Revitalisation of local economy by development of ...

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Revitalisation of local economy by development of renewable energy (REvLOCAL)

O F F S H O R E W I N D A R O U N D T H E F U R N E S S P E N I N S U L A ( U K )

August 2016

Photo credit: Furness Economic Development Forum

A B O U T T H E I E A R E T D T E C H N O L O G Y

C O L L A B O R AT I O N P R O G R A M M E

The IEA Renewable Energy Technology Deployment Technology Collaboration Programme (IEA RETD

TCP) provides a platform for enhancing international cooperation on policies, measures and market

instruments to accelerate the global deployment of renewable energy technologies.

IEA RETD TCP aims to empower policy makers and energy market actors to make informed decisions by:

(1) providing innovative policy options; (2) disseminating best practices related to policy measures and

market instruments to increase deployment of renewable energy, and (3) increasing awareness of the

short-, medium- and long-term impacts of renewable energy action and inaction.

For further information please visit: http://iea-retd.org or contact [email protected].

Twitter: @IEA_RETD

IEA RETD TCP is part of the IEA Energy Technology Network.

D I S C L A I M E R

The IEA RETD TCP, formally known as the Technology Collaboration Programme for Renewable Energy

Technology Deployment, functions within a Framework created by the International Energy Agency

(IEA). Views, findings and publications of IEA RETD TCP do not necessarily represent the views or

policies of the IEA Secretariat or of its individual Member Countries.

C O P Y R I G H T

This publication should be cited as:

IEA RETD TCP (2016), Revitalisation of local economy by development of renewable energy: good practices and case studies (REvLOCAL), IEA Implementing Agreement for Renewable Energy Technology Deployment (IEA RETD TCP), Utrecht, 2016.

Copyright © IEA RETD TCP 2016

(Stichting Foundation Renewable Energy Technology Deployment)

http://iea-retd.org/

mailto:[email protected]

A C K N O W L E D G E M E N T S

The Authors would like to thank the IEA RETD TCP REvLOCAL Project Steering Group (PSG) members for

their guidance and support throughout the project, as well as the interviewees and the external

reviewers:

Project Steering Group

Yasushi Ninomiya The Institute of Energy Economics of Japan (PSG Chair)

Guilain Cals Agence de l’Environnement et de la Maîtrise de l’Energie

Sascha Van Rooijen Operating Agent, IEA RETD TCP

Coraline Bucquet Operating Agent, IEA RETD TCP

External Reviewers

Stuart Klosinski (FEDF Supply Chain Growth Programme), Rachel Cary (DONG Energy UK), and Ken Milne

(Isle of Man Government).

A U T H O R S

Lead Author

Mia Pantzar, IEEP

Contributing Authors

Martin Nesbit, IEEP

Kamila Paquel, IEEP

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TA B L E O F C O N T E N T S

1. WHY THE FURNESS PENINSULA? .................................................................................................. 2

2. METHODS AND CHALLENGES ....................................................................................................... 3

2.1 METHODS .................................................................................................................................. 3

2.2 CHALLENGES ............................................................................................................................. 3

3. BRIEF SUMMARY .......................................................................................................................... 5

4. OVERVIEW .................................................................................................................................... 6

5. BACKGROUND INFORMATION ...................................................................................................... 7

6. OFFSHORE WIND FARMS – OVERVIEW ......................................................................................... 8

7. DELIVERY OF LOCAL IMPACTS IN FURNESS ................................................................................... 10

7.1 EMPLOYMENT ........................................................................................................................... 10

7.2 BUSINESS OPPORTUNITIES ........................................................................................................ 12

7.3 DURABILITY OF ECONOMIC IMPACTS ....................................................................................... 15

7.4 SOCIAL AND ENVIRONMENTAL IMPACTS .................................................................................. 17

7.5 ENABLING POLICIES................................................................................................................... 18

7.6 CONFLICTING POLICIES ............................................................................................................. 20

7.7 GOVERNANCE ........................................................................................................................... 22

8. CONCLUSIONS AND RECOMMENDATIONS ................................................................................... 23

8.1 CONCLUSIONS ........................................................................................................................... 23

8.2 RECOMMENDATIONS ................................................................................................................ 23

A N N E X I – R E F E R E N C E S ........................................................................................................... 25

REvLOCAL – Revitalisation of local economy by development of renewable energy, August 2016

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1 . W H Y T H E F U R N ES S PE N I N S U L A? The Irish Sea off the Furness Peninsula is today a hub for offshore wind turbines. Four wind farms with a

total installed maximum capacity of almost 1,000 MW have been installed in the area since 2002, and

around 150 people, mostly locals, are employed directly in relation to their operations and

maintenance. This development has been a welcomed contribution to a local community centred

around the Barrow port that in the 1990s and early 2000s experienced some of the deepest economic

lows in all of UK.

Offshore wind investment off the Furness Peninsula is an interesting subject for a case study. From the

beginning, there was a clear intention to use the investments to help revitalise a local economy which

had been in steady decline for many years. The downturn in Barrow’s largest manufacturing industries,

including shipbuilding, had led to job losses and decline. The peak of change occurred between 1990

and 1995 when the 14,400 skilled workforce of the shipyard reduced to around 5,500. Between 2002

and 2004, the Barrow shipyard experienced a loss of a further 3,000 jobs as surface warship building

ended. Local stakeholders saw an opportunity to make use of existing infrastructure, manufacturing

expertise and an underused port to seek to attract manufacture of wind farms locally as a means of

diversification of the industrial base. It was also an attempt to build up local capacity in this field to

support operations and maintenance, and to complement existing onshore wind farm servicing and oil,

gas, and nuclear energy related services already situated in the area.

Diversifying the local economy and enabling it to leap-frog from old, high emissions industrial sectors to

clean technologies with a future, made clear sense. The result has been an ‘Evolution of the Barrow

port’ and a gradual build-up of supply chain expertise and local procurement, according to one of our

interviewees representing the local economic development group, with onshore support bases

providing a significant number of different types of highly qualified jobs that have been sourced from

the local work force. Existing companies have successfully tapped in to the opportunities of economic

diversification which the wind industry has provided and new businesses have entered the market,

making use of transferable skills, existing infrastructure and high demands for services.

How did it come about that the investment produced this new level of economic activity? We wanted to

identify the most important factors that enabled this development and what can be learnt by other

regions seeking to achieve similar local effects by encouraging investment in renewable energy

installations.


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2 . M E T HO D S A N D C HA L L E N G ES

2 . 1 M E T H O D S

To get the best insight of the local circumstances around the Furness Peninsula, we interviewed a range

of stakeholders from local authorities, regional public authorities, project developers and local

economic development groups. The interviews were conducted by phone and were structured around a

set of research questions:

How to increase and/or maintain employment in the local economy induced by the

development of renewable energy projects?

What type of employment and new business can it create? What are the conditions to

make it happen?

How to establish and/or maintain new business related to renewable energy built-in

local economy?

How to ensure that the resulting economic impacts can be extended over longer periods

of time, and not only during the construction phase of these renewable energy projects?

What are effective schemes and instruments (in the broadest sense, e.g. education and

training) that enable local economy to gain welfare/benefit from renewable energy

projects located in the area?

