The Scottish Supply Chain

‘As I hurtled through space, one thought kept crossing my mind - every part of this rocket was supplied by the lowest bidder.’ ~ John Glenn

When John Glenn took to space in 1962, his comments were symptomatic of an industry under pressure to deliver results with an uncertain future, whilst at the same time trying to keep a lid on costs.

At the Scottish Renewables offshore supply chain event in Aberdeen this week, the triumvirate demands of lower costs, future support and economic growth were brought together as the offshore wind industry met to discuss opportunities for the domestic supply chain.

The issue is a complicated one. National Governments wish to conflate green energy development with economic growth. Green collar jobs is the popular mantra.

But is that realistic?

Is it achievable to ask the supply chain to force down its costs, whilst investing in skills and assets against an industry backdrop of uncertainty?

To many, the argument seems to be to address political certainty, and the other elements will slot into place. It’s one reason why the Scottish Government was quick to announce a 2030 decarbonisation target, commensurate with 50% of energy from renewable sources by 2015.

All well and good, and it’s probably fair to say that the Scottish renewable energy industry is in a better place long term than its counterpart in England and Wales.

But if these longer term securities come with the caveat of forcing down the cost base, then any benefits from such certainty will have less favourable long term effects on the industry.

After all, as and when offshore wind becomes a fully fledged secondaries market and asset class, the supply chain, and the equipment and expertise it has provided, will therefore come under intense amounts of scrutiny in the due diligence process from future investors.

Anything that is suspected to have been built at the lowest possible cost, will, commensurately only ever attract a lower price premium, but will be more expensive to maintain as an asset.

Political obsessions in Westminster with cheapening offshore wind shouldn’t mean that the supply chain bears the brunt of having to provide its goods and services at the lowest possible rate. In the long term nobody benefits – long term industry security or otherwise.

‘As I hurtled through space, one thought kept crossing my mind - every part of this rocket was supplied by the lowest bidder.’ ~ John Glenn

When John Glenn took to space in 1962, his comments were symptomatic of an industry under pressure to deliver results with an uncertain future, whilst at the same time trying to keep a lid on costs.

At the Scottish Renewables offshore supply chain event in Aberdeen this week, the triumvirate demands of lower costs, future support and economic growth were brought together as the offshore wind industry met to discuss opportunities for the domestic supply chain.

The issue is a complicated one. National Governments wish to conflate green energy development with economic growth. Green collar jobs is the popular mantra.

But is that realistic?

Is it achievable to ask the supply chain to force down its costs, whilst investing in skills and assets against an industry backdrop of uncertainty?

To many, the argument seems to be to address political certainty, and the other elements will slot into place. It’s one reason why the Scottish Government was quick to announce a 2030 decarbonisation target, commensurate with 50% of energy from renewable sources by 2015.

All well and good, and it’s probably fair to say that the Scottish renewable energy industry is in a better place long term than its counterpart in England and Wales.

But if these longer term securities come with the caveat of forcing down the cost base, then any benefits from such certainty will have less favourable long term effects on the industry.

After all, as and when offshore wind becomes a fully fledged secondaries market and asset class, the supply chain, and the equipment and expertise it has provided, will therefore come under intense amounts of scrutiny in the due diligence process from future investors.

Anything that is suspected to have been built at the lowest possible cost, will, commensurately only ever attract a lower price premium, but will be more expensive to maintain as an asset.

Political obsessions in Westminster with cheapening offshore wind shouldn’t mean that the supply chain bears the brunt of having to provide its goods and services at the lowest possible rate. In the long term nobody benefits – long term industry security or otherwise.

‘As I hurtled through space, one thought kept crossing my mind - every part of this rocket was supplied by the lowest bidder.’ ~ John Glenn

When John Glenn took to space in 1962, his comments were symptomatic of an industry under pressure to deliver results with an uncertain future, whilst at the same time trying to keep a lid on costs.

At the Scottish Renewables offshore supply chain event in Aberdeen this week, the triumvirate demands of lower costs, future support and economic growth were brought together as the offshore wind industry met to discuss opportunities for the domestic supply chain.

The issue is a complicated one. National Governments wish to conflate green energy development with economic growth. Green collar jobs is the popular mantra.

But is that realistic?

Is it achievable to ask the supply chain to force down its costs, whilst investing in skills and assets against an industry backdrop of uncertainty?

To many, the argument seems to be to address political certainty, and the other elements will slot into place. It’s one reason why the Scottish Government was quick to announce a 2030 decarbonisation target, commensurate with 50% of energy from renewable sources by 2015.

All well and good, and it’s probably fair to say that the Scottish renewable energy industry is in a better place long term than its counterpart in England and Wales.

But if these longer term securities come with the caveat of forcing down the cost base, then any benefits from such certainty will have less favourable long term effects on the industry.

After all, as and when offshore wind becomes a fully fledged secondaries market and asset class, the supply chain, and the equipment and expertise it has provided, will therefore come under intense amounts of scrutiny in the due diligence process from future investors.

Anything that is suspected to have been built at the lowest possible cost, will, commensurately only ever attract a lower price premium, but will be more expensive to maintain as an asset.

Political obsessions in Westminster with cheapening offshore wind shouldn’t mean that the supply chain bears the brunt of having to provide its goods and services at the lowest possible rate. In the long term nobody benefits – long term industry security or otherwise.