2

Contents Page

Executive Summary 3

Forewords 4

Introduction 6

Part A: The development process 7

(1) Pre-planning and planning services 9

(2) Construction 10

2.1 Critical works

2.2 Ancillary works

2.3 Support services

(3) Operation & Maintenance 12

(4) Case studies 13

Part B: Technical and other requirements 17

(1) Detailed critical works 17

(2) Generic requirements 21

Part C: Realising local content 23

(1) What is local? 24

(2) Why do developers want to source locally? 24

(3) What barriers are there? 24

3.1 The size of contracts

3.2 Competing developments

3.3 Continued drive for cost reduction

3.4 Supply chain knowledge

3.5 Reluctance to invest

(4) What is the industry doing to overcome these barriers? 28

(5) What do Welsh firms need to do? 32

5.1 Get to know the sector

5.2 Understand requirements

5.3 Understand the procurement process

5.4 Start small

5.5 Explore opportunities for joint ventures

(6) Where to go for assistance and further information 33

Appendix One: Technical and other requirements 34

Estimating the scale of the opportunity

Acknowledgements: 38

3

Executive Summary

Onshore wind development opens up opportunities for a wide range of local suppliers. This document sets out the

range of opportunities in the onshore wind sector for Welsh companies and is intended as a guide to suppliers wishing

to enter or expand their presence in the sector.

Wales’ wind sector is growing, and wind energy is now a major part of our electricity mix. As a sector, onshore wind

already directly employs around 700 people in Wales1 and there is a great deal of potential for this to increase.

Part A of this Guide introduces the onshore wind farm development process, and sets out the potential scale of

opportunity for Welsh companies in the sector. Case studies are provided to illustrate the type of opportunities

available.

Part B includes more detail on the technical and other requirements for potential suppliers as well as breaking down

the construction activities into more detail.

Part C sets out the importance of local supply chain content to wind farm developers and the ways in which they try

to source goods and services from Welsh businesses. It also considers some of the challenges developers face in doing

this and highlights some of the actions businesses can take to improve their chances of securing work in the onshore

wind sector.

A summary of our recommendations for Welsh businesses are:

Get to know your part of the onshore wind farm supply chain and the organisations and individuals who could be buying your services. This will rarely be the wind farm developer and is more likely to be one of their prime contractors.

Take steps to understand the technical requirements in your part of the supply chain in good time so that you have an opportunity to develop capacity or work towards any accreditations needed.

Understand the procurement process, the specific requirements of the developer and the manner in which prime contractors may assemble their bidding teams.

Look for opportunities in smaller wind farms first if your company has no wind farm experience.

Explore opportunities for joint ventures (to access the much larger opportunities) with other firms in your

sector to gain the critical mass you may need to bid in your own right or have credibility with prime contractors.

1 RenewableUK

4

Foreword from David Clubb, Director, RenewableUK Cymru

2 Source: Renewable UK (2014) Local Supply Chain Opportunities in Onshore Wind: Good Practice Guide

Welcome to RenewableUK Cymru’s

Good Practice Guide, which aims to

encourage the development of the

onshore wind supply chain

throughout Wales.

As the leading renewable trade

association, representing more than

30 Welsh companies, we’re delighted

to have this opportunity to

demonstrate exactly how onshore

wind can be a key driver of local

growth and also benefit the national

economy.

At a time when other sectors have

been contracting, the green economy

has continued to forge ahead: in fact,

it is one of the sectors that the UK can

point to with pride, as having created

a substantial number of jobs.

Onshore wind now provides

employment for nearly 19,000

people in the UK: more than 9,900

are directly employed in the sector,

and a further 8,950 are employed

indirectly, supplying goods and

services2. In Wales, the onshore wind

sector already directly employs

around 700 people and there is a

great deal of potential for this to

increase.

We have produced this guide to

showcase the extraordinarily diverse

range of opportunities available to

firms in Wales to get involved in the

sector, whether they are well-

established companies or new

entrants. The onshore wind industry

is very much open for business: the

market is eminently accessible, but

some companies may need a little

help in finding where and how to

start. As the trade and professional

body, we aim to demystify the sector

for such firms. To achieve this, the

guide breaks down the development

process, using case studies to

highlight how, with the right

preparation, local businesses can

benefit significantly from the

opportunities onshore wind

presents.

The environmental benefits of clean

energy over fossil fuels are well

known, and the public is increasingly

aware of the importance of

developing home-grown, secure

energy sources such as onshore

wind. What has perhaps been under-

appreciated until now is the fact that

this sector is also a powerhouse for

economic growth. Many parents are

currently wondering where their

children will find employment in the

future - the answer may lie in the

renewable energy sector, and its

burgeoning supply chain.

5

Foreword: Onshore Wind Industry Developers

Onshore wind is an important economic sector in Wales and there are substantial opportunities for Welsh companies to supply goods and services to the sector. We estimate our current pipeline of onshore wind developments could lead to a total of £1.7bn construction spend and £175m in planning and development by 2025. Of this 35% (£580m) of all money spent during construction and 71% (£125m) of all expenditure during planning and development could be spent in sectors where Welsh companies have a strong competitive chance.

We want to be sure that the economic benefits of onshore wind to Wales are maximised. This means that we need more Welsh firms to supply goods and services to us as developers, or to our contractors. We are already working with some companies in Wales, and a number of Welsh firms have the expertise and scale to act as the prime contractor for large onshore wind farms.

Like us, our prime contractors aim to use the expertise that already exists amongst companies which are local to particular wind farm developments. We always encourage our suppliers to work with local firms where they can. But we and our suppliers sometimes find it difficult to identify and engage with the right companies.

We are committed to maximising the value of our supply chain spend in Wales and will continue to:

Engage with local suppliers in Wales to build up our knowledge and understanding of the capability that exists

in the Welsh supplier base

Encourage our suppliers to use local companies as much as possible

Make linkages between Welsh companies and our prime contractors where we can

Provide constructive feedback to firms which tender for but do not secure opportunities with us to help to maximise their chances in future.

We need businesses in Wales to help us by:

1. Keeping up to date with developments in the sector 2. Being aware of the opportunities on the horizon and the capacity and capability needed to access them 3. Engaging with relevant buyers, both developers and our prime contractors 4. Making sure that they have the right accreditations in place so that there are no barriers to working with us

This guide sets out the range of opportunities for SMEs in Wales in the onshore wind sector and provides the guidance that local firms need to help them to enter or expand their presence in the sector.

6

Introduction

Onshore wind is the most cost-effective renewable technology, and is a key component of an affordable and secure

low-carbon energy mix. Its importance is set to grow in the future as the UK strives to meet its renewable energy

targets, set by the European Union.

But not only is onshore wind helping to keep the lights on and energy costs down, it is also a significant business

opportunity for Wales. In 2013, RenewableUK Cymru commissioned research into the economic opportunities for

Wales from onshore wind development3.The study estimated that between 2005 and 2011:

The planning and construction of onshore wind projects in Wales contributed an annual average of £7.8m in

Gross Value Added and 335 Full Time Equivalent jobs;

The operations and maintenance of onshore wind projects in Wales contributed an annual average of £6m of

Gross Value Added per annum and 210 Full Time Equivalent jobs per annum.

The scale of opportunity in the sector over the next 10 years is substantial. The current pipeline of onshore wind

developments could lead to £1.9bn in spend across all stages of the development process by 2025. Around £750m

could be spent in sectors where Welsh companies have a strong competitive presence.

This Supply Chain Guide provides developers, operators, contractors and the wider supply chain with practical advice

on how to capitalise on the commercial opportunities that onshore wind brings, both locally and nationally. We

highlight the approaches taken by developers and contractors in identifying and using local suppliers to ensure that

the environmental benefits of renewable energy are complemented by economic benefits.

This Guide sets out the range of opportunities for companies in Wales in the onshore wind sector, and is intended as

a guide to suppliers wishing to enter or expand their presence in the sector.

Part A introduces the onshore wind farm development process, and sets out the potential scale of opportunity

in the sector for Welsh companies. It is aimed primarily at suppliers with little or no experience in the sector.

Part B includes more detail on the technical and other requirements for potential suppliers as well as breaking

down the range of construction activities into more detail.

Part C sets out the importance of local supply chain content to wind farm developers and the ways in which

they try to source goods and services from Welsh businesses. It also considers some of the challenges

developers face in doing this and highlights some of the actions businesses can take to improve their chances

of securing work in the onshore wind sector.