Are there conflicting policies or policy structures (e.g. with respect to state-aid support,

WTO, EU)? How are they being addressed in the case studies?

How to divide policy roles between national and local governments to achieve successful

revitalisation of the local economy?

These framework questions were tailored and detailed for each interview and used as a basis for

discussion. This approach allowed us to explore interesting threads discovered in the course of our

study and to identify detail that we had not anticipated beforehand. We completed the interviews with

analysis of written evidence available online in media reports and official project documentation.

2 . 2 C H A L L E N G E S

The study process has been going well, although certain methodological challenges have occurred along

the line. It has been relatively straight forward to identify suitable stakeholders to talk to, but difficult to

get responses to our emails inviting them to participate. For the interviews conducted, it took about 5

days between the initial email was sent to settle an appointment. In some cases, after a reminder email

following 3 days after the initial contact, we phoned up stakeholders to enquire about an appointment.

This seemed to be a more effective approach. Several contacts expressed their interest in the project,

but had to decline due to lack of time. At the time of writing we have consequently conducted five

interviews. We had one other interview booked with a local district council representative, although the

interviewee turned out to be occupied in meetings at appointed time. Despite repeated reminders and

promises to get back to us, we have not yet been able to run the interview and the interviewee has

instead promised to provide answers in writing. See Annex II for a list of interviewees.

Interviewees have generally been keen to share their thoughts and stories. One interviewee spoke more

or less freely for an hour straight, sharing very interesting and detailed information. Another

interviewee with the local district council that we called up after a reminding email was hesitant at first

but ended up discussing a few of the questions with us. He referred us to the person in the Furness

Economic Development Forum that we had already talked to, saying that they were really the ones to


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talk to. This illustrates a point that we are making in this case study (see Section 7.7), namely that the

local economic development groups are acting as nodes bringing stakeholders together and driving the

process of generating economic benefits in the local economy from the RES investments.

Overall the research questions listed above have been helpful to help extract the information we hoped

to. Some interviewees did not understand the meaning of some questions, such as on the topic on

governance. We suggest that this question is clarified in order to avoid confusion. Similarly, the

questions about ‘maintaining’ and ‘building in’ employment and new businesses in the local economy

are rather similar and could be clarified/ concretised in order to ease the flow of discussion in the

interviews. Otherwise the material we now have from the interviews is very comprehensive with a large

number of detailed examples, e.g. of individual companies and economic details of the effects of RES

deployment.


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3 . B R I E F S U M M A RY The following is a brief summary of our key findings from the case study on offshore wind around the

Furness Peninsula, UK.

Installation of four wind farms off the coast around the Furness Peninsula has provided a

welcome boost to a local economy with a recent past of job cuts, large-scale exodus and

economic decline. Part of the idea for investing in offshore wind was to make use of existing

infrastructure and manufacturing expertise.

Today, the offshore operations directly support around 150 long-term, well-paying jobs. Local

firms have seen substantial (in some cases 20%) additional business as a result of the RES

projects. Activity in the local port would have declined significantly without the RES investment.

We found many cases of economic diversification and new companies making use of the pre-

existing accommodation supply.

Wider social benefits include, e.g. teaching of offshore wind engineering at a local college. A

focus on availability of a skilled workforce, and of jobs for high-achieving STEM (science,

technology and maths) students, is an important element in securing local economic benefits.

Interviewees emphasise that the success is due to key stakeholders working together to attract

investors to the area, build up local capacity and secure benefits for local businesses. This is an

attempt to save the area from depopulation and encourage the skilled workforce to stay.

The Furness approach is being copied in other regions in the UK looking to develop offshore

wind.

Adopting a coordinated approach among local stakeholders has also made the regulator more

supportive of finding solutions to nature conservation conflicts.

Benefits provided through national British policy schemes, including the Renewables

Obligation, and (until recently) exemption from the Climate Change Levy on electricity

generation, have helped RES development. However, recent abrupt changes and current lack of

certainty over future subsidy arrangements is feared by some to have a chilling effect on the

planning of further investment.

The local economic development group has played a crucial role in this success. It has been

funded by national and regional development funds, and has aimed to make it easier for local

companies to take advantage of future business opportunities.

The Furness example shows that a sustained local strategy aiming at maximising activity and

local economic opportunities can be effective in capturing economic benefits. Barrow has been

able to avoid problems associated with the downturn of some its traditional port activity and to

create new opportunities with high value added.

While there has been no explicit creation of a ‘one-window’ facility for permitting decisions,

local bodies have worked closely together in practice. What matters is not the formal

mechanism, but whether the organisations involved grasp the need for cooperation to facilitate

investment..

Continuity of vision, close and continuous stakeholder collaboration and predictability for

investors and local firms alike have been important to the success of the investment.


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4 . OV E RV IE W

Geographic location Furness Peninsula, Borough of Barrow-in-Furness, United Kingdom

(Image source : ‘Nilfanion’ via Wikimedia Commons)

Type of RES Offshore wind

Project development 2002 – on-going

Background information

Economically deprived Assisted Area has successfully made use of old infrastructure to accommodate the needs of offshore wind energy development.

Renewable energy project

Four offshore wind farms totalling 996 MW (Barrow, 90 MW; West of Duddon Sands, 389 MW; Ormonde, 150 MW, and Walney wind farms, 367.2 MW)

Impacts on employment

Around 150 local direct jobs, including well-paying skilled roles. Local actors now use the local capacity as a selling point when trying to attract new investors. Indirect employment has been created in the surrounding economy, including education.

Business opportunities Local firms have seen substantial (in some cases 20% more) additional business. Activity in the local port would have declined significantly without the renewables investment. Many cases of economic diversification and new companies making use of existing building base and infrastructure. Substantial construction activity at support bases; around 170 companies benefitting.

Other impacts Education and training; demand for hotels accommodation and taxis; some impacts on protected species.

Durability of impacts Some positions for 25 years. Key local stakeholders working together to secure the benefits for local businesses; model copied in other areas.

Enabling policies The Renewables Obligation, and (until recently) exemption from the Climate Change Levy on electricity generation. Assisted Area status in the UK and focus of regional development funding at both national and EU level. Local economic development group funded by the UK Coastal Communities Fund.

Conflicting policies Reductions in the availability of state aids and the disbanding of the North West Development Agency in 2010. Recent abrupt changes and current lack of certainty over future subsidy arrangements is likely to have a chilling effect, at least in the short term, on the planning of further investment.

Governance Local economic development group driving RES development and mobilising offshore wind energy supply chains. Regional cooperation among Local Enterprise Partnerships in North West England to build regional capacity for offshore wind and promote access to it.


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5 . BA C KG RO UN D IN FO R M AT I O N The Furness Peninsula reaches out into the Irish Sea from the south west coast of Cumbria in the North

West of England. It is home to around 100,000 people of which about 64% live in the largest town of

Barrow-in-Furness. All of Cumbria County, where Furness is located, has around 500,000 residents.

