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'It's just harder work': Wind-turbine makers adapt to UK's post-Brexit realities

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'It's just harder work': Wind-turbine makers adapt to UK's post-Brexit realities

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Siemens Gamesa's blade factory in Hull, U.K. The facility's order book is filled with projects in U.K. waters, limiting exposure to Brexit-related changes.
Source: Siemens Gamesa Renewable Energy SA

In the final weeks of 2020, a wind turbine blade factory on the Isle of Wight, off the south coast of England, did what many other manufacturing facilities in the country were doing as the U.K. prepared to exit the EU's single market.

To prevent running out of crucial materials due to delays at the border, factory operator Vestas Wind Systems A/S opened a new stockpiling facility for the plant to house blade components like balsa wood, foam and glass fiber.

And while the eventual trade agreement with the EU has ensured tariff-free trade, fears of disruption and delays materialized in the first week of January, according to Julian Brown, U.K. country manager for the Vestas division until recently known as MHI Vestas Offshore Wind A/S.

"We are seeing delays of about a week. In normal circumstances, if we saw a week of delays our factory would close. At the moment, the buffer stock is protecting us," he said in a Jan. 8 interview.

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"This is a 24/7 serial production process," Brown added. When one component runs out, the factory cannot assemble the product, he said.

For Vestas, the full impact of the newly-introduced customs requirements will become apparent in the coming months. In the meantime, issues around the free movement of labor will be one of the most tangible immediate fallouts of Brexit, Brown said.

Non-British workers will now need permission to work in the country, adding paperwork and sometimes delays. Vestas employs a team of installation technicians and engineers who work on sites across Europe, from Denmark to Germany to the U.K. "It's wherever the work is," Brown said.

Even at the most remote offshore wind sites in Scotland, you will hear plenty of Danish and French being spoken, according to Gary Bills, director for projects in EMEA at advisory group K2 Management, who agreed that attracting and hiring talent will be more difficult now. "The labor issue is going to be a challenge," he said Jan. 14.

A more divided system

Beyond complications for employing offshore crews, an executive at one of the world's busiest offshore wind ports also sees uncertainties in the export rules. Denmark's Port of Esbjerg has dispatched equipment for 55 offshore wind farms since 2001, amounting to around 4,000 offshore turbines.

There are times where 80% of jack-up installation vessels building European wind farms are sitting in the port, and many of those trips have headed west to U.K. projects, said Jesper Bank, chief commercial officer at the Port of Esbjerg.

While the big lines of the trade agreement are clear, there can be uncertainties relating to the origin of components. A nacelle shipped from Denmark to the U.K. is a mixed-component product, with some parts potentially sourced from countries outside of the scope of the zero-tariff agreement, Bank explained in a Jan. 18 interview.

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Turbine parts in the Port of Esbjerg, Denmark.
Source: Port of Esbjerg

The amount of paperwork for exports is far more extensive since Jan. 1, he said. "Are there components with tariffs? There are issues here which are not straight yet. ... It's still trial and error," he said.

For wind turbines, rules of origin under the trade agreement stipulate a 50% share of local content for equipment to qualify for duty-free imports.

"We are coming from a very flexible, integrated system to a more divided system," Bank said.

For others, the implications of leaving the EU look more limited. Siemens Gamesa Renewable Energy SA runs a blade factory in the northeastern port city of Hull, a region which voted strongly for Brexit. Company spokesperson Guy Dorrell said the plant is shielded from most of the changes.

"[Siemens Gamesa] is in a near-unique situation," he said, with the company's order book in Hull filled exclusively with U.K. projects, negating the need for exports.

The U.K.'s next round of offshore wind farms will also be constructed beyond a seven-mile boundary at sea where tariffs do not apply. "This enables us to have bonded [duty-exempt] warehousing onshore for components that will go back out offshore during the construction phase and thereby avoid tariffs that might affect manufacturers of other goods," Dorrell said in a Jan. 12 email. EU workers staying on vessels in the offshore zone will not need visas to work there, he added.

Manufacturing weakness

Meanwhile, Vestas' Isle of Wight factory — situated on France's doorstep in the English Channel sends it blades to a variety of destinations. "We treat the Northern European market as an entity," Brown said.

Demand for the blades comes in geographical waves: Some years, the entire output is installed in U.K. waters; in others, everything is shipped to Germany or the Netherlands.

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"When any project comes through to delivery, we look at where the capacity exists, where we can optimally supply it from. The U.K. is an important part of that," he said.

While blades are made in Britain, the country relies on imports from the EU for towers, turbines and nacelles. K2's Bills said this might change in the coming years.

"The U.K.'s ability to produce its own products in the wind sector isn't great," he said. Given the size of the market and the mammoth targets for new projects, overseas manufacturers may see value in setting up shop in the U.K. "We should have much more manufacturing capacity," he said.

The governing Conservative party has already pledged to create "green collar" jobs, especially in coastal regions of Teesside, Humber, Scotland and Wales. Planned investments could create 60,000 jobs in the wind sector by 2030, the party announced in October 2020.

Against that backdrop, Bank also expects a growth in the country's own offshore wind production capacity. "Brexit or not, that would have happened anyway," he said.

Indeed, already Europe's largest offshore wind market, the U.K. is pursuing a 40-GW offshore wind capacity goal by the end of this decade.

For Vestas and its manufacturing business, the U.K. therefore remains attractive after Brexit, Brown said. "The U.K. market has got so much right. ... It's just harder work," he said.