This guidance relates primarily to the large scale part of the market, typically multi-megawatt projects where there is

the most interest from local companies in supply chain opportunities. However, smaller-scale projects also benefit

the national and local economy, and are covered in RenewableUK’s Small and Medium Wind Market Report4 and

Supply Chain Map5.

3 http://www.renewableuk-cymru.com/wp content/uploads/2013/10/EconomicOpportunitiesOnshoreWindWales.pdf 4 www.renewableuk.com/en/publications/reports.cfm/Small-and-Medium-Wind-UK-Market-Report-2013 5 Contained within the State of the Industry report. http://www.renewableuk.com/en/publications/reports.cfm/state-of-industry-report-2014

7

Part A: The Development Process

The scale of opportunity from the onshore wind sector in Wales is substantial. The current pipeline of onshore wind

developments could lead to a total of £1.9bn capital expenditure from all stages of the development process by 2025.

Of this, around £750m could be spent in sectors where Welsh companies have a strong presence and the chance of

securing contracts.

The Opportunity

The opportunity is particularly significant during the construction phase; previous research commissioned by

RenewableUK Cymru (2013)6 suggests that total average construction costs (spend) per MW of installed capacity are

£1.13m (in 2012 prices)7. In addition to this, planning and development costs (spend) per MW of installed capacity

are around £0.12m, and operation and maintenance costs are around £0.04m per MW of installed capacity. This

investment presents a significant opportunity for Wales: research8 suggests that up to 35% of all expenditure in the

construction phase could be retained within Wales, along with 71% of planning and development spend and 76% of

operational spend.

Based on the current pipeline of consented onshore wind developments in Wales and a range of supporting research

and assumptions we estimate that the current pipeline of onshore wind developments could lead to a total of £1.9bn

of expenditure from all stages of the development process by 20259. This is made up of £1.7bn construction spend,

£175m planning and development spend, and £57m in operational spend by 2025. Of this, around two fifths (£750m)

of all spend could be spent in sectors where Welsh companies currently have a strong competitive presence.

The scale of opportunity from the development process up to 2025 has been estimated from the current pipeline of

onshore wind developments in Wales and the estimated average expenditure per MW of installed capacity, according

to previous research commissioned by RenewableUK Cymru (2013)10.

6 http://www.renewableuk-cymru.com/wp-content/uploads/2013/10/EconomicOpportunitiesOnshoreWindWales.pdf 7 Note: There are margins of error in the estimates as the developer’s survey only reached a sample of all developers and operators of onshore wind farms in Wales. However given the coverage of the developer survey reached 66% of all existing and proposed capacity in Wales and the estimates were then benchmarked against other published sources, the estimates are robust. 8 http://www.renewableuk-cymru.com/wp-content/uploads/2013/10/EconomicOpportunitiesOnshoreWindWales.pdf 9 Renewable UK maintains an up to date list of UK schemes on their website. The searchable facility is here: http://www.renewableuk.com/en/renewable-energy/wind-energy/uk-wind-energy-database/index.cfm 10 http://www.renewableuk-cymru.com/wp-content/uploads/2013/10/EconomicOpportunitiesOnshoreWindWales.pdf

8

RenewableUK maintains an up to date list of UK schemes on their website. The searchable facility is here: http://www.renewableuk.com/en/renewable-energy/wind-

energy/uk-wind-energy-database/index.cfm

Note: At the time of publication there was considerable uncertainty about whether Wales would retain its current turbine tower manufacturing capacity. The figures presented

here and the underlying calculations assume that existing capacity in the manufacture of turbine towers will be retained and that a proportion of expenditure on turbine

towers can be safeguarded in Wales. Given the large contribution that spend related to turbine towers makes to the overall spend per MW in Wales, it is important to note

that the scale and nature of the opportunity would differ if turbine manufacturing capacity did not stay in Wales.

9

The Development Process

The time between a developer identifying a potential site and the production of the first electricity from the wind farm

can be as short as four years, or as long as ten years. Along the way, the developer procures a range of technical and

professional services while investigating the site, conducting environmental and technical surveys, and refining their

proposals. This activity continues all the way through to planning, construction and operation. Opportunities for

contractors exist throughout this period, and will usually peak once the consent is awarded and construction begins.

During the design and planning stages some developers rely mainly on in-house expertise, but many contract at least

some of their activities, meaning opportunities exist for third parties to tender for work at these stages. This section

covers the areas in which developers may procure external services at each stage.

Figure 1: The development process

(1) Pre-planning and planning services

Pre-planning covers all the stages from site identification to the submission of a planning application. The main

activities at this stage can be broken down further as follows:

Pre-planning: before a planning application is drafted, wind farm developers need services to support site

selection and investigation (including but not limited to wind assessment), scheme financing and planning.

Environmental Impact Assessment: most large onshore wind projects require an Environmental Impact

Assessment (EIA) to be carried out and an Environmental Statement (often known as an ES) submitted in

support of their planning application.11 The EIA process involves the collection and analysis of a large volume

of data relevant to the project’s likely environmental, social and economic impacts. This requires professional

services, often conducted by accredited specialists and support staff12.

Legal and Other Services: other professional expertise is often required to support onshore wind projects. For

example, lawyers and/or land surveyors can be used to help negotiate and secure land option agreements and

longer-term land lease agreements.

Community Engagement and Consultation: community consultation is a key element of the planning system,

and also represents an opportunity for local benefit. Consultation and engagement may be carried out

throughout the development, construction and operational stages.

Onsite Wind Resource Assessment: Assessing the wind profile of a site is a crucial early-stage feasibility activity

for project financiers and developers.

11 Some larger schemes may be just below the thresholds for EIA and ESs. In such circumstances, much of the same information will still need to be provided. The largest schemes or those near European designated sites may also require a Habitats Regulations Assessment. 12 Where a scheme goes to appeal, practitioners in the above fields may also be called upon as expert witnesses to give evidence.

Pre-planning and planning

•Environmental Impact Assessment (EIA)

•Legal and other services

•Community enagagement

•Wind resource assessment

Procurement and construction

•Critical works

•Ancillary works

•Indirect spend

Operations and maintenance

•Site and other maintenance

•Safety and quality

•Community liaison

10

Many of these pre-planning services are specialist in their nature and the sector is considered to be relatively mature

in Wales with a range of providers offering a variety of technologies and commercial skills.

(2) Construction

Once a scheme is consented and all conditions have been discharged, a developer will move to pre-construction tasks

and procurement of turbines and contractors for civil and electrical works. Wales based suppliers have a potentially

significant role to play, particularly in Balance of Plant (BoP)13, operation and supporting services, such as provision of

financial services. There are examples of local content accounting for 60% or more of construction spend14.

Procurement can take a number of forms, reflecting different types of contracts (Appendix 1 discusses this in more

detail). While specifications vary for individual developments the main elements for the critical works are similar, and

are detailed in the sections below.

As the industry is around 20 years old, easily accessible sites are becoming rarer. More remote sites are likely to

increase the types and extent of ancillary works required to support the commissioning and operation of a wind farm.

Similarly, the provision of increasingly sophisticated mitigation solutions and environmental enhancement schemes is,

in some cases, significantly expanding the labour, service and supplier requirements of wind farm developments. This

opens up potential new business areas for local suppliers who would not normally be associated with the onshore

wind industry. Given the highly site-specific nature of these ancillary works, however, it would not be feasible to list

them all here, so our list of activities is therefore not intended to be exhaustive.

13 ‘Balance of Plant’ (BoP) is the catch-all term used to describe those parts of spend not related to the manufacture of the wind turbine itself. 14 Source: Renewable UK (2014) Local Supply Chain Opportunities in Onshore Wind: Good Practice Guide

Myth: There are very few jobs supported by the onshore wind industry.

Wind farms are complex developments and require a wide range of technical and specialist expertise to plan,

develop and consent. In Wales, around 700 people work directly in the development, construction and operation

of onshore wind farms. If jobs in the supply chain are included, this number increases substantially.

Myth: Onshore wind is too specialist for most local suppliers and SMEs.

Construction works for onshore wind range from highly specialist activities such as turbine assembly to standard

construction activities like ground clearing and construction of access tracks. In principle, there is no reason why

firms with expertise and experience in other sectors should not be able to compete for work in onshore wind.

Relevant local businesses should therefore view onshore wind as an accessible construction sector like any

other, and many developers work with local suppliers and local business agencies to help companies navigate

contracting and tendering.