Following the arrival of the railway in the early 1800s, the area around the Furness Peninsula was

transformed from rural into an industrial hub for iron ore extraction, steelworks, shipbuilding and later

submarine development. The iron ore and steelworks in Cumbria were, at the time, the biggest in the

world and the industrial surge led to a drastic population increase (VisitCumbria.com; Cumbria Local

Enterprise Partnership, 2014).

With a local economy built on ship- and submarine construction, the post-Cold War cuts in defence

spending contributed to a long economic decline in Furness. As manufacturing stalled, many residents

moved away with big drops in population in the latter half of the 1900s. Between 1999 and 2004, West

Cumbria had the lowest growth of any region in the UK (Cumbria Partners, 2007). Meanwhile, the area

has struggled to tap into economic opportunities enjoyed by its neighbouring areas. Tourists attracted

to the Lake District National Park just north of Furness have little economic impact on this coastal strip.

The large nuclear power developments a bit further up the coast at Sellafield, which attract over 500-

1,000 commuters, are complemented by significant defence nuclear investment at Barrow shipyard.

Then, about 15 years ago, the horizon began to brighten, as the local industry and development groups

decided to explore the potential to exploit the area’s good natural and geographical conditions for

renewable energy technologies. The coast has excellent wind resources, favourable water depths and

grid access relatively close to shore. Local and regional politicians saw the opportunity to try to attract

young people to pursue a career locally, and we found out that following the introduction of commercial

offshore wind energy generation in the early 2000s, economic growth gradually regained its strength.

Figure 1 illustrates the jobs density change since year 2000 in Barrow-in-Furness, North West of England

and Great Britain overall. Note how Barrow-in-Furness moved from 54% in 2000 to 79% in 2014.

Figure 1 Jobs density between year 2000 and 2014 (Source: Office for National Statistics, 2016).

0%

25%

50%

75%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Barrow-in-Furness

North West

Great Britain


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6 . O F FS HO R E W I ND FA R M S – OV E RV IE W In terms of energy supply, the Furness Peninsula has historically been associated with finite fuels, such

as nuclear, oil and gas. Renewable energy has been present, but mainly in the form of the

manufacturing of hydroelectric turbines and pumps in Kendal (34 miles from Barrow) that has been

operating since the mid-1800s. ‘This is the nearest, historically, that we had in terms of renewable

energy’, says a representative of a local economic development group to us in one of our interviews. In

the mid-1990s, the interest for renewables, especially wind, increased and a couple of onshore wind

energy installations were set up and run by local land owners.

In 2002, UK-based Warwick Energy received planning permission to build the offshore Barrow wind

farm (which ended up being owned by a consortia comprising DONG Energy, Centrica and Statkraft).

Economic opportunities were already identified at the planning stage, with the County Council

observing that ‘the greatest opportunity for economic benefit would be the potential development of

over 300 turbines in the North-West [of England] with the opportunity for the area to become a UK

manufacturing base for the wind turbine components, most of which are currently manufactured in

Germany or Denmark. Barrow would appear to be in a strong position to exploit this potential.’ /.../ ‘At a

more local level there could be major economic benefits to Cumbria if construction and servicing

facilities were developed from the Port of Barrow. Development of offshore wind resources is clearly

preferable to the further development of such technologies on land.’ (Development, Control and

Regulation Committee, 2002). We wanted to know more about the benefits expected, how local actors

worked to maximise them, and whether the potential was realised.

Today, the Furness Peninsula has significant nearby offshore wind electricity generation capacity, in the

form of the Barrow wind farm, the West of Duddon Sands farm, Ormonde, and Walney wind farms.

Construction of an additional site, Walney Extension, is underway (see below). Table 1 presents a

timescale of offshore wind energy instalments around the Peninsula and Table 2 shows more details

about the individual sites.

2002 Permit granted for first offshore wind farm

2005-2006 Construction of first wind farm – Barrow

2010-2011 Construction of second wind farm – Ormonde

2010-2012 Construction of third wind farm – Walney 1 and 2

2014 Construction of fourth wind farm – West of Duddon Sands

2017-19 Construction planned for extension of Walney wind farm

Table 1 Timeline of offshore wind energy deployment around Furness Peninsula.

Installed capacity Energy output No. of households supplied

Barrow wind farm 90 MW 305 GWh/y 80,000

West of Duddon Sands wind farm

389 MW 340,000


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Ormonde wind farm 150 MW 500 GWh/y 126,000

Walney wind farm 367.2 MW 320,000

Table 2 General information about the wind farms around Furness Peninsula.

Box 1 Other energy presence in Cumbria.

Other local energy presence comprises:

Hydropower (Kendal Gilbert Gilkes) and Haverthwaite

Proposal for biomass power generation (Kimberly Clark Barrow)

Possible wind power solar for biopharma production and new energy centre (GSK Ulverston)

Solar farm (Sowerby Woods)

Onshore wind farm (11.5 MW, Furness)

Oil and gas technology manufacture

Gas processing terminals (Centrica/ConocoPhilips)

Gas fired power station (Roosecote)

Defence nuclear reactor built in submarines


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7 . D E L I V E RY O F LO CA L I M PA C TS I N F U R N ES S

7 . 1 E M P L O Y M E N T

RQ1 How to increase and/or maintain employment in the local economy induced by the development of renewable energy project?

Local actors now actively market the local capacity as a selling point when trying to attract new investors.

Project developers and economic development groups are working together with local colleges to fill the need for additional engineering qualifications, for example through apprenticeship schemes.

RQ2 What type of employment can it [RES project] create? What are the conditions to make it [employment creation] happen?

Around 150 local direct jobs, including well-paying skilled roles.

Indirect employment has been created in the surrounding economy, including education.

Participation of individuals with local knowledge, trust and expertise has made involvement of local suppliers more effective.

Local contacts told us that the real noticeable economic impact of wind energy in Furness began in 2005

and 2006, when a substation platform was completed and construction of the first wind farm (Barrow)

kicked off. The Barrow wind farm is supported by an 11,000 ft2 base facility1 creating about 15 jobs

servicing the thirty 3 MW turbines. Similarly, operation and maintenance of the Ormonde wind farm

supports 35 jobs, where for example each 5 MW wind turbine requires up to six technicians to

undertake planned maintenance work. Walney 1 and 2 support 60 jobs and West of Duddon Sands 40-

50 jobs (interview with local economic development group). Our interviewee said that ‘the outcome

has been an evolution of Barrow port to become a ‘4 base’ port between 2008 and 2013-14 which

resulted in ‘pulses’ of intense activity supporting construction in 2009, 2010, 2011 and 2013-14’. A local

infrastructure manager also emphasises that, for the port, ‘the main long-term benefit has been the

four operations and maintenance bases – three operated by DONG and one by Vattenfall.’ One more

will be built next-year for DONG.

