VIEW FROM SCOTLAND: Steven Vass
While Siemens has been getting flak for dodging a commitment on its proposed Hull turbine assembly plant, it has been notably active in Scotland of late.
Within a month, it has opened a logistics hub for onshore wind at Livingston, near Edinburgh, and is close to erecting its latest 6MW offshore turbine for testing at Hunterston in Ayrshire, southwest Scotland.
It is good to see the Germans manoeuvring on at least some fronts. The company has been going through a choppy time in the personnel area, dispensing with chief executive Peter Löscher and wind-power chief Felix Ferlemann over the summer.
Both were replaced by internal candidates, against a backdrop of uncharacteristic trouble that has had much to do with renewables. Solar is a bogey, costing the company a fortune amid an embarrassing withdrawal. Wind profits are heavily down for the second year running, this year largely due to problems in the US.
There has been speculation that this is why Siemens has been keeping schtum on its proposed £80m ($130m) assembly investment at Hull’s Alexandra Dock in northeast England, contrary to heavy hints from prime minister David Cameron during the summer that it would have declared by now.
When energy minister Greg Barker publicly told the company the other week to “get real” and commit, it compounded the sense that there has been some flip-flopping behind the scenes.
Anything to worry about? Not according to politicians Nick Clegg and Peter Mandelson, who have since indicated that they believe Siemens will come good for Hull. Given the company’s contract to provide 4GW of turbines to Mainstream and Dong for the Round 3 Hornsea zone, for which the Hull site is ideally placed, this is probably right. But until the light turns green, these are tense times for the region.
The spate of activity in Scotland is possibly irrelevant to this picture, but it certainly won’t be what people in Hull want to be reading about. The logistics hub is about putting office and warehouse space at Livingston to serve Siemens’ onshore wind market, which currently happens outside England.
This might well be more about consolidating market share than winning it, since Siemens has been doing strong business in Scotland with its direct-drive turbines, which are well suited to more turbulent conditions.
The 6MW SWT-6.0-154 offshore test turbine at Hunterston has been expected for some time. It is taking up one of three berths, which is being financed by SSE with support from Scottish Enterprise. Mitsubishi’s 7MW SeaAngel will follow next year. The occupier of the third berth was due to have been announced earlier this year, but there is still no signs of a taker.
The biggest yet of Siemens’ new generation of 6MW turbines, the prototype is to make its commercial debut at Westermost Rough next year – another Dong production off northeast England. This again underlines the fit between Siemens and that region.
Some have floated the idea that Siemens’ presence at Hunterston might also point to an opportunity for Scotland in the company’s offshore manufacturing future. The Germans are known to have made visits to rival Scottish ports in the couple of years since the Hull plan was announced.
If you look at the five developers with the offshore wind sites in Scotland – Mainstream, SSE, Scottish Power, Repsol and EDP – all but the latter have contracted Siemens turbines for offshore projects, while front-running Scottish project Beatrice has already announced that Siemens will be its supplier. In short, the Germans are likely to win plenty of business in Scottish waters.
The Scottish authorities are also understood to have pushed hard to try to win some kind of manufacturing commitment from the company. They seem to have all but given up, however.
Siemens’ turbine is here for SSE’s purposes as one of the Scottish company’s two apparent preferred suppliers. This could well lead to lots of Siemens turbines in Scottish waters, but no-one expects any part of them to be made locally. Given SSE’s importance to Scottish renewables, this makes this an awkward partnership from an economic development point of view in Scotland.
Steven Vass is deputy business editor at the Sunday Herald and a regular contributor to New Era magazine