11

2.1 Critical works

The exact works required by a development will vary on a site-by-site basis. They can be categorised as follows,

together with examples of the sorts of activities involved. A more detailed discussion is included in Section B, together

with a more comprehensive table of typical activities and materials.

2.2 Ancillary works

In addition to the main onsite works, onshore wind projects may require off-site and ancillary works. These works are

often driven by requirements to mitigate certain impacts or otherwise enable the construction and eventual operation

of the wind farm, and provide new and more extensive business opportunities. As more wind farms are built and the

more straightforward sites are completed, there is often a greater need for these works. These can include:

Habitat creation, enhancement and management: when a scheme is likely to impact habitats of protected or

other species of flora and fauna, developers can mitigate these impacts through habitat creation or

enhancement. This can be a condition on planning consent (often formalised through a Habitat Management

Plan) or discretionary on the part of the developer. Examples of these activities are hedgerow planting, the

introduction of certain types of flora, or creation of new scrapes or ponds. The opportunity exists to employ

local specialists who will provide a valuable insight, e.g. local wildlife experts.

Screening: screening through tree planting is one method of mitigating visual impacts on nearby properties or

recreational areas, leading to work for forestry-related businesses.

Highway works: as part of consent, a developer often has to satisfy specific legal agreements (called Section

278 or Section 38 agreements) relating to required highways works (for example, road widening or access

improvements). The local community will often be the beneficiary of these works, which may be over and

above what the local highways authority would otherwise have undertaken.

2.3 Support Services

During peak construction activity, there will be dozens, or, for the largest schemes, hundreds of extra workers in the

vicinity of the site. For a rural community, this can represent a significant increase in users of local facilities. It is

common for local hotels, B&Bs, shops, restaurants, cafes and pubs as well as taxi and car hire companies to be busy

during the construction phase.

12

(3) Operation & Maintenance (O&M)

Although much of the operation of turbines can be undertaken remotely, there remains a need for crucial ongoing

services to support the smooth, safe and efficient operation of a site. This can take various forms. The level of on-site

presence needed to support the operation of a wind farm will vary roughly in proportion to the size of the project, but

will also depend on the amount of in-house O&M resource the wind farm owner retains and the type of O&M contract

they enter into with the turbine supplier. Some smaller sites may be serviced by staff who split their operations across

a portfolio of wind farms. Larger sites may require dedicated on-site presence, which can be provided by the developer

or procured through dedicated O&M companies.

Typical activities include: control room operations; site management; routine turbine maintenance and testing;

electrical equipment maintenance; site maintenance (e.g. track maintenance, snow and ice clearance); crane hire for

large component repair; component refurbishment; small engineering works; consumables and tool supply for minor

works; tool calibration; lab work for metallurgy; engineering forensics; and independent safety and quality inspections.

Ongoing activities can include security (where required), ecological management, community liaison and community

fund management. Principal Designers and other roles relating to health & safety (such as certification of harnesses

or testing chains) may also be required. As with pre-construction activities, O&M opportunities are most likely to be

in employment rather than in materials or supply.

Having voluntary community benefit funds is now standard practice in the onshore wind industry, particularly for

schemes of 5MW or greater. Although the beneficiary decides how these funds are used, they can represent significant

levels of investment in local areas, and over a project’s lifetime the amounts add up.

13

Case Studies

The following case studies highlight some Welsh companies that are supplying services to the onshore wind sector.

8MW wind farm in South Wales

This 8MW wind farm had a construction budget worth over £10 million, nearly 45% of which was spent in

South Wales (see chart below). Significant contracts were placed locally for turbine tower supply, grid

connection and a variety of civil construction activities, including construction of the substation. Local plant

hire firms and aggregate suppliers also won contracts.

14

Ysgellog Wind Farm, Anglesey: Proactively Promoting Local Supplier Opportunities

Airvolution Energy Limited’s 4.6MW wind farm at Ysgellog Farm in Anglesey comprises two turbines, measuring

92.5 metres to blade tip, which are estimated to generate enough electricity to power the equivalent of 3,100

homes each year. Construction started in October 2012 and the turbines started generating electricity in March

2013.

Airvolution is fully committed to working with local businesses in all of its developments, and maximising the

number of contracts that are awarded to local suppliers. This helps local businesses, but also makes sense for

Airvolution because of the commercial and logistical benefits of having contractors close by.

The company regularly holds ‘meet the buyer’ events with local companies to discuss the opportunities that could

come from their development projects. At Ysgellog, 71% of the construction budget was spent within Wales, and

35% (£316,000) was spent with Anglesey based businesses. The commitment to local sourcing resulted in the

Ysgellog development winning the category for Outstanding Green Energy Project at the 2013 Wales Green Energy

Awards.

Raymond Brown Renewables, based in Bridgend, won the prime contract for overseeing construction of the

project, and it was instructed by the developer to use Welsh or Anglesey based suppliers wherever it was possible

to do so. While it was not possible to award contracts locally for more specialised activity, there were numerous

opportunities for local building contractors, aggregates suppliers, hospitality businesses, and businesses providing

support services such as equipment hire and fencing.

Figure 1: The value of contracts placed with Anglesey based businesses

Several of the local businesses that won contracts for Ysgellog had not worked for the energy industry before, and

the experience has generated long term benefits for their businesses. One example is local house builders,

Pritchard Brothers, which secured the £75,000 contract for construction of the site’s substation building. The firm

is based just 2.5 miles from Ysgellog Farm. Hywel Pritchard, Senior Partner believes that Pritchard Brothers has

made new contacts and won additional work through the Ysgellog development.

CMP Plant Hire secured a contract for plant hire and aggregates. Ysgellog Farm was the business’s first

experience of working in the onshore wind sector. While it still only accounts for a small proportion of its

business (c. 5%), the importance of the sector is expected to grow as a result of other planned wind farm

developments in Anglesey. The contract for Ysgellog also meant it was able to safeguard the job of one of its

employees.

15

Bridgend based Apex Holdings: Seizing New Business Opportunities in the Onshore Wind Sector

Apex Drilling has been providing drilling services to various sectors since 1992 and first started supplying the

onshore wind sector in the late 1990s. Apex had built a reputation through work in other sectors and was

commissioned by Jones Bros for drilling services as part of the construction of the Carno Wind Farm in the late

2000s. Since then Apex has had a steady stream of wind farm work and provided drilling services to a large

proportion of the onshore wind farms in South Wales, including the Pen y Cymoedd wind farm.

Apex works mostly for civil engineering contractors (although it does occasionally work directly for developers)

and its wind farm related clients include major civil engineering companies such as Balfour Beatty, Jones Bros and

Walters UK. Onshore wind farm related services now accounts for a steady stream of work and accounts for around

5% of Apex Drilling’s £5m annual turnover. Although a small proportion of the overall business, this work has been

particularly important over recent years, especially when work in other construction sectors shrunk during the

recession.

Apex set up a ground and concrete testing business (Apex Testing) three years ago to respond to opportunities

arising in the wind sector. Apex Testing offers a range of material and geotechnical testing services and has a large

contract to test the stability and strength of turbine bases for the Pen y Cymoedd wind farm. Apex Testing allows

Apex to offer its wind farm clients a broader range of services in addition to drilling. By offering linked services

such as this, Apex Holding’s overall turnover has grown. Apex Testing currently has a turnover of around £250k per

annum, half of this is linked to the onshore wind sector. Apex is optimistic about the growth prospects for this

business and expect opportunities in the onshore wind sector in Wales and elsewhere in the UK to play a role in

its future growth and profitability.

Anglesey Based CMP Plant: Transferring General Construction Skills to the Wind Farm Sector

CMP is a construction and plant hire company which employs around 30 people in the Anglesey area. Wind farm

related work has been an important income stream for 20 years and has safeguarded employment for a number

of skilled and apprentice workers in Anglesey. Its work in the wind farm sector has come about through a

combination of its relevant skills and expertise and the locational advantages it offers to client’s construction of

wind farms in Anglesey. CMP gets the majority of wind farm work via civil engineering sub-contractors to wind

farm developers.

CMP was able to access opportunities to supply stone, machine hire and landfill services to the Ysgellog

development with only limited new investment in equipment or capability. The skills and machinery required are

not specialist and its general construction skills are entirely transferrable to the wind farm sector and the firm

already has the health and safety and insurance accreditations needed to work on a wind farm site. CMP has

therefore been able to benefit from this work through building on the skills and expertise within its existing

business.