Our interviewee with the local development group estimates that in total, some 155 people have been

employed directly in relation to the wind farms which, compared to other main employers in the area,

is a big deal. The interviewee continues: ‘another 70 people are coming in for DONG [Energy] this year

[2016], starting to develop the new Walney Extension. Several hundred people will be involved probably

(onshore and offshore), throughout the 3 year construction project’ (interview with local economic

development group). ‘BAE Systems [international technical manufacturing business] is by far the main

employer in Barrow following new orders from the government, but the wind farms are also providing

good jobs locally’, confirms our contact at DONG Energy. An interviewee from the local district council

adds with excitement that ‘there are additional jobs being created. DONG Energy is in town, Siemens

1 Base facilities onshore typically comprise a rectangular plot of land on which is an integrated operations centre, offices, crew facilities, warehouse with open storage and car parking within very secure boundaries, accessed by way of electronically controlled access gates (Furness Economic Development Forum, 2016).


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has a maintenance office, the port is used for assembly of turbines etc. It is surely creating

diversification.’

These jobs that have been created are skilled roles, including project management for offshore energy

and marine projects, design and manufacturing of marine power substations, welding and electrical

trades and quality assurance and testing. Our interviewee from a local infrastructure body told us that

the Barrow port has a wide range of staff including marine, engineering, administrative and pilots –

about 25 in total. The Port’s role in renewable projects is focused on offshore wind. During construction

they receive and load-out mono-piles; assist in transport of aggregates (3,000-4,000 tonnes, providing

business for a local quarry); assist with construction of offshore substations; and assist with sites for

other construction activity such as the operations and maintenance bases.

Today, the area prides itself for being able to offer this type of jobs and tries to attract new investors and

businesses for whom this local capacity is one of the selling points. Actively marketing the local

capacity in this way is a strategy for maintaining as well as trying to increase employment in the local

economy induced by the development of renewable energy generation. The town has moved on from

offering a relatively inexpensive workforce specialised in shipbuilding to offering a wider range of

technical skills. ‘I did not appreciate [this effect] until I joined the company – but during construction

hundreds of jobs are created, some of which are specialist complex engineering roles, but there are also

local jobs associated with onshore construction and cable works’, says an interviewee at DONG Energy.

‘We then develop specialist maintenance sites where our technicians are based, where we monitor

weather conditions and turbine performance and plan maintenance programmes. These long-term jobs

are often overlooked. They are highly sought-after – people don’t tend to move on that quickly’, she

adds with enthusiasm.

We were interested to note that most of the jobs created as a result of the development of wind

energy appear to have been sourced locally. Vattenfall has for example drawn its workforce for the

Ormonde wind farm from south west Cumbria and has had no challenges in recruiting (interview with

local economic development group). A local infrastructure manager emphasises that Barrow had a pre-

existing highly skilled workforce, with transferable skills (engineering etc.) from the shipbuilding sector.

The new jobs were probably ‘at the same level [of qualification], but different’. An interviewee at DONG

Energy tells us that ‘jobs in operations and maintenance are nearly entirely local – we need people who

don’t require a two hours’ commute. They need to be able to go out directly and our people generally

live within a few miles from the site. Highly qualified technicians go out daily and if there is a fault they

can quickly go out on specialist boats and in the future using helicopters.’ In fact, one interviewee

pointed out that outreach to, and involvement of, local suppliers has been made more effective by

participation of people with local knowledge and expertise.

The potential of additional wind farm installations in the area clearly creates a surge for more local

people with suitable academic credentials. According to our contact at DONG Energy, ‘the Walney

extension [see Section 6] will need to create up to 200 new jobs in the North West, mane of which will

require engineering expertise, and over 350 jobs across the UK as it is so big. There is definitely a

recognition across all companies in Barrow that there is a massive need for engineering qualifications

locally. A lot of the colleges are scaling up, especially Furness College whom I have talked to’. Section 7.4

below discusses the educational and social effects of this development in more detail. Our contact also

highlights that the investments have generated jobs also on a regional and national scale, with some

manufacturing on the Isle of Man (situated in the Irish Sea close to Cumbria) and cables being sourced

from other UK companies (interview with project developer), as well as a recent shift of construction

activity to Belfast (see section 7.2 below).


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The operations around the Furness Peninsula wind farms has also stimulated a range of supporting

products and services in the surrounding economy. Some local businesses have diversified, for

example, and gone from part time fishing to crew boat operations (interview with local economic

development group; this is discussed in more detail below). Teaching positions have also been

supported as local schools and colleges have introduced offshore wind energy engineering aspects to

the curriculum (see Section 7.4)

7 . 2 B U S I N E S S O P P O R T U N I T I E S

RQ3 How to establish and/or maintain new business related to renewable energy built-in local economy?

Local firms have seen substantial (in some cases 20% more) additional business.

Activity in the local port would have declined significantly without the RES investment.

Many cases of economic diversification and new companies/business models making use of existing building base and infrastructure.

As expected, market access and stability of incoming projects is central for local business creation. Meanwhile, availability of relevant local capacity has been crucial to attract investors and generate business opportunities.

The on-going build-up of local capacity is creating opportunities also for future service needs of the wind farms.

Part of the initial idea to try to attract offshore wind development was to integrate the wind farm manufacturing and maintenance supply chain in the local economy by making use of existing port, infrastructure and expertise.

The four offshore wind farms have generated economic benefits for south west Cumbria in the form of

jobs and also substantial (in some cases 20%) additional business for established local firms, according

to the local economic development group that we have talked to. These business opportunities have

been created when the farms were being installed, requiring construction expertise etc., and from later

operations and maintenance, benefitting around 170 companies. For example, ‘Edmundson Electrical’ in

the Furness Business Park has secured six figure sums of associated work. As has safety equipment

producer Deltawaite, 3 miles from the port and Optech Fibres, also at Furness Business Park’, says our

interviewee. He adds: ‘we have also seen over the past 4 years, firms like Athena PTS grow from a 4-

person new start-up business to 20 people in Phoenix Business Centre, now starting to seek 10,000 ft2

bespoke office/warehouse to service its onshore/offshore wind farm electrical power systems design

and installation work, and its diversification into servicing Centrica and BAE Systems’ needs’. Athena PTS

provides electrical design consultancy, project support services and specialist installation works.

A local infrastructure manager tells us further that benefits for existing port businesses include ‘local

contractors building the operations and maintenance bases; crew transfer vessels, and other supply

businesses’. The port’s own workforce is pretty much unchanged, but its activity would have declined

significantly without the renewables investment. ‘Because of its relative remoteness geographically,

Barrow is not a hugely busy commercial port.’ The investment helps keep the port in business and

available as a facility for other local businesses, and has ‘raised the profile of the port in the public eye’.

One interviewee tells us that the port is ‘currently undergoing a resurgence with some 40 billion GBP of


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new investment planned over the next decade; 2 billion GBP of which will be associated with the

Walney Extension windfarm being delivered by Dong Energy.’

There is also an interesting dialogue between DONG Energy and the local taxi operators in light of the

new team coming in to set up the extension of the Walney wind farm. ‘Some of the crew will fly in to

Manchester expecting to use cash-less taxi on their way to the site – we need to encourage this type of

innovation for cash-less services’, says one of our interviewees. A contact at DONG Energy also points

out to us that there is a direct train from Manchester airport to Barrow, but with only two services a

day, adding that ‘maybe more frequent services could be encouraged?’

As this case study indicates, offshore wind projects and cooperation through local enterprise

partnerships led to impressive economic diversification in the local economy. Examples of new or

established businesses which have transitioned into servicing the needs of the offshore wind farms are

presented in Box 2.

