Durham firm Tekmar is leading the way in providing equipment for offshore wind farms

The Newton Aycliffe-based company is at the forefront of the offshore wind industry's drive to reduce costs

With a 90% share of the global offshore wind cable protection market, County Durham company Tekmar is well-placed to support the industry’s cost-cutting drive. Peter McCusker reports.

There was some much-needed good news for the offshore wind industry last week with a North East foundation maker saying it was looking to create 350 new jobs and the UK Government giving approval for the world’s largest development in the North Sea.

This shot in the arm is in marked contrast to a series of recent disappointments, with hopes that North East will become an industry hub - creating potentially thousands of new jobs - fading fast.

The main problem facing the industry is its expense. The Government says it wants to see cost reductions of at least 30% and this is leading to renewed innovation.

Newton Aycliffe company Tekmar is one of the sector’s leading innovators with its patented TekLink product, which saves millions of pounds from offshore cable installation costs, being the outstanding market leader.

Having begun life as an oil and gas supply chain company, it saw the emerging opportunities in offshore wind and developed a world-leading product to protect subsea power cables.

Since its launch in 2008 TekLink has been supplied to 33 offshore wind farms and is the undisputed leader with 90% of the global market.

The company has a healthy order book and is well placed to secure work in all of the new developments taking place across the globe , including last week’s Dogger Bank announcement (see panel).

Its clients include major players such as Statoil and Dong Energy with much of the work is carried out in partnership with contractors such as Dutch subsea power cable installers VSMC. Many of the cables it protects come from Hartlepool firm JDR Cables.

Russell Edmondson, senior project manager, said “We have a very busy order book and to date we have been involved in almost all of the European offshore wind farm developments.

“We are renowned for our service and reactiveness, with installation vessel rates of £200,000 a day, our clients need to know that we can be on the plane to help them solve any problems at short notice.”

The UK is the world leader in offshore wind with over 4GW of capacity, there is a further 10GW coming through the system – with a contact value of almost £20bn – and this should help the Government achieve its 2020 renewable energy targets.

However the level of subsidies which start at over £150 per MW/h, and are over three times the prices of wholesale electricity, have been criticised for being overly-generous.

The Government has told the industry it wants to see some major cost reductions going forward and Tekmar is working in conjunction with its partners to drive efficiencies across the supply chain.

Mr Edmondson said: “There is a big drive to reduce costs. Everything is being driven to reduce the pounds per megawatt hour (MW/h) the industry is looking for a 30% reduction in costs by 2020. The industry can, and is, addressing these cost issues.

“A lot of our clients are now focusing on the speed of installation. This is a big potential area for costs savings and can be achieved by sharing knowledge.”

Tekmar has on-site training facilities and also holds regular training events at the ORE Catapult facility (formerly Narec) in Blyth. These so-called ‘wet trials’ allow installation staff to gain hands-on knowledge of installing equipment in a real-life setting.

Consequently, installation teams which would have previously taken one day to install one pair of cables into a turbine’s monopile foundation are now able to complete four turbines – eight fittings - in the course of one day.

It has also established a new business AgileTek. This is based in London and uses industry-leading software to determine how a potential development will perform over its proposed 25-year life.

Mr Edmondson said: “Of the 33 projects we have completed all but one has been a bespoke project, however the industry is now working on greater standardisation.

“It’s one of the hot topics right now and our USP means we are sitting at the top table. We are the only equipment supplier in there, working alongside some of the industry’s major players.

“As the industry grows contractors, developers and operators are gaining a greater understanding and this helps drive cost reduction.”

Following its success in the offshore windfarm market Tekmar is now refocusing some of its attention back to the offshore oil and gas market. With in-house design, engineering, training and testing facilities, Tekmar can offer a full turnkey package to its customers.

Technical sales manager Charlie Sullivan has been recruited to drive growth in the oil and gas sector and has recently secured contract wins in the North Sea, offshore Nigeria and Venezuela.

He said: “While there is a lot of doom and gloom with some projects being pushed back, we have not felt the squeeze yet and are growing our presence, visibility and market share.”

The Government cost drive and a lack of clarity on UK renewable energy targets beyond 2020 have prompted uncertainty in the offshore wind industry going forward.

Tekmar chief executive officer James Ritchie said: “The renewable industry has to reach cost parity, to become cost competitive.

“A guaranteed renewable target for the UK beyond 2020 would be nice as it would give the supply chain the confidence to invest, however the industry has to drive its own cost reductions.

“At the moment the industry depends on subsidies. The subsidies are very generous, and some of the pressures being felt by the industry over costs are self-inflicted.

“There are some big technical challenges and the supply chain has to look very closely at what it can do to reduce costs in relation to conventional energy sources.

“In our experience developers are adopting different capex (capital expenditure) approaches and some are producing significant cost-savings, while some are still high cost. We have to look at greater standardisation across the industry.”

Despite the challenges that lie ahead in the UK market, the global decarbonisation agenda is driving growth with Japan, China and the US developing offshore wind industries.

This is reflected in Tekmar’s bullish outlook going forward. Mr Ritchie says it anticipates increasing revenues from £15m to £25m in the coming year and boosting staff numbers from 100 to 130.

The company is in the process of opening a second 80,000sq ft manufacturing plant on the Park 2000 industrial estate, adjacent to its current 30,000 sq ft headquarters.

Mr Ritchie said: “A number of projects have been delayed and revenues fell from £20m in the previous year. However these projects are now coming forward and we are anticipating strong growth over the coming years.”

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Follow Peter McCusker on Twitter @mccusker60

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Good news for the industry last week

THE North East offshore wind industry received a major boost with the news a German and Danish turbine foundation-maker consortium plans to create 350 jobs on Teesside.

Late last year Offshore Structures (Britain) - a partnership between Denmark’s Bladt Industries and Germany’s EEW SPC - took over the assets and base of TAG Energy Solutions site at Haverton Hill, Billingham.

The consortium is now investing up to £35m in the site and recently secured its first major contract with Dong Energy, which will see it supply foundations for 32 turbines for the Burbo Bank Extension offshore wind farm in Liverpool Bay.

With some £20bn of UK offshore wind orders in the pipeline – and much of this in the North Sea - Offshore Structures (Britain) is positioning itself for a large share of this.

Joanne Leng, deputy chairman of North East supply chain body Energi Coast, said: “The confidence the partners behind Offshore Structures (Britain) Ltd have shown in the skills and infrastructure on Teesside is a real shot in the arm for the North East offshore renewables sector.

“They are building on TAG Energy Solutions’ objective to prove this region has the capabilities to meet the requirements of the offshore wind industry and winning the Burbo Bank Extension project highlights Offshore Structures (Britain) Ltd’s ability to secure high profile work that generates employment and opportunities for its supply chain.

“It also proves that the North East is ideally-placed in terms of skills and geography to serve the new Dogger Bank offshore wind farm. We hope there will be considerable opportunities for British companies, including those from the North East, to play a part in its development and future operation.”

The Government last week gave planning permission for the Dogger Bank Creyke Beck project to be developed by the Forewind consortium, comprising SSE, RWE, Statoil and Statkraft.

More than twice the size of the UK’s current biggest offshore windfarm and located 80 miles off the Yorkshire coast, the project is an example of the rapid developments taking place in the industry.

The average distance to shore for offshore wind farms constructed in 2014 was just 21 miles – a far cry from the 80 miles distance approved for the Dogger Bank project.

Nick Medic, director of offshore renewables at RenewableUK: said: “Dogger Bank demonstrates the sheer potential of offshore technology to turn our vast ocean and wind resources into green energy.”

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