CMP expects the importance of the wind sector to grow as construction activities in the onshore sector expand.

Building upon its track record in the onshore sector, it also provided services to Gwynt y Mor, an offshore

scheme close to its base in Anglesey.

Carmarthen based Burke Contracts: Shifting Focus to the Onshore Wind Sector

Burke Contracts started out as a general construction company in the 1990s. Its work in the onshore wind sector

started in the late 1990s following an approach to provide ground works and construction services to a wind

farm in North Wales. The importance of onshore wind to Burke Contracts has grown steadily since then and work

in the sector (in Wales and elsewhere in the UK) now generates ground work contracts worth around £3m per

annum. This work has been particularly important over recent years when other construction sectors have been

less buoyant. Onshore wind related work has helped Burke Contracts to maintain employment and now accounts

for 80% of annual turnover.

16

Neath Port Talbot based Express Reinforcements: Steel reinforcement for Pen y Cymoed The foundations for the 76 turbines at Pen y Cymoedd will need more than 6,000 tonnes of steel. This is being

supplied by Neath-based company Express Reinforcements. Its Managing Director, Andy Lodge, said: “We're

delighted to have been contracted to supply steel for such a significant project so close to our home base.

Furthermore, in line with the values of the Pen y Cymoedd wind energy project as a whole, our raw materials

have been sourced from within the UK, and the steel itself is being made in Cardiff."

17

Part B: Technical and Other Requirements

This section follows on from the discussion in Part A and provides more practical advice on the sorts of operations

involved and the likely requirements that subcontractors and suppliers will need to demonstrate in order to bid for

work. We follow the division of works in the graphic in Figure 2.

(1) Detailed critical works

The following tables break down typical activities and materials/plant requirements for each category of works.

Examples of specific technical requirements that developers and primary contractors may need to see evidence of are

included, and an extensive list of generic requirements is included at the end.

Table 1: Detailed works

Construction Stage and Description

Activities Materials, plant and third-party services

Specific technical requirements

Feasibility: Wind resource assessment

A potential site is assessed for its suitability to host a wind farm by gathering meteorological data, often for two years.

Delivery of mast

Ground works

Onsite assembly of mast

Erection of mast

Servicing

Haulage vehicle

Excavator

Hydraulic winch/crane

Cable/lifting rope

Mast

Meteorological equipment

Feasibility: Geotechnical

Geotechnical and geological surveys describe the terrain to inform decisions on foundation type, access roads and other construction activities. Typically this involves a combination of desk-based and field studies.

Desk-based research

Borehole drilling

Trial pits

Testing of samples

Topographical survey

Backhoe

Drilling rigs

Low ground pressure access machines

Fuel

Laboratory services

Suitably qualified geotechnical team

Site preparation: Ground works

Topsoil is removed and stored, and embankments and cuttings are made. Ground may also need to be densified. Required for foundations, access tracks, crane pads and any control buildings.

Excavation of topsoil

Movement and storage of topsoil

Excavation of cuttings

Construction of embankments

Densification of ground

Removal of waste

Excavator/bulldozer/ scraper

Grader

Dump trucks

Compactor/roller

Waste removal vehicles

Waste disposal facility

Fuel

Site preparation: Tree felling

Commercial forestry sites can be suitable for wind farm development. ‘Keyhole’ felling may be used to reduce felling requirements. Commercial harvesting (CH) or in-situ chipping (ISC) techniques are generally used, and require different equipment.

Felling of trees

Onsite transportation (CH)

Offsite transportation (CH)

Chipping/mulching of timber (ISC)

Removal and disposal of waste (ISC)

Transportation of logs/waste (CH/ISC)

Harvester/cable crane (CH)

Flail/chipper (ISC)

Forwarder/skidder

Log transport vehicles (CH – specifications apply15)

Waste removal vehicles (ISC)

Waste disposal facility (ISC)

Fuel

15 www.ukfpa.co.uk/pdfs/TTF_Code_of_Practice.pdf

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Site management

As part of a project, a number of ancillary services are needed. Developers will need to build a site compound, hire cabins for offices, etc., and will also need to contract for services such as security.

Establishing site compound

Hire of cabins, generators, etc.

Cleaning

Security

Waste management

Hi-ab transport vehicles

Balance of Plant: Access and onsite tracks

Tracks to access the site from the main road network are often required. Additionally, tracks are needed for construction and maintenance of the wind farm and access to any control buildings, substations, and so on. Tracks need not necessarily have a sealed surface. In peat-rich ground conditions, floating roads may be used. Watercourse crossings may require bridge construction. Stones for use in construction of the tracks can be sourced onsite where available.

Site preparation (see above)

Drainage (culverts or ditches)

Quarrying

Transport and laying of aggregates

Laying of geotextile/geogrid fabrics

Laying and compaction of aggregates

Excavators

Aggregates (sand, stone, etc. – may be subject to specification, e.g. Type 1 stone)

Roller

Dump trucks

Grader

Culverts

Fuel

Specific requirements for BoP tend to come from the turbine supplier, and will therefore vary on a site-by-site basis. Early engagement to ascertain suitability is therefore crucial.

Balance of Plant (civil): Crane pads

Crane pads are hard-standing areas to enable the assembly and erection of the turbines.

Site preparation (see above)

Drainage (culverts or ditches)

Quarrying

Transport and laying of aggregates

Laying and compaction of aggregates

Excavators

Dump Trucks

Roller

Grader

Plate testing equipment

Fuel

As above, turbine suppliers will specify design and quality criteria.

Balance of Plant (civil): Foundations

Foundations are made from steel-reinforced concrete in excavated pits. Different designs can be used, and will be determined predominantly by the ground conditions on site and the design load of the turbines. This may include piling operations. Bolts at the top of the foundation connect the first tower section to the foundation.

Site preparation (as above)

Laying of subgrade

Installation of concrete mudmat

Installation of steel rebar

Installation of anchor gate

Delivery of concrete

Pouring of concrete

Backfilling of soil

Excavators

Dump Trucks

Rollers

Aggregates for subgrade

Aggregates for concrete

Cement for concrete

Batching Plants

Delivery truck

Mixertrucks

Concrete Pump rig

Steel reinforcement bars (and delivery)

Bolts

Fuel

Plate testing equipment

Concrete testing labs

As above.

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Balance of Plant (civil): General

General services and equipment to support construction activities will be required.

See next column Administrative support

Catering

Security fencing

Safety/security stewards

Traffic management

Snow/ice clearance

Project Management

CDM – Principal Designers

Civil Designers

Electrical Designers

Recognised qualifications or standards may be applicable to individual roles and services.

Balance of Plant (electrical): Substation

A substation (collector) is used to step up the voltage of the energy produced for export to the grid or distribution network. The substation also contains equipment for operating the wind farm, for example switchgear and export meter.

Substation design

Construction

Testing and certification

Design and optimisation

Domestic electrics

Heating

Fire/security alarms

Building

Excavator

Dump Trucks

Fuel

Delivery vehicles

The necessary electrical elements of the substation will define the civil requirement. Engineering Design Standards are provided by DNOs.

Balance of plant (electrical): Cabling

A series of medium-voltage cables connect the turbines to the substation. The circuits will need to be designed to suit the conditions on site. Cables tend to be trenched and sizing varies, though factors such as soil resistivity and ampacity requirements are key factors in determining sizing requirements.

Circuit design

Excavation of trenches

Laying of cables and connection

Testing

Backfilling trenches

Design and testing services

Installation

Cable supply

Cable delivery

Excavator

Fuel

Cable jointing

Cable termination

Cable testing

Cable diameters and specifications will vary depending on the capacity of the turbines.

An export cable will connect the wind farm to the distribution network. Developers can, in certain circumstances, undertake these works (the appointed company has to be a Lloyds registered Independent Connections Provider) The grid connection can be either overhead (OH) or buried cables (C) (or partly underground), which in turn may require directional drilling or other excavation techniques.

Connection design

Excavation and backfilling of trenches (C)

Assembly and erection of trident poles/pylons (OH)

Laying of cables (C)

Wiring of poles/pylons (OH)

Testing

Substation works

Design and testing services

Installation

Cable supply

Cable delivery

Excavator (C)

Supply of poles/pylon materials (steel, conductors, bolts, fittings) (OH)

Delivery of poles/pylons

Cherry picker (OH)

Crane(OH)

Fuel

Cable jointing

Cable terminations

Lloyds registered and DNO/TO approved companies are required.