Box 2 Examples of business linked to offshore wind around Furness (Source: Furness Economic Development Forum, 2016).

Wildcat Marine: The local company Kingfisher Seafood, exporting shellfish to continental

Europe, turned into a crew change boat company. The local development agency helped

fund Wildcat’s start up and the company has serviced offshore activity during the 2008-13

development out of Barrow and other UK ports. The company now has one 14 m and one

17 m boat and have sold the 11 m boats they received funding for and are also looking to

expand their fleet further. According to our interviewee, ‘the Wildcat is having to procure

larger boats to meet demand for more luxurious travel and better cargo carrying capacity

able to operate in 1.5-2.3 m swell crew transfers’. The company is currently bidding for part

of a DONG Energy 31 vessel contract that will run from 2016–2020.

Elevated Systems Technology (EST): This rope access company is less than two years old.

Its owner used to work in Scotland providing climbing course tuition when he foresaw

more lucrative revenue in the oil and gas sector and entered into that market offering rope

access. When business got more infrequent in oil and gas, EST began to service wind farms

in the Barrow area and is now servicing wind farm needs throughout Europe.

Our interviewee found it interesting that DONG Energy provided 50% of contracted funds

upfront to EST for one of their first jobs for them, in order to help cash flow. Our

interviewee states that ‘EST is a good example of how a new young firm has penetrated the

industry and secured direct business with a wind farm developer, Dong Energy.’

Underwater Diving Services (UDS): UDS of Barrow conducts maintenance and underwater

inspections, while the certification is undertaken by a firm in Cornwall.

Stephenson Halliday: This Kendal-based environmental planning firm was heavily involved

in onshore wind energy. One of our interviewee told us that ‘as this [onshore wind] is now

drying up, they are going through the process of diversification and are looking into

offshore wind’.

Larkin Engineering: A steel company that diversified to deliver for example stevedoring


14

services for the offshore wind industry.

Scurrah Nassau (SN) Group: SN Group is a long established family owned business that

service precision engineering /fabrication needs of Barrow shipyard. The original owner’s

son joined 4 years ago from Centrica Energy where he had a procurement background, and

has developed what was St Andrews Engineering (precision engineering) Scurrah Nassau

(fabrication) into a group spanning rope access/hyperbaric services, provision of labour and

project management – in addition to its traditional services. It now operates across

defence/energy/wind markets, employs 60-80 people (depending on contracts) instead of

40 in the past and is seeking to build its Tier 4/3 role as a trusted supplier in the wind

sector. It is a good example of how to bring in expertise and transform an engineering

company to provide a local resource.

Not only existing companies were boosted by the arrival of wind energy production – it has also led to

new entrants to the market, such as Bay Towage, a company operating from a small office in the port,

which thanks to the development at Furness has secured work with all local windfarms and with Belgian

firm DEME’s subsidiary Tideway. Bay Towage has picked up a significant amount of additional operations

and maintenance work supporting the wind farm operations. We were somewhat surprised that,

despite the boom of wind farm operations and maintenance activity locally, there have apparently been

few specific construction projects to provide space for these supply chain businesses. All new building

activity has been at the port and specific to wind farm base operations required by the wind farm

operators. The pre-existing accommodation supply has proved ample for the new firms that have set

up in existing business centres, such as Trinity Enterprise Centre and Phoenix Business Centre both

being on Furness Business Park in Barrow (interview with local economic development group). For

example, one interviewee mentioned an old Council Highway depot outside of Barrow which is now

used as a crane hire maintenance facility by Duddon Hire which are supporting wind farm operations.

Another interesting example is given by one of our interviewees: ‘some guys left a long-established

manufacturing company that got taken over, and instead set up their own version in a local business

centre. It is now one of the fastest growing companies in the North West with a 5 million [GBP]

turnover. Most of its business is attributable to onshore wind, but some of it to the offshore farms’.

So what is required for this business creation to happen? Our interviewee at the Isle of Man

Government, who are drawing inspiration from, and collaborating with, Barrow when developing

offshore wind energy, says ‘the biggest factor is access to market. It is essential to give the certainty to

the market – you have to have a pipeline of projects’. A representative of the local economic

development group in Furness points out that, as the local offshore wind industry matures, new service

opportunities will emerge, for example new maintenance challenges due to exposure to the marine

environment (repainting and dealing with corrosion). Thanks to the build-up of local capacity, the

capability to deal with upcoming service needs will be available locally. One of our interviewees adds

that ‘there are also discussions about a project developer contracting to use a local airport for

helicopter support to offshore operations. As wind farms get built further and further out at sea, more

helicopter services will be required’. A local infrastructure manager adds that – for future projects –

‘because the scale has got bigger, the vessels are now too big to get in to Barrow [port], so we don’t

expect to be involved in new construction projects’. Belfast will be benefitting instead. However,

proximity matters for operations and maintenance bases, so these will continue to be located in Barrow.

At Furness, the local economic development group is now trying, together with the politicians, to

influence the energy companies to attract further locally based operations and maintenance as a way

to encourage further economic diversification.


15

The establishment of the four wind farms off the Furness Peninsula was actively campaigned for and

intended to be built into the local economy. According to a local economic development group,

Associated British Ports plc (who owns the local port) campaigned in 2002 together with the then

Furness Enterprise to attract wind farm component manufacturing and support base activity to the

region. Part of the objective was to make better use of the underused port and to generate business for

local companies, particularly those involved in servicing the needs of manufacturing, oil and gas

sections. This was intended as part of a move to foster economic diversification at a time when the

Barrow shipyard experienced a loss of 3,000 jobs over two years (interview with local economic

development group). We were encouraged by several examples where existing infrastructure has been

transformed into different functions servicing the wind farms, such as the example with use of the old

Council Highway depot mentioned above.

The impression that Barrow is a positive example was confirmed when we heard that business

representatives from North Devon and Northern Ireland have come to visit to learn from the

experiences of economic revitalisation (interview with local economic development group). A local

infrastructure manager also told us that the port has had interest from other areas wanting to learn

from their experience with renewables – Isle of Wight and the Highland and Islands Council visited to

get a better understanding of their operations. The area has indeed become a national example of best

practice in terms of renewable energy deployment. According to an official at the Isle of Man

Government, they have also had an active dialogue with the development and enterprise groups in

Barrow as they are about to develop their own offshore wind energy sector. Offshore energy to export

to the UK market is one of the Isle of Man Government’s core targets. ‘We have plans for offshore

[wind] in the same area of the Irish Sea [as the existing wind farms]. DONG won the tender last year. We

are working very closely with Barrow about how we can be part of their supply chain work’. Our

interviewee stresses that their offshore project, although it is a very different market place, is ‘very

much about creating job opportunities locally.’ He adds: ‘part of our agreement with DONG is to

generate long-term operations and maintenance jobs on the Isle of Man’.

7 . 3 D U R A B I L I T Y O F E C O N O M I C I M PA C T S

RQ4 How to ensure that the resulting economic impacts can be extended over longer periods of time, and not only during the construction phase of these renewable energy projects?

