Within weeks the Government will unveil an industrial strategy for offshore wind and announce subsidy levels to support its future growth.
The financial markets have been waiting for the Government to show its full commitment to the sector, and these announcements may be the signal they are looking for.
Andrew Mill, chief executive of Narec, believes so. He said: “I think the Government realises this is the time to get the industry going in the UK.
“This is no coincidence, bringing forward both of these at the same time is a clear sign. The Government expects the market to kick-start into action.”
If that is the case then it could not have been better timed for the Narec, which is located in a set of functional, historical and gleaming new buildings, in a well-ordered corner of Blyth harbour.
Over the past 10 years it has secured £150m from UK Government, the private sector and the European Union to develop this selection of world-leading offshore wind, wave and tidal facilities.
The latest piece of this multi-million pound jigsaw was put into place last month with the official opening of the £48m wind turbine engine and gear testing facility.
Narec has quickly secured its first contract. Samsung Heavy Industries, of Korea, will spend the summer testing the drive train for its 7MW offshore wind turbine at the facility.
Mill said: “It’s all coming together. Over the next five years we want to steadily grow so that by the end of that period we will be looking at annual revenues of £12m.
“Our aim is to utilise the facilities we have by securing commercial contracts for testing new products in them. We also have great knowledge here and will be seeking to commercialise this through R&D consultancy work.
“We will be operating on a commercial basis and we will continue to work with the Government and Europe in a bid to secure money for R&D projects.”
Referring to last week’s drive train trial announcement he explained why a major multinational player such as Samsung wants to use Narec’s facilities.
“Well, it would cost them £45m to build a test rig of their own. Here at Narec we have one which is available and ready to use.
“They can tap into our expertise, we are able to analyse the results and if necessary help them improve the design and in doing so we are reducing the time it takes for Samsung to move up the learning curve.
“They want to build the turbines and we want to test them. Furthermore, we are also independent and when a manufacturer goes to a customer it boosts a product’s credibility if it has been extensively tested by a world-leading facility such as ours.”
Narec hasn’t quite got all of its ducks lined up and is still developing its most ambitious project to date.
Mill is confident it will be able to attract £350m from the private sector to build out its offshore wind demonstration site.
Narec expects to secure planning permission next month, by then £5m will have been spent getting it to the start line.
There is still some geotechnical work to be done but Mill is confident that by the end of 2014 all of the finance will be in place allowing construction to begin in 2015.
“The development needs investment but we feel the initial work we have done is de-risking the project for investors.
“This is a great opportunity for businesses with a stake in offshore wind to showcase their technologies.”
Narec aims to secure a consortium of investors and expects to be in a position to announce the identity of some by the autumn.
The thought of sharing a project with companies, which may be competitors, would fill many corporate legal departments with dread. Mill counters: “Most offshore oil and gas fields are developed by consortia and we see these offshore wind relationships working in the same manner.”
Narec’s offshore demonstration project will see three arrays of five turbines each, installed at depths of 35 metres, 45m and 55m respectively.
The typical Round 3 turbine will be sited in waters more than 40m deep and will feature turbines with capacities of 7MW, up to 15MW, compared to around 2MW for a bog-standard onshore turbine.
The technological challenges involved in these UK Round 3 offshore sites make these the most ambitious renewables projects the world has seen.
The scale and sums of money involved are phenomenal with over 5,000 turbines earmarked for four sites in the North Sea, with each turbine costing at least £10m.
Investment in these sites has stalled due to perceived Government indecision. One Government concern is the cost, and earlier this month it said it wanted to see a 30% reduction.
Mill explained how the failure rate at one Danish offshore wind site was 120%, with even the replacements for the poorly performing turbines disappointing.
He continued: “Manufacturers want to have facilities where they can effectively test their products.
“If a piece of kit can be robustly tested it will save on an enormous amount of time, money and effort.
“As things stand, a prototype is installed and then tested over time to see how it performs.
“The manufacturer cannot go ahead and make hundreds of blades, for example, until successful trials have taken place.
“Our test rigs will allow this process to be completed in a much quicker time.”
The speed of progress in the tidal and wave sector has not met the expectations or hopes of many but Mill explained how its testing facilities have huge cost-benefit implications for developers.
A faulty £20 sensor was to blame for the failure of one in-situ tidal test, with the costs of taking the tidal turbine out of the water and then replacing it amounting to £400,000.
The financial advantages that can be secured through Narec’s facilities are attracting the attention of the financial community.