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Turbine supply

Turbines tend to come as a complete package from turbine manufacturers, though there may be opportunities to procure some of the required elements locally or nationally. Blades, tower sections and internal electrical parts are delivered for onsite assembly.

Delivery and storage of turbine components

Onsite assembly

Erection of turbine

Installation of electrical and operational components

Commissioning and testing

Transport of turbines

Crane hire

Onsite assembly and erection of turbine (specialist engineering)

Internal transformers and switch gear

Electrical engineering

Ladders and platforms

Ventilation

Foundation fixings

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(2) Generic requirements

This section provides an overview of the kind of information suppliers can be expected to provide when pre-qualifying

or bidding for work. Individual developers or primary contractors may have specific requirements in areas like Health

& Safety, and should always be contacted for definitive information. Requirements are likely to differ depending on

the nature of the services being procured. For example, an administrative function with no presence on site will have

different health & safety requirements to on-site construction.

Table 2: Generic requirements

Topic area Example requirements Comments

Company details

Registered name and address, incuding subsidiaries

TAX registration no.

Contact details

Key contacts for management, H&S, quality, etc.

Financial Bank name and details

Turnover and pre-tax profits (multiple years)

To determine whether the contractor is financially stable and does not present a financial risk.

Insurance Details and copies of certificates of relevant policies, e.g. employer liability, public liability, contractor all risks, professional indemnity, goods in transit

The cover amount will need to be sufficient for the purposes of the activity, and should therefore be discussed with developer/primary contractor.

Experience Background of previous relevant contracts, including geographical extent, numbers of employees managed, etc.

References

Previous experience need not always be in relation to onshore wind construction. For new entrants, it is worth discussing the relevance of previous contracts with developers/primary contractors. References will often be taken up, so please make sure your reference client has agreed.

Health & Safety H&S policies, including any improvement targets and training programmes for employees

Details of any safety certificates

Environment Management Policies (EMP)

Evidence on use of incident book

Waste disposal policies

Historic accident and incident data

Sample risk assessment and method statements

H&S standard may refer to BS OHSAS 18001 or similar. Environmental standard ISO 14001 (or simlar) may be referenced. Third-party vendor accreditation may be required for a specific scheme, as may inclusion on specific registers of safe contractors. Safety certificates held by operators may be CSCS or similar. RenewableUK has also published Wind Turbine Safety Rules, which relevant suppliers should familiarise themselves with16. NICEIC certification (or similar) may be required for any electrical function. The client will want to ensure that a contractor is competent to produce good quality Risk Assessment and Method Statement documentation to avoid problems on site. Risk assessments should follow relevant HSE guidance.17

Quality management

Details of Quality Management System/policy (QMS), including:

Certification

Complaints handling procedures

Customer satisfaction surveys

Certification may be to ISO9001 or equivalents, or via third-party assessments. Clients are looking for contractors who review their performance and are always looking to improve.

16 See www.renewableuk.com/en/our-work/health-and-safety/wind-turbine-safety-rules.cfm 17 www.hse.gov.uk/risk/controlling-risks.htm

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For suppliers of components (e.g. fabricators, machine shops)

Details of inspections carried out

Testing performed

Records of testing

Claim rates

For design functions

Organisation, experience and qualifications of design staff

Design review processes

Hazard elimination methodology

Construction Design and Management Regulations are likely to apply, so evidence on compliance with these should be provided.

For organisations looking to take on the role of CDM Principal Contractor (PC)

Experience of acting in a PC role

Clients are likely to request to audit a site where the role of PC is being performed.

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Part C: Realising Local Content

There is a genuine desire amongst wind farm developers to see the local benefits from onshore wind maximised. Local supply chain content is a central element of this and it offers benefits to the developer as well as the Welsh economy more widely.

This part of the Guide looks at how developers try to involve local firms in their supply chains. It explores the challenges

that developers, principal contractors and supply chain companies can face in boosting local supply chain content. We

highlight some of the barriers that exist here and set out some examples of positive steps that various parties can take

to maximise supply chain opportunity.

A summary of our recommendations for Welsh businesses are:

Get to know your part of the onshore wind farm supply chain and the organisations and individuals who could be buying your services. This will rarely be the wind farm developer and is more likely to be one of their prime contractors.

Take steps to understand the technical requirements in your part of the supply chain in good time so that you have an opportunity to develop capacity or work towards any accreditations needed.

Understand the procurement process, the specific requirements of the developer and the manner in which prime contractors may assemble their bidding teams.

Look for opportunities in smaller wind farms first if your company has no wind farm experience.

Explore opportunities for joint ventures (to access the much larger opportunities) with other firms in your sector to gain the critical mass you may need to bid in your own right or have credibility with prime contractors.

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(1) What is local?

Wind farm developers are committed to maximising the local content of their supply chains but it is important to be clear what ‘local’ means in the context of a wind farm supply chain. For each development the definition of ‘local’ must be agreed with reference to the location of available, competent and competitive suppliers. The lack of appropriate suppliers in some areas might mean that developers have to look further afield for some goods and services than they do for others.

As part of the planning consent process, developers may decide to work with local authorities to agree what ‘local’ means for their development. This will be informed by an analysis of the nature of the business base in the vicinity of developments and what this could mean for the geography of the supply chain. These discussions could involve more than one local authority if a particular development is close to local authority borders.

The supply chains of individual wind farms will always be the focal point for efforts to boost local sourcing. But it is important not to lose sight of the fact that developers want and need the Welsh wind farm supply chain to develop as a whole, rather than in particular localities around specific development sites.

(2) Why do developers want to source locally?

We know that the onshore wind sector has already created substantial economic benefit in Wales and we expect the sector to continue to make an important economic contribution. Wind farm developers look to these economic benefits to help to develop positive relationships with communities close to their developments, but local content creates more than just positive PR and good feeling – it offers real operational benefits to wind farm developers.

Developers want and need to benefit from the knowledge (for example of local ground conditions and site access) that exists within Welsh firms. They are also keen to develop links with local suppliers to help reduce lead-in times for particular goods and services and reduce the cost of transport and logistics for larger components and equipment.

When all other things are equal, these benefits can give local suppliers an edge over competitors from outside Wales, particularly when taking the steps to maximise local supply chain content is a condition of a development’s planning permission. But firms still need to be able to prove they have the relevant accreditations and can do the job well at a competitive price.

Local Content Agreements It is often a condition of planning consents for onshore wind farms that developers will take the steps to maximise local economic benefits. The nature of these conditions varies. Often, they state that developers and their contractors should work with local suppliers wherever possible. More recent planning consents have been more prescriptive on this issue and dictated that a specific proportion of supply chain spend should be invested with firms within a particular radius of the site. How such conditions affect local supply chain sourcing in practice depends on the nature of the agreement. But while these agreements are important, their existence does not automatically guarantee companies in the local area gain contracts. Firms still need to have an appropriate track record, financial standing and accreditations, as well as a competitive price, to access this work.

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(3) What barriers are there?

Local supply chain content offers undoubted strategic and operational benefits to developers but it can be difficult for

developers to influence the geography of a development’s supply chain. Construction activities for major wind farms

tend to be procured in the first instance via a small number of large contracts.

Developers can implement three main types of contract structure. The choice between them will be determined in

part by the demands of the project itself (particularly perceived construction risk), the developer’s preferred method

(including availability of in-house resource) and financiers’ preferences. The approach to maximising local content will

differ depending on which structure is used, reflecting the developer’s ‘distance’ from suppliers lower down the chain.

These dynamics, discussed in more detail below, ought to be borne in mind by developers seeking to maximise local

content. Potential suppliers should also be aware of the proposed contract structure and the different dynamics

involved, in order to make sure they know who to engage with, and who will be responsible for what once contract

awards begin. The main contract types are:

Engineering, Procurement and Construction contract (EPC): Also known as turnkey contracts. The developer

will issue a primary contract to a single company for delivery of the whole operational wind farm, including all

design, purchasing and construction activities. There are a range of companies in the UK operating as turnkey

contractors. Such companies are likely to already have a significant database of suppliers across the country,

and may therefore need to do little in the way of scheme-specific identification. Ensuring a sufficient level of

local and UK content will therefore depend strongly on the wording of the invitation to tender for the contract,

and the contract itself. New suppliers should consider engaging directly with primary contractors in this sector

to understand the criteria for acceptance onto approved supplier lists, including pre-qualification

requirements.