Some positions created are for 25 years and the wind farms have a lifetime to 2040.

Interviewees point to key local stakeholders working together to secure the benefits for local businesses and save the area from exodus and further decline.

The Furness Economic Development Forum (FEDF) has been a key player to generate integrated local business opportunities, for example by bringing project developers and local firms together.

The supply chain and joint marketing models established under FEDF are spreading to other areas. Development groups and local governmental authorities are working together to build up and strengthen regional offshore wind capacity and investor attractiveness.

It seems clear that part of the success at Furness is due to the efforts of local firms and infrastructure

managers to attract new business. This helped sustain the vitality of the region and to maintain existing

businesses. The interviewees attribute this to the key stakeholders working together to attract wind

energy production to the area, and to secure the benefits for local businesses. It is clear from the


16

interviews that a key organisation that has enabled this to happen is the Furness Economic

Development Forum (FEDF) – a public, private sector partnership funded from a range of sources,

including Government grants for regional development, and the lottery-funded UK Coastal Communities

Fund.2 See more information about FEDF in Box 3. While the FEDF in its current form is a relatively new

entity, established by local partners to fill gaps in provision created by the abolition of the pre-existing

structure of Regional Development Agencies3, it has been able to maintain a degree of continuity with

previous locally economic regeneration bodies. Another factor is the relative geographical isolation of

the area which, while it is clearly in principle a disadvantage, it seems to make it more likely that

effective partnership working coalesces rapidly around a specific economic opportunity with clear

potential benefits.

Box 3 The Furness Economic Development Forum (FEDF).

One example of how this collaboration has happened is a new initiative in collaboration between the

wind energy developers and FEDF, targeted toward local service SMEs, which is called ‘compete to win’:

aimed at helping SMEs to access and offer rolling contract solutions. FEDF is now encouraging the

windfarm developers to identify 2-3 companies per service need they have and they will match those

needs with local companies. Work is also underway to use the network to identify hotels and other

forms of accommodation such as apartments. Our interviewee sees wider opportunities with this

approach: ‘some of the crew prefers apartments and not hotels. They want to cook their own food. This

creates opportunities.’

A local infrastructure manager told us that the port has worked closely with the FEDF in trying to attract

wind farm operators. When asked if local efforts to capture economic benefits had made a big

difference for the port, our interviewee acknowledged that some of the benefits would have happened

2 ‘The Coastal Communities Fund (CCF) is a UK-wide programme led by the Department for Communities and Local Government. CCF is designed to support the economic development of coastal communities by promoting sustainable economic growth and jobs, so that people are better able to respond to the changing economic needs and opportunities of their area’ (Department for Communities and Local Government, 2016).

3 See ‘A National Cradle for Advanced Engineering: Towards a new economic vision for Furness’, July 2012.

The Furness Economic Development Forum (FEDF)

The FEDF’s objective is to ‘support the economic growth of the Furness area (defined as the area

within the Barrow and Furness Parliamentary Constituency boundary) and its companies through

leadership, direct provision of services by partner organisations, by influencing others and

coordinating.’ This is done by offering a range of supply chain support measures to local businesses

and individuals, including for example:

Development of a Furness supplier group;

Gap analysis of supply chain capability;

One-to-one support to local firms; and

Career path and new jobs awareness raising.

FEDF also has a clear focus on joint marketing together with port owner Associated British Ports plc.

Especially the Coastal Communities Fund’s ‘supply chain strengthening and transforming skills’

programme has been a catalyst the current drive to increase local company involvement in the

renewable offshore wind market.

Source: FEDF, 2015


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anyway, given the scale of investment, but that ‘it has been very beneficial to have the support of FEDF

and Barrow Borough Council in promoting what the town has to offer to wind farm operators’. The

former Northwest Regional Development Agency ‘didn’t really get involved, and nor did Cumbria County

Council’, although the Cumbria LEP had shown an increasing interest as energy developments are a key

strategic priority for the LEP.

Regarding the durability of these impacts in the area, one interviewee points out with excitement that

‘we’re only at the start! Most of the wind farms in Irish Sea have a lifespan to 2040. In some cases, there

is already some indication that in 15-20 years’ time, people will want to repower these sites. So a life

beyond 2040 seems likely’. A representative of the local district council told us that this development

will continue: ‘DONG will locate another major operations and maintenance facility in town and we are

discussing a couple of different sites with them.’

The model developed in Barrow is also spreading across the region. There is for example collaboration

between Barrow and the Isle of Man where the authorities are in the process of developing offshore

wind energy. ‘We have identified 40-50 companies that want to be involved when offshore will be

developed through DONG Energy. We want to integrate these two ambitions [Isle of Man and Barrow]

and are working together [with FEDF] – where are there gaps in our local expertise? How can we fill

these gaps etc.’, says a representative of the Isle of Man Government in our interview.

7 . 4 S O C I A L A N D E N V I R O N M E N TA L I M PA C T S

What social and environmental impacts associated with RES development can be identified? How do they link to the economic impacts identified above?

Creation of long-term jobs that pay better than generally available in the local job market.

Local colleges have started to teach offshore wind engineering and private firms have initiated training courses covering issues specific to wind farms.

The main energy companies have helped fund this development.

An interviewee from FEDF told us that Vattenfall offers highly-qualified employment for 25 years,

which is the anticipated lifetime of its wind turbines. They have a focus on recruiting mechanical and

electrical engineers, administration, and logistics staff and many of the jobs require Higher National

Certificate level qualifications. ‘This has created better paying jobs than otherwise available in the area

– people have swapped from part-time fishing activities to permanent jobs in the wind industry’, says

our interviewee.

An interviewee from the local district council adds: ‘I know that a number of further education courses

have started at the local college, teaching offshore wind engineering.’ Furness College is offering

bespoke training courses, which, according to a local infrastructure manager, ‘wouldn’t have happened

without support from organisations beyond the port’. A crew transfer operator has set up a Northern

Windfarm Training School offering courses at the college, covering issues specific to wind farms (eg

working at height).

The development of offshore wind energy also seems to have helped generate other types of training

and educational effects locally. For example, Elevated Systems Technology (EST) as mentioned earlier

provides rope access training locally and an offshore survival centre in Blackpool has started local

training (Furness Education and Skills Partnership, 2016). A representative from the Isle of Man


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Government told us that also they are planning to offer similar education schemes once their new wind

turbines have been installed. ‘We have done it for other sectors and are keen to grown internal

expertise also in this field. We are working with North West [UK] academic institutions looking at the

programmes that they provide etc.’, says our interviewee at the Government.

We found it interesting that the main energy companies are helping to invest in this development,

with DONG for example voluntarily providing a community benefit fund of 600,000 GBP per year for 25

years in relation to the Walney Extension from May 2016. ‘The idea is it to fund a mix of projects from

community activities, recreational activities and conservation projects in the area, within a coastal zone

that is five km inland and spans the coast line near the site’, explains our interviewee from DONG with

excitement. ‘We also plan to spend some of the fund on skills – to pay for students to do higher level

engineering qualifications, and we also hope to work with primary and secondary schools’, she adds.