“Financiers want to be sure a piece of kit is going to be robust enough to last 20 years. If it breaks down after one or two then the financial model on which the whole investment is based is thrown into doubt.
“Narec is ideally placed to tackle many of the issues facing the Round 3 developers.”
Many in the offshore wind industry had hoped to see much faster progress than there has been to date.
As yet no global turbine player has set up a successful manufacturing factory in the UK.
But July’s announcement on the subsidy levels, combined with the launch of an industrial strategy may change the dynamic.
Mill remains upbeat and is confident the North East is set to secure a major economic boost; with some saying the sector can create 10,000 new jobs.
He added: “Over the next year we will see the turbine manufacturers commit to their investment decisions, by 2015 the factories will be under construction and the supply chain will mobilise.
“By 2017 the industry will be mobilising offshore. The Tyne, the Port of Blyth and the Wear are all ideally placed for the Round 3 sites and we are in a tremendous position to benefit from the industry’s growth.”
TO mark its tenth year and to coincide with its commercialisation drive Narec played host to more than 200 national and European policy makers, industrialists, and R&D specialists last week.
Those attending included wind turbine manufacturers, tidal turbine developers, utility project developers, major component suppliers, operations and maintenance providers, research centres of excellence and academia.
Speakers included the European Commission, Department for Business, Innovation and Skills, Department for Energy and Climate Change, Energy Technologies Institute and the Low Carbon Innovation Co-ordination Group.
The finale on Friday was dedicated to North East SMEs and designed to raise awareness of expertise in the region and to identify funding opportunities for companies looking to diversify and expand into offshore renewables.
One overseas company which visited the facility, as part of an inward investment delegation organised with the support of the NewcastleGateshead Initiative, was Spanish shipbuilding giant Navantia.
Diego Palacin, offshore wind business development manager for the Government-owned Navantia, said: “The projects at Narec are extremely interesting.
“We see the North East of England as an ideal location for UK offshore wind market.
“Navantia decided to diversify into this sector a few years ago and we are keen to invest in the region alongside local partners.
“We expect to get a clearer idea of how this can be achieved following the launch of the Government’s strategy in July.”
1. Fujin, a 15MW wind drive train testing rig
This £48m scheme was completed earlier this year and comprises of a 15MW capacity wind turbine nacelle test rig.
It is housed in a 35 metre high, 3,000 sq m hall and will conduct performance, endurance and compressed life testing of complete nacelles up to 15MW.
Last week Narec announced that Samsung Heavy Industries will use the facility to test the drive train for its 7MW offshore wind turbine.
2. 100 metre blade test facility
This was opened in August 2012 and is the largest of its kind in the world.
It houses a 15-metre high concrete superstructure with two huge rings. The top ring of 8m diameter is designed to accommodate the testing of blades up to 100m.
It has been created to test the longer blades being developed for larger, Round 3 offshore turbines. A turbine generating 12MW of electricity will need blades of 100 metres, which is five times the height of the Angel of the North.
3. 3MW tidal turbine facility
The 3MW facility was opened in the spring of 2012 and performs testing of integrated turbine nacelle systems and individual drive train components of tidal power generation devices.
The drive train test facility exercises both the mechanical and electrical components within a tidal power system allowing the performance and reliability of the system to be established prior to installation at sea.
It is being used by Atlantis Resources Corporation to test its AR1000 tidal device and by Siemens-owned Marine Current Turbines to test its 1MW power train SeaGen-S device.
4. Marine testing docks
Narec provides open access to a fully controlled onshore saltwater dry dock environment to perform verification activities, reliability and performance appraisals of new mechanical and electrical subcomponents and systems. One of the two dry docks is currently being mocked-up as a seabed to test of underwater trenching ploughs.
5. The Charles Parsons Electrical and Materials Laboratories
These provide research and testing facilities for marine device developers with specific emphasis on component development, materials selection, system certification and electrical grid integration.
Its laboratories are equipped with an extensive suite of specialist facilities and are located next to and integrated into its marine test and dry dock facilities. This allows for saltwater immersion, simulated seabed trialling and testing of cable systems and umbilicals.
6. 50 metre blade test facility
Narec has undertaken independent testing of wind turbine blades up to 50m in length for a number of leading manufacturers since opening this, its first, facility in 2005.
7. Offshore wind demonstration facility
This is Narec's most ambitious project to date and it is confident of securing £350m from private sector partners to build this facility in the North Sea, off the Northumberland coast, to test the new generation of offshore turbines.