The offshore wind sector has had much to celebrate in the past 12 months. Record low prices. Hundreds of gigawatts added to the global project pipeline. The first 15MW-plus turbine models hitting the market. Green hydrogen-linked developments gaining serious public and private funding. Flagship lease awards for commercial-scale floating arrays. The first-ever auction rounds in several countries. All of this only good news in unlocking the sector’s staggering growth potential internationally.
Good for industry and good for the climate – but all reflective of progress that could be undone by the workforce planning challenges that this rapid expansion will bring, exacerbating an already acute problem, namely how do we attract, develop and retain the skilled people needed in the time we have?
A decade ago, workforce accounted for only 2-3% of an offshore wind project’s price-tag. As other costs have tumbled and the sector has seen levellised cost of energy (LCOE) fall to below €50/MWh ($48/MWh), this has grown to 6-8% – and will rise even higher as salary inflation spirals, accelerated further by inflation in the wider economy.
Now, it’s a material cost that demands attention in the competitive world of auctions. We’re playing catch-up to get the lid back on runaway workforce costs. But increasing the supply of skilled workers necessarily takes time.
We’re playing catch-up to get the lid back on runaway workforce costs
Winning auctions and securing finance currently requires demonstrable industrial competence. Having several gigawatts of successfully developed and executed offshore wind projects on your track record is essential: those with experience are sitting pretty. Skilled professionals seeking a route into offshore wind are battling significant headwinds.
There will be explosive growth in the number of auctions and projects reaching financial investment decision in the next three years, more than ever in history in the world’s waters.
Critical roles in these projects arguably take between eight and 15 years to achieve competence. The issue is simple: there aren’t enough competent professionals to deliver all of these projects, and not enough time to develop this degree of competence in new personnel.
Three historical factors have brought us here.
First, the boom and bust of projects coming to market caused by government policy shifts and power network constraints. Developers and supply chain companies have not have the visibility to make long-term investments in building competence.
Second, the at-all-costs pursuit of LCOE reductions has suppressed wages and day rates below aligned sectors – making it a real challenge to attract experienced staff while keeping projects commercially viable.
Third, competition for talent has been fuelled by the market mechanisms for awarding projects and securing funding.
Urgent change required
Urgent and fundamental change is required to avoid a scenario where wage inflation spirals for key roles, and projects that cannot secure funding become stranded.
Organisations with clear talent management and succession planning strategies to build competency levels should receive recognition and preference in bidding processes.
Lenders must educate themselves on the reality of the risks posed by bringing in transferable skills from aligned sectors and become comfortable with this scenario. Fifteen years ago, the first projects were built by “novices”. Is this perceived risk real?
Tailored, industry-specific transfer training must be developed and delivered on a large scale to smooth cross-sector transition and speed up individual development.
And salary benchmarking against other aligned sectors must become the norm to ensure offshore wind can compete in attracting and retaining the best minds.
If this can be achieved, there is no lack of talented professionals that wish to dedicate their skills across all the varied disciplines required to successfully develop and operate an offshore wind farm.
Now more than ever, the climate, economic and energy security advantages are evident. We must to create the conditions for companies to invest in competency building and succeed, rather than risk failure that would resonate far beyond the industry itself.
· Tom Hopkinson is CEO of UK-headquartered renewables recruitment consultancy Taylor Hopkinson