DONG Energy has also donated a transition piece of a wind turbine to a local college which is now used

for training, according to one of our interviewees. Also Vattenfall has been heavily involved in reaching

out to local schools and colleges. They have worked with the Furness Education and Skills Partnership

(FESP) to interact with secondary and primary schools and interest young people in future employment

in the industry (interview with local economic development group).

7 . 5 E N A B L I N G P O L I C I E S

RQ5 What are effective schemes and instruments (in the broadest sense, e.g. education and training) that enabled local economy to gain welfare/benefit from renewable energy projects located in the area?

The most important aspect seems to have been the establishment of, and strategies initiated by, the local economic development group; funded by national and regional development funds.

The local council plan is under revision and does currently not include renewable energy; local government tells us that the economic development group is the primary driver.

Offshore wind has benefited from national policies such as the Renewables Obligation, and (until recently) exemption from the Climate Change Levy on electricity generation.

Barrow has had Assisted Area status in the UK and focus of regional development funding at both national and EU level.

In terms of local policies and planning, our interviewee from the local governmental district authority –

Barrow Borough Council – points out that ‘the local plan is outdated and does not include renewable

energy. We are currently working on a new plan that will go out for review in a few months.’ According

to our interviewee at FEDF, ‘in the absence of the Northwest Regional Development Agency, since 2010

and post-2000 reductions in available gap funding at a high rate (due to State Aid Rules), Barrow

Borough Council has been the major provider of new industrial space generally 2 million GBP at a time

in providing 10-20,000 ft2 blocks on Furness Business Park to anticipate demand for factory space’

(personal communication, 2016). Barrow Borough Council also engages actively with the big energy

companies, such as DONG.

However, our interviewee from the Council stresses that the Furness Economic Development Forum

(FEDF) is a primary local actor which has brought RES development and associated impacts to Furness.

FEDF has, as mentioned, received funding from the national UK Coastal Communities Fund (CCF) to


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provide supply chain business support and training to make it easier for local companies can take

advantage of future business opportunities. Our interviewee at DONG energy told us that ‘there are a

lot of good things being done by organisations like the Furness Economic Development Forum [FEDF]

when it comes to skills and supply chains’. We are reminded about the importance of local enterprise

collaboration to make sure that the local economy benefits from the development. ‘For example, we

ran a supply chain event in collaboration with FEDF where we invited all our tier one suppliers and asked

them which contracts they needed. We then explored the potential for local companies to fill these

needs’, says our interviewee at DONG. The interaction and coordination provided by these local

development groups provides also some more unexpected benefits: ‘they help coordinate the outreach

by us energy companies. If we would all approach the local school children and universities at the same

time it would not work – it is better to come together. And this takes a lot of work [by them]’, explains

our interviewee at DONG.

FEDF has recently received nearly 1 million GBP in funding from CCF for trying to build a mix of local

supply chain support and building capacity, courses and training, provide an intelligent matching service

etc., or, as one of our interviewees put it – ‘we know the local capacity and can take you to the right

people.’ According to the interviewee, this allows local companies that used to be in the oil and gas

sector to start exploring renewable energy technologies. It also creates opportunities for companies to

realise that there might be chances of technology transfer (interview with local economic development

group).

As offshore wind installations are dealt with through the national planning system, they are particularly

subject to national energy strategies and policies, for example on encouraging a diverse energy mix.

The wind farms off Furness have benefitted from the Renewables Obligation, the new Feed in Tariff with

Contract for Difference4 (Walney Extension has a Final Investment Decision Enabling (FIDe) CfD contract)

and (until recently) from exemption from the Climate Change Levy on electricity generation. We also

noted that the County Council in their recommendation to the Department of Trade and Industry on the

Barrow wind farm in 2002 stated that: ‘there are now strong moves towards setting regional goals to

reach such [decarbonisation] targets and the [regional] County Council has recently embarked on a

study of the potential for renewable energy development in the County, including on and offshore

wind.’ The tentative target for generating capacity for offshore wind was then for 4 offshore schemes

with a total output of 103.2 MW (Development, Control and Regulation Committee, 2002). Offshore

wind energy in Furness has more recently also benefited from a change in national UK policy which has

made investments in onshore wind energy less attractive. However, there is still strong political support

nationally for offshore wind installations which is meant to provide security for investors and

businesses related to offshore power manufacturing and operations. According to an interviewee at

DONG energy: ‘the fundamental thing is national policy – do we have the funding to move forward? It’s

great news that the Government has committed to future auctions for offshore wind and other less

mature renewable technologies. We now need to get costs down and continue to work with our

suppliers to increase the proportion of the components and services we need to build our wind farms

that we can source from the UK.’

Barrow has also benefited from Assisted Area status in the UK, enabling the national Government to

provide state aids, and it has also been a focus of regional development funding at both national and

4 The Contracts for Difference mechanism is part of the 2015 UK Electricity Market Reform and is a long-term contract between electricity generators and the national Low Carbon Contracts Company. It is intended to give greater certainty and stability of revenues to electricity generators by reducing their exposure to volatile wholesale prices, whilst protecting consumers from paying for higher support costs when electricity prices are high (Department of Energy & Climate Change, 2015).


20

EU level. The North West Development Agency5, which (along with the other RDAs in England) was

disbanded in 2010, provided an impetus behind long-term economic strategy in the region, and was

able to integrate local regeneration action in the Furness area into a wider regional vision. Its work has

been continued at a local level by Cumbria Local Enterprise Partnership and through funding for local

groups such as the FEDF. Overall, it is seems from the interviews that establishment of the FEDF

platform and the work done by the organisation has been the most important approach in terms of

enabling the local economy to benefit from the renewable energy projects in the area.

7 . 6 C O N F L I C T I N G P O L I C I E S

RQ6 Are there conflicting policies or policy structures (e.g. with respect to state-aid support, WTO, EU)? How are they being addressed in the case study?

Reductions in the availability of state aids and the disbanding of the North West Development Agency in 2010.

Recent abrupt changes and current lack of certainty over future subsidy arrangements is likely to have a chilling effect, at least in the short term, on the planning of further investment.

Recently introduced changes in national policy incentives create difficulties for energy companies in planning their supply chains, which therefore could impact future local economic impacts of RES in Furness.

Clashes between the development of the wind farms and nature conservation objectives and regulation have been resolved with a coordinated multi-stakeholder approach, which has been supported by the regulator.

Interviewees were generally not aware of, or not willing to identify, significant conflicting policies.

However, some reference was made to reductions in the availability of state aids (with, for example, a

reduction in 2000 in the level of gap funding allowed). The role of the North West Development Agency

(NWDA) was widely considered as important in the initial development of wind energy off Furness, and

in taking forward strategic thinking about how to maximise local economic benefits; the disbanding of

the NWDA in 2010 is therefore implicitly regarded as a step backwards in the coherence of regional

economic planning. Finally, the offshore wind investment benefited significantly from the availability of

low carbon subsidy through, on the one hand, the Renewables Obligation (RO) (which requires energy

distributors to source a proportion of their energy from renewables), and on the other hand exemption

from the Climate Change Levy (a UK tax originally intended to discourage carbon-based energy) and the

EU Emissions Trading System. However, recent abrupt changes in the level of support for renewable

energy, including the extension of the Climate Change Levy to renewable installations, have created

some uncertainty among investors. While this does not appear to have had a negative impact on the

economic benefits from the current wind farms off the Furness peninsula, the changes and the current

lack of certainty over future subsidy arrangements is likely to have a chilling effect, at least in the short

term, on the planning of further investment.