Dual contracts (DC): Dual contracts split the supply and erection of turbines from Balance of Plant (BoP)

(namely, all other activities). As with EPCs, there is a mature market for provision of both services. The dynamic

between developers and subcontractors is also similar.

Multi-contract structure (MC): MCs break the construction activities down into several distinct streams (five

or six, for example), with the developer managing the interface between all primary contractors. MCs are

often a higher-risk approach than EPCs or DCs, but, because the developer is ‘closer’ to the subcontractors

and suppliers lower down the chain, they arguably provide more leverage to look at local/UK commitments at

the point of contract award. Where an MC is being used, suppliers and subcontractors should consider

engaging early with the developer, as well as with any candidate primary contractors, to discuss possible

opportunities and future requirements.

In many cases and particularly for larger developments the number of Welsh firms with both the particular expertise

needed and the financial standing necessary to access large prime contracts will be limited. This means that prime

contracts can be placed with firms outside of Wales (although this is not always the case). The purchasing decisions of

prime contractors are central in driving the local supply chain content. Developers have to work with and through

their prime contractors to deliver their aspirations around local supply chain content.

There are a number of barriers that developers and their contractors must negotiate:

3.1 The Size of Contracts

The developer’s prime contractors will let a variety of contracts of their own for goods and services to support wind

farm construction. Depending on the size of the wind farm and the procurement approach being taken the second

(and sometime third) tier contracts may still be very large. This can narrow the field of companies who would be able

to compete for these contracts.

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For example, the Balance of Plant contract for the Pen y Cymoedd development was won by Welsh contractor Jones

Bros and global infrastructure group, Balfour Beatty. Jones Bros had the track record, accreditations and reputation

that Vattenfall was looking for while Balfour Beatty supplied the financial capacity required for the project. Vattenfall

was looking for while Balfour Beatty supplied the financial capacity required for the project.

3.2 Competing Developments

The availability of contractors locally (and for some components and services, nationally) is sensitive to the range and

type of other developments that are underway. If other developments are drawing upon available capacity then it can

be more challenging to achieve local content aspirations within programme timescales. The scale of wind farm

construction programmes means that timetable slippage is costly (and contractors can be faced with steep financial

penalties if they miss milestones). Any short-term bottlenecks in local capacity can mean that developers have to look

further afield for contractors.

3.3 Continued Drive for Cost Reduction

Onshore wind is a price sensitive industry and there is a long term requirement for continual cost improvement in the

sector so that economic returns and the need for subsidy can be retained over time. This continual downward pressure

on costs is a double edged sword for companies in Wales. On the one hand, it means that developers and their prime

contractors need to build long term relationships with their supplier base and work with them to deliver cost

reductions. But the focus on price makes the sector very competitive. For some components, local firms will be

competing with overseas companies, sometimes from low cost economies. For Welsh suppliers, it is essential to

consider costs carefully and get a full understanding of the costs, capability and responsiveness that their clients are

looking for and to make their ability to meet these requirements clear in their contract bids.

Jones Bros and Balfour Beatty: A Joint Venture to Access a Large Opportunity

Jones Bros and Balfour Beatty’s joint venture bid for the Balance of Plant contract for Pen y Cymoedd has helped

to secure substantial economic benefit for Wales. Jones Bros is a large company with a substantial track record in

onshore wind, and formed a joint venture with global infrastructure group Balfour Beatty to bid for the project’s

Balance of Plant contract.

Jones Bros and Balfour Beatty had worked together before and saw Pen y Cymoedd as a particularly good

opportunity to work as a joint venture again, particularly as Vattenfall was encouraging Welsh content and actively

looking to support joint ventures.

This is a good example of how contract structure can support benefits in Wales. In addition to the work which

Jones Bros has directly captured itself, the firm’s existing Wales supply chain has positioned the joint venture well

to meet Vattenfall’s local labour and sourcing requirements.

The main challenges have been related to the size of the work. The scale of the work on this development and the

financial requirements and penalties can be particularly challenging for smaller firms. There is no reason why

smaller firms can’t work together and mirror the approach that Jones Bros and Balfour Beatty have adopted. Most

of the work in the onshore wind supply chain, outside of the turbine manufacture, is not particularly specialist.

Having said that, firms still need to be able to demonstrate wind farm experience. Track record is always a big

consideration. But there is scope for firms to build up experience on smaller turbines and then scale up to larger

turbines and then larger developments.

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3.4 Supply Chain Knowledge

It can take time to build up a full knowledge of the capability that exists in local firms. Developers and their principal

contractors might not always have perfect knowledge about the range of firms that exist locally, what goods and

services they can provide and the level of capacity that they can offer. Although there are a range of activities that

developers can get involved in (e.g. supplier registration, meet the buyer etc.) it can still be challenging to identify all

of the relevant firms in a particular area.

3.5. Reluctance to Invest

Wind farms are major construction projects and companies need to be able to demonstrate that they have the

particular skills required. There are various technical and more general accreditations needed. For example, in all parts

of the supply chain there are various Health and Safety accreditations that firms need to work in different parts of the

site. The accreditations needed will vary for different developers and in different parts of the supply chain, but the

requirements are non-negotiable. The accreditations can take time to work towards and involve investment in training

and up-skilling.

The investment needed to develop particular technical expertise, work-winning skills and / or accreditations might not

necessarily match a company’s interpretation of the scale of opportunity in the sector. Developers report that it is

much easier to interest local companies in supplier opportunities when there is a cluster of activity in a particular

location. When developers or prime contractors are able to offer a steady stream of work, the justification for making

investments to help these potential suppliers to access this work becomes more compelling.

Similarly, firms need to have an awareness and experience of major procurement exercises to be able to put together

a competitive bid.

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(4) What is the industry doing to overcome these barriers?

Developers and their prime contractors are working hard to make it easier to identify and work with appropriate Wales

based suppliers. There are already a number of examples of successful approaches which have made it easier for local

companies to access opportunities (see for example the Pen y Cymoedd case study). Developers’ approaches will differ

from one development to the next, but many of the developers in Wales are committed to best practice approaches.

This means that they are investing substantially in activities to develop their local supply chain knowledge and identify

where key businesses are, what their capabilities are and the level of capacity available. This information gathering

activity is taking place at early stages in project planning and developers are committed to communicating

opportunities to local firms.

Developers are improving their approaches to communication with potential suppliers and ensuring that key

information about developments is communicated early so that potential suppliers have time to consider their

suitability for opportunities and take any steps needed to put themselves in a competitive position (such as

certification, training or even capital investment). For the Pen y Cymoedd development this engagement activity began

at the pre-planning phase and this is thought to have been important in securing local content.

Developers have traditionally used more passive approaches to this activity (e.g. registration portals and websites etc.)

but increasingly developers are recognising the benefits of more active and targeted approaches which engage

businesses and allow for a more detailed dialogue in which the nature of opportunities and the process for

procurement can be discussed in more depth.

Meet the buyer events have proven particularly helpful in this regard and these have been held as part of the Pen y

Cymoedd, Mynydd y Gwair and Ysgellog schemes. The format for these events varies. Sometimes the developer and

primary contractors host these together, for other developments they start to take place before primary contractors

have been appointed. They provide benefits for potential suppliers because they allow an early discussion about the

nature and timing of opportunities and the capability and certification requirements of the development. For

developers these events help to deepen their knowledge of the local supplier base. They have also been used to

encourage the development of local consortia bids.

The relationship between the project developer and the primary contractors is very important. Developers might

specify in their procurement of prime contractors the importance of a commitment to using local suppliers. There are

recent examples of developers making the commitment for local supply more explicit and contractually binding, for

example requiring primary contractors to ensure that a certain percentage of their supply chain spend is in a particular

locality / area. This depends on whether the developer thinks that there is sufficient local presence of particular firms

to make a commitment in this way.

All developers active in Wales are committed to monitoring and reporting on the local content of their supply chains.

This will help to strengthen approaches in the future. Developers are also committed to communicating the scale of

opportunity in the sector and the progress of their individual developments through the planning system.

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The Developer View: RWE’s Approach to Maximising Welsh Supply Chain Content

RWE Innogy UK is a major developer and operator of onshore wind farms in Wales and currently has three large

schemes in Wales that are consented and in the pre-construction phases (Mynydd y Gwair, Brechfa Forest West

and Clocaenog). RWE has been considering the Welsh content of supply chains for these schemes for a number of

years and is optimistic they will provide real opportunities for Welsh companies.

