propelled vessels—the “Seajacks Leviathan”, “Seajacks Kraken” and the recently launched “Seajacks Zaratan”.
Originally designed to facilitate the service and maintenance of offshore oil and gas platforms in the North Sea, the three current vessels have been modified to facilitate the installation and maintenance of offshore wind turbines. The vessels we operate are huge; Leviathan and Kraken both displace 7,000 tonnes, whilst Zaratan displaces 14,000 tonnes.
Seajacks is based in Great Yarmouth and Lowestoft and has total assets worth approximately £800 million. It employs over 200 people and as well as direct jobs, we estimate that we inject approximately £2 million per year into local businesses. In March of this year we were acquired by the Japanese company Marubeni Corporation, although we very much consider ourselves to be a UK business as 95% of our staff are British. We also became the first business to move our premises inside the newly created Great Yarmouth Enterprise Zone and therefore one of the first businesses in the UK to move into an Enterprise Zone.
We already have a strong track record of working in the industry. In recent months we have worked for Dong Energy installing wind turbines at the Walney off shore wind farm in the Irish Sea, and also off the east coast of England on the Greater Gabbard wind project—the world’s largest offshore wind farm. The newly delivered Zaratan will start its first assignment in September where it will perform the installation of 80 wind turbine generators and foundations alongside Seajacks Leviathan on the Meerwind wind farm in Germany.
Our View on Key Policy Priorities
1. Seajacks welcomes the Draft Energy Bill, the Government’s recognition of the enormous growth opportunity offshore wind represents for the British economy, and applauds the Government’s desire to secure the investment needed. As a non-generator, Seajacks’ submission to this inquiry will focus primarily on the potential for economic growth as a result of investment in offshore wind.
2. As the Bill rightly recognises, the next ten years will see a fifth of all power plants close. Renewable energy is necessary to keep the lights on, and investment is desperately required. Like others in the industry, we have repeatedly made clear that securing investment and enlarging the UK supply chain depends upon there being investor confidence and certainty.
3. We welcome the steps that the Government has taken in providing some level of detail on the Contract for Difference (CfD), as well as the soon to be published response to the consultation on banding for the renewables obligation. However, we share concerns raised by others in the industry that the CfD is overly complex. An understandable and effective functioning CfD is crucial for investor certainty, and the Government must provide further clarity about how exactly it plans to guarantee prices for generators.
4. The need to do this is underscored by the extremely tight timetable that we are on if the UK really is to meet its 2020 targets. The Government must deliver investor certainty quickly; without it commitments will be difficult to secure, and without orders it will be difficult to create jobs in the UK supply chain. With this in mind we are especially concerned by the Government’s plan to not consult on the strike price until 2013. This is a decision which we urge the Government to review.
5. We are also concerned that given the short timetable, and the Government’s apparent retreat from a commitment to decarbonise the electricity market by 2030, this Government may opt to roll out a very significant number of gas-fired power stations. Such a step would be politically and environmentally regressive, and would miss a once in a lifetime opportunity to preserve the environment in a way that generates huge economic growth for the UK.
6. The Government has made clear that a fifth of all power plants are due to close in the next decade, and that and investment surge is necessary in order to provide the £110 billion worth of electricity and energy transmission infrastructure needed to keep the lights on.
7. We also have concerns which need to be addressed alongside the bill.
8. Assuming investor certainty can be provided through CfD it will be imperative that the Government takes steps to ensure that it is British firms and the British economy that which benefits directly from the offshore supply chain.
9. As part of this, the Government must take steps to create an environment in which British firms are best placed to be active participants in the offshore wind supply chain, and are able to match and effectively compete with competitors from Europe and farther afield.
10. Transforming the Government’s vision for Britain’s renewable future into successful policy will, by itself, be far from straightforward. But the Government must also heed its own objective of supporting business and ensure that this historic opportunity for growth yields its true potential for Britain.
11. We are concerned by the mixed messages on wind investment coming from different government departments. Although the uncertainty seems to be greater for onshore wind, it is clear that many believe offshore wind should not be supported either. We would urge the Select Committee to continue to support offshore wind and ensure that the benefits of supporting offshore are recognised not just in environmental terms but also for supporting jobs and growth especially in areas of need such as the east of England.
12. By any standard Seajacks is an enormously successful company. Just imagine the growth potential of companies like ours if the Government took steps to ensure that British business was best placed to seize the historic opportunity represented by Britain’s renewable future. We would urge the Select Committee to encourage the government to ensure this happens through reform of the electricity market. Companies like us need offshore wind developers from all over the world to have the confidence to invest in UK renewable, otherwise we will find valuable jobs and growth disappearing to countries with more progressive support regimes.
June 2012