5 The Northwest Regional Development Agency was non-departmental public body acting as the regional development agency in the North West of England.


21

It should be noted that the new British Contracts for Difference mechanism (see Section 7.5) has been

intended to replace the RO. The local infrastructure manager that we spoke to felt a bit too far removed

from DONG’s strategic investment decisions and was not sure if the new ‘Contracts for Difference

changes have affected their decision-making’. It looked as if the peak for wind farm investment was now

past – Centrica had won development rights to new areas, but the cost of developing them meant that

they have shelved the project. ‘One of the factors is the level of subsidies’, adds the infrastructure

manager and agrees that changes in subsidy regimes affected predictability for investors. Our

interviewee at one of the energy companies told us that ‘now that the Government has moved to

Contract for Difference/ competitive auction instead of obligation, it makes it quite difficult for us in

terms of planning our supply chains for example. It’s a bit of a challenge. We are being pressured that

the wind farms should be built in the UK, but we need a long-term order book and targets in order to

plan for that’. This uncertainty might have implications for the apparently widely appreciated local

supply chain work established by FEDF and other local and regional partners.

One interviewee also told us that there has been a need to strike a balance between any development

in the port area and nature conservation objectives and regulation. ‘For example, in the old dock in

Barrow, Slow-worm and Common Lizards had established. Natural England and the Environment Agency

negotiated with local authorities to facilitate public funding to deal with translocation of the wildlife to

other sites’ and development of for example the onshore facilities to support the offshore wind farms

was allowed to continue (interview with local economic development group). ‘In general, the fact that

we’ve got together (Associated British Ports plc/DONG/Barrow Borough Council/Cumbria County

Council) with a coordinated approach to deal with the situation means that Natural England [the

regulator] has been more supportive’, adds a local infrastructure manager.

A representative of the local district council told us that there are also a number of marine sites

designated for nature protection in the area around Furness, including a Ramsar Site (Wetland of

International Importance), European Marine Site (SPA, SSSI, SAC) and a Special Marine Area. This led us

to take a look at the environmental assessment made in 2002 when the Barrow wind farm was

permitted, which concludes that these sites are not in immediate vicinity to the wind farms and will only

have minor impact from cables running from the power generators. Our interviewee at one of the

project developers points out a common issue with these areas: ‘this is a tricky one because it is

implementing EU legislation but it is very uncertain what restrictions it will result in. What does it mean

for us?’ Setting up management plans and conservation measures for these protected sites is, in the

case of EU nature legislation, a Member State responsibility.

The County Council also raised the issue in 2002 whether the development would be detrimental to the

distinctive character and quality of the surrounding landscapes. However, they concluded that the

project would have larger positive impacts than negative (Development, Control and Regulation

Committee, 2002). When asked about the visual impact of the wind farms, and whether this created

any local opposition, a local infrastructure manager told us that ‘further afield it has been an issue;

some people say it spoils the look of the horizon. But people in Barrow, because of the shipbuilding and

engineering background, they just see it as an everyday thing. They’re used to seeing large structures

built and heavy engineering.’ The fact that there were local economic benefits also helped.


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7 . 7 G O V E R N A N C E

RQ7 How to divide policy roles between national and local governments to achieve successful revitalisation of the local economy?

The local economic development group is driving RES development and mobilising offshore wind energy supply chains.

Regional cooperation among Local Enterprise Partnerships in North West England to build regional capacity for offshore wind.

To make this work, the big energy companies need to be open about what the likely level of local economic impact will be.

When talking to the local district council, they told us to discuss these issues with Furness Economic

Development Forum (FEDF), the local economic development group, as, according to the council: ‘they

will know this as well as anyone’ and that the group is effectively driving this development locally, and

setting the pace and conditions for further development. When we talked to FEDF, they said that when

it comes to marketing and targeting business opportunities in relation to the offshore wind

developments, they are leading the way. ‘For example, we run a board meeting every few weeks to

review progress, and we work with a regional investment body operating from Manchester as well as

the Associated British Ports, to mention a few’, says one interviewee.

We did not expect that, from 2015, FEDF has been taking this consulting practice a step further by

teaming up with other Local Enterprise Partnerships (LEP) around the North of England region in an

attempt to jointly build the regional capacity for the offshore wind industry across the northern

powerhouse area. One of our interviewees said that this is part of the response to the national

government’s discussion about ‘the Northern Powerhouse’ and to boost economic development in

Northern England: ‘there is 15 million people here! And 3-4 key ports, a range of companies etc. It is an

obvious selling point for companies like DONG Energy. By linking to the local LEP organisations, DONG

can attract the right people to their events and make sure that they meet the relevant companies’

(interview with local economic development group). The key success in this case, and what was pointed

out in the interview as crucial, is to make sure that the big companies are open about what is likely to

happen locally and what the expected level of development is.

Based on the interviews, it has also become clear to us that part of the success in this case was the early

and very active engagement and networking between the big energy companies and the local

enterprise groups. ‘An offshore planning permit is today a solid promise and companies will start

procuring for installation and services many years in advance. If they are not sufficiently aware of the

local capacity, then the opportunity will slip by the local SMEs’, says one interviewee. We would be

interested in understanding which role local people and environmental NGOs for example have played

in this process, whether public acceptance has at all been taken into account. However, the interviews

have not provided any detail on this.


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8 . CO N C LU S I O N S A ND R ECO M M E NDATI O N S

8 . 1 C O N C L U S I O N S

From our case study on offshore wind around the Furness Peninsula, UK, we draw the following main

conclusions:

The Furness experience is encouraging. Well-paying jobs, innovative business models and revival

of economic activity can come from clustered offshore wind energy investment. The city of

Barrow has not only been able to avoid problems associated with the downturn of some its

traditional port activity – it has been able to create new opportunities with high value added.

The specialised nature of turbine blade manufacture (which therefore takes place somewhere

else), the offshore nature of the installations, and the focus of activity on initial installation, can

lead to an expectation of only weak or temporary local job impacts of offshore wind energy.

However, Furness shows that a sustained local multi-stakeholder strategy aiming at maximising

port activity and local economic opportunities can be effective in capturing economic benefits

both during construction phases and over the 20-30 year maintenance life span of the wind

farm developments.

Relative geographical isolation can, paradoxically, be an advantage to areas like Barrow in

ensuring that there is a clear, shared willingness among organisations with an interest in the

local economy to ensure that identifiable opportunities like off-shore wind are seized, and the

local benefits maximised.

Barrow has achieved local economic benefits from successful offshore investment despite a

recent lack of continuity in regional economic strategic governance, and recent abrupt changes

in national support for renewables investments.

Although it seems likely that this is partly because the bulk of the investment took place before

the recent changes, much of the success is thanks to local individuals and firms coming

together to seize the opportunities of renewable energy investment in a region