RWE expects to procure construction activities for these wind farms via three groups of work packages; the turbine

and related components, towers and balance of plant. RWE expects the greatest concentration of opportunities

for Welsh firms to be associated with balance of plant activities. With the exception of high voltage cabling and

manufacture of switchgear and transformers, most of the work in this part of the supply chain is not particularly

specialist.

Although there are companies in Wales that could act as upper tier Balance of Plant contractors for smaller

schemes, there are few firms of sufficient financial standing to win upper tier contracts for schemes with more

than 20 turbines. RWE therefore reflects its commitment to local supply chain content through its contractual

relationships with its upper tier contractors. For example, planning requirements related to local content are

reflected in contracts with upper tier suppliers and there are examples (such as Mynydd y Gwair) where

requirements related to local content will be passed down to contractors in lower tiers of the supply chain.

A substantial number of Welsh companies could tender competitively for contracts relating to plant hire,

aggregates, steel for concrete reinforcement, ground investigation services and security services, particularly as

there are locational advantages for suppliers located close to the wind farm for these services. To help to boost

the ability of upper tier contractors to source from within Wales, RWE is proposing to:

Where possible and appropriate, ensure that upper tier suppliers have local content requirements

reflected in their contracts with RWE.

Actively raise awareness of the nature and timing of opportunities associated with these developments

amongst Welsh companies in relevant sectors.

Ensure that Welsh firms have timely information to allow them to make any investments (e.g. in

accreditations or skills) necessary to boost their chances of winning work.

Continue to develop relationships with Welsh firms and pass this information to upper tier contractors to

support them in their efforts to maximise Welsh supply chain content.

Carefully monitor the Welsh supply chain content of its wind farms.

There are various activities that would help RWE to meet its aims around local content. It would be particularly

keen to see collaborative bids from Welsh firms to access some of the larger contracts which will emerge from its

developments. It is also keen to see Welsh firms approach the sector strategically and build up experience

working on smaller developments (3/4 turbines) to gain a track record. There is a greater need for support

through the procurement process, which Welsh firms should be actively lobbying for. It is not just about doing

the work – Welsh suppliers need the accreditations and bid writing skills to enable them to compete effectively

for it.

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A Local Sourcing Success Story: Vattenfall’s Pen y Cymoedd

Vattenfall’s 228MW Pen y Cymoedd project in South Wales is a £400 million investment, and will be England and

Wales’ largest wind farm on completion in 2017. Construction began in 2014 and work worth more than£45 million

has already been contracted with businesses in Wales, with over 50 Welsh companies and 600 jobs supported by

the project, which is expected to be worth over £1 billion to the Welsh economy over its lifetime.

The strong presence of Welsh firms in Pen y Cymoedd’s supply chain has not come about by chance. Vattenfall

and the Welsh supplier base have worked together to ensure the scheme creates economic benefits in Wales.

Vattenfall’s early dialogue with Welsh companies has played an important role here. Local businesses made it clear

to Vattenfall before the scheme received planning consent that they needed to understand the nature and timing

of opportunities, the contracting strategy and the specific requirements and accreditations needed. As a result,

Vattenfall hosted briefing sessions for South Wales companies before planning permission for the scheme was

granted. These sessions opened up lines of communication and started to raise awareness and understanding of

the nature of opportunities and the requirements of the scheme. Once Vattenfall had appointed its prime

contractors the engagement continued and Meet the Contractor events were organised so local contractors could

engage with lead suppliers before the tender processes for their work packages commenced.

This early and ongoing engagement was important but perhaps the most crucial factor was Vattenfall’s

commitment to write local supply chain engagement into all tender documents. Vattenfall requires all of its upper

tier contractors involved in Pen y Cymoedd to maximise use of local contractors and develop a local supply chain

plan. This means its contractors are contractually required to source goods and services from within Wales where

they can.

The approach of Vattenfall’s prime contractors has also played a role in securing local economic benefits. For

example, Vattenfall report that ABB (the prime contractor for the wind farm’s grid connection) have awarded

significant contracts to Welsh companies. The joint venture between Jones Bros and Balfour Beatty for the Balance

of Plant contract has further enhanced local sourcing on the scheme. As a Welsh company, Jones Bros’ existing

supply chain was already well developed in Wales, but the requirement to source locally where possible has helped

to secure further benefits for Welsh companies. To date, 13 suppliers and 11 sub-contractors businesses in South

Wales have been awarded contracts as part of the supply chain for the Balance of Plant works. Contracts include

a range of on-site services, including site supplies and aggregate, surfacing, security and traffic management.

Firms in the Wales supply chain have proven willing and able to act on the information Vattenfall has provided.

The scale of the Pen y Cymoedd development has had a part to play here – firms have shown themselves willing

to make investments in accreditation and skills to access the large opportunities it presents. The availability of

complementary support developed and delivered by Neath Port Talbot County Borough Council has helped

businesses looking to upskill and helped them access opportunities.

Vattenfall is keen to highlight the importance attached to the development of local supply chains and states that

“Maximising supply chain opportunities and employment benefits to Wales has been a project priority. Our

contracting has worked to secure that our contractors work with us and the Welsh supply chain to achieve the

best possible objectives. Many benefits have been secured through our approach – from local employment and

apprenticeships, to major contract awards to Welsh companies big and small.”

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The Prime Contractor’s View: Walters UK’s Take on Balance of Plant Opportunities

Walters UK has acted as the prime Balance of Plant contractor on a number of wind farm developments in Wales,

including Pant y Wal, Fforch Nest, Maesgwyn and Mynydd Bwllfa. As the prime contractor on these developments,

Walters UK was responsible for the discharge of planning conditions and the design and construction of civil

engineering works (including turbine foundations, crane platforms and access roads).

Opportunities for local sourcing are much more developed in the civil engineering sector than they are for other

parts of the supply chain. The skills and expertise needed tends to exist locally to specific sites. The opportunities

for local suppliers tend to be related to plant hire, aggregate supply, concrete, reinforcement, formwork

reinforcement concrete, concrete pump hire, assembly of bolt cages, security contractors, site investigation.

Walters has also successfully sub-contracted design services to local subcontractors in some instances.

Because of the nature of the work in the civils sector, there tends to be contractors locally with the relevant

expertise and the size or capacity of firms has not proven to be a challenge. Its central assumption is that it will

consistently use local suppliers unless there is a significant commercial reason to go outside of Wales.

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(5) What do Welsh firms need to do?

Although developers take the issue of local supply chain content seriously and are putting actions in place to maximise

this, there are still barriers to overcome. To maximise the potential to access opportunities, the industry needs Welsh

companies to:

5.1 Get to Know the Sector

Developers are naturally the focal point for activity around wind farms but their relationships with suppliers tend to

be limited to a small number of prime contractors. These tend to be very large businesses and they may not necessarily

be located in Wales, although many are.

For smaller businesses, the opportunity for work in the onshore wind sector is most likely to come from these prime

contractors or their sub-contractors. Welsh companies interested in opportunities in onshore wind need to get to

know who the main buyers for their services are likely to be. Developers will play their part by bringing their

contractors together with local firms (e.g. at Meet the Buyer events) so it is still important to register on the

developer’s supplier portal and look out for updates. In addition, Welsh businesses can maximise their chances by

keeping an eye on wider sector developments, including which contractors are winning work in their area.

5.2 Understand Requirements

Wind farm developers want to maximise the local content of their supply chains but cannot make exceptions when it

comes to technical requirements and accreditation. The technical requirements and accreditations needed to access

work in the sector differ across the supply chain and are summarised in Part B of this guide. These are essential

requirements that can take time and money to achieve. This underlines the need to explore opportunities early to

allow time to take the necessary steps towards the accreditations needed.

5.3 Understand the Procurement Process

The procurement process for wind farm developments can be complex and time consuming, especially at the upper

tiers of the supply chain. Developers want to work with local contractors but to compete effectively, Welsh firms

need to be able to present their offer convincingly in the form of a high quality bid. The requirements and how bids

will be judged will be clearly stated. These are often related to (i) cost (ii) competence and technical accreditation;

and (iii) health and safety accreditations.

Companies might find it helpful to tender for similar work in the near term to become familiar with the tendering

process.

5.4 Start Small

With no experience in the wind farm sector it will always be difficult to win work on larger developments. For larger

schemes, developers will be looking for a track record in the wind sector, even if this has been built up on smaller

schemes.

5.5 Explore opportunities for joint ventures

There are some examples of Welsh companies accessing opportunities in onshore wind by bidding in consortia with

other firms, or as a joint venture with another firm. Jones Bros and Balfour Beatty’s joint venture for the Balance of

Plant contract on Pen y Cymoedd is perhaps the most recent example. This appears to be limited to the upper tiers of

the supply chain so far, but there could be opportunities for firms lower down the supply chain to work together to

access large opportunities.

Owners of these businesses should proactively approach developers to find out if they have particular requirements.

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(6) Where to go for assistance and further information

There is a range of information available to help to you to understand and improve upon your competitive position

in the onshore wind industry. Business Wales is able to provide advice on the range of support services that are

available and can be contacted on 03000 603 000. Further information is also available at

www.business.wales.gov.uk

Local Chambers of Commerce and Economic Development Teams in Local Authorities will also be able to help to

access support and advisory services.

RenewableUK Cymru is the trade body for renewable energy in Wales and may have details about individual wind

farms and developers. They can be contacted at cymru@renewableuk.com or on 029 2034 7840. Further

information is available at www.renewableuk-cymru.com

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Appendix One: Technical and other requirements

Estimating the Scale of Opportunity

The estimated 1,465MW of additional installed capacity up to 2025 (see below) and the per MW supply chain spend and sourcing estimates have been used to estimate the

total scale of opportunity from the onshore wind sector in Wales up to 2025.

Current Pipeline

RenewableUK records all wind farms that are in construction, consented or in the planning system. The data reveals there is currently an operational capacity of 560MW in

Wales, as well as a strong pipeline of development capacity. The table below illustrates the current development pipeline and estimated additional capacity coming

forward.

Table A1: Current Operational capacity and Development Pipeline

Stage Total MW Capacity

Currently Operational 560

A: Currently in planning 780

B: Currently consented, construction not commenced 400

C: Currently in construction 340

Total additional capacity coming forward (A+B+C) 1,500

In addition to the above capacity pipeline, there is also around 460MW at pre-planning, on hold or going to appeal. However it is highly unlikely that all of these will all be

approved, and indeed some are mutually exclusive.

Looking at the current pipeline of developments which have been approved in Wales:

There is currently 740MW of approved additional capacity: 340MW in construction and 400MW approved but not yet constructed.

RenewableUK Cymru has provided pipeline data that provides an indication of the likely start data of operations. This suggests that the majority of

approved capacity in the pipeline will become operational by 2018.

35

Bringing all of this together, this equates to an annual average of 185MW per annum of additional capacity over the four year period (2015-2018). However, the recent

approvals are heavily skewed by the Pen y Cymoedd scheme (228MW). There are no other schemes of a comparable size in the planning system at present. It is therefore

not realistic to project forward on this basis.

Excluding Pen y Cymoedd from the recently consented schemes indicates an annual average additional capacity of 121MW per annum. Projecting forward on this basis would

yield 1,210MW of installed capacity by 2025; leading to a total additional installed capacity figure of 1,465MW by 2025 (once the Pen y Cymoedd scheme (228MW) has been

added to the final additional capacity figure).

Supply Chain Spend and Sourcing

The construction and development phase expenditure benchmarks used in this study are shown in the table below. These are informed by the research and developer’s

survey that underpinned the 2013 RenewableUK Cymru report18, which have been benchmarked against other published sources and tested with industry representatives.

At the time of publication there was considerable uncertainty about whether Wales would retain its current turbine tower manufacturing capacity. The figures presented

here and the underlying calculations assume that existing capacity in the manufacture of turbine towers will be retained and that a proportion of expenditure on turbine

towers can be safeguarded in Wales. Given the large contribution that spend related to turbine towers makes to the overall spend per MW in Wales, it is important to note

that the scale and nature of the opportunity would differ if turbine manufacturing capacity did not stay in Wales.

The research suggests that total average construction costs per MW of installed capacity are £1.13m, and total development costs are £0.12m, in 2012 prices19. The research

also suggests 35% of all expenditure in the construction phase is on average expected to be retained within Wales, along with 71% of planning and development spend.

Table A2: Average Expenditure per MW of Installed Capacity for Development and Construction Phase, and % Sourced from Wales (in 2012 prices)

£ per MW (total) % in Wales £ per MW

Wales

Development and planning £120,000 71% £85,000

18 http://www.renewableuk-cymru.com/wp-content/uploads/2013/10/EconomicOpportunitiesOnshoreWindWales.pdf 19 Note: There are margins of error in the estimates as the developer’s survey only reached a sample of all developers and operators of onshore wind farms in Wales. However given the coverage of the developer survey reached 66% of all existing and proposed capacity in Wales and the estimates were then benchmarked against other published sources, the estimates are robust.

36

Construction

Project Management of Construction £58,000 82% £47,000

Wind Turbine Nacelle, Rotor and Blades £528,000 0% -

Wind Turbine Tower £140,000 76%* £106,000

Wind Turbine Transport, Assembly & Installation £67,000 61% 41,000

Civil Engineering Works £147,000 76% £112,000

Electrical Engineering Works £85,000 28% £24,000

Grid Connection and Related Works £90,000 55% £49,000

Forestry & Environment Services (inc habitat management) £18,000 92% £17,000

Total Construction (not inc. planning) £1,133,000 35% £396,000

Source: Survey of Developers and Operators

Note: Figures may not sum due to rounding

* Note: whilst this represents developers’ intentions, in the modelling we have reduced this to 50%, in order to be conservative.

The operations and maintenance phase expenditure benchmarks used in this study are shown in the table below. These are informed by the research and developer’s survey

that underpinned the 2013 RenewableUK Cymru report20, which have been benchmarked against other published sources and tested with industry representatives. The

research suggests that total average operational costs per MW of installed capacity are £38,600. The research also suggests that on average 76% of all operational expenditure

is expected to be retained within Wales.

Table A3: Average Expenditure per MW of Installed Capacity for Operation and Maintenance Phase, and % Sourced from Wales (in 2012 prices)

£ per MW (total)

% in Wales Wales £ per MW

Employment Costs:

Wind Farm Operations and Management 3,600 79% 2,800

Turbine Maintenance 5,700 89% 5,000

Other Activities 500 75% 400

20 http://www.renewableuk-cymru.com/wp-content/uploads/2013/10/EconomicOpportunitiesOnshoreWindWales.pdf

37

External Costs/Bought In:

Equipment and Spares 8,400 22% 1,800

Forestry and Environment (including habitat management) 600 97% 500

Insurances 1,500 28% 400

Land Rentals/Access Payments 12,000 100% 12,000

Business Rates 6,400 100% 6,400

Total Operational Expenditure 38,600 76% 29,400 Source: Survey of Developers and Operators

Note: Figures may not sum due to rounding

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Acknowledgements

The authors would like to thank the many contributors to this report:

Airvolution Energy www.airvolutionenergy.com

Amegni Renewables Ltd

Apex Drilling Services - www.apexdrilling.co.uk

Apex Testing Solutions - www.apextestingsolutions.co.uk

Balfour Beatty – www.balfourbeatty.com

Burke Contracts - www.burkecontracts.ltd.uk

CMP Plant - www.cmpplanthire.co.uk

Express Reinforcements - www.expressreinforcements.co.uk

Jones Bros - www.jones-bros.com

Raymond Brown Renewables – www.raymondbrownrenewables.co.uk

RES - www.res-group.com

RWE Innogy UK - www.rwe.com/web/cms/en/1113816/rwe-innogy/about-rwe-innogy/rwe-innogy-uk

Vattenfall - www.vattenfall.co.uk/en/index.htm

Walters UK - www.walters-uk.co.uk

39

RenewableUK Cymru is the Wales branch of the UK’s leading renewable energy trade association, RenewableUK. Its

vision is of a sustainable Wales which makes full use of its renewable energy resource. RenewableUK Cymru

represents all renewable technologies in Wales, along with energy storage, with membership ranging from individual

installers to large companies.

RenewableUK Cymru acts as a central point of information and a united representative voice for its membership. It

provides market intelligence and business leads: finds solutions; organises events, facilitates business development;

and lobbies and promotes renewables to Government, industry, the media and the public.

For more information on how to join the UK’s leading renewables association, please go to www.renewableuk-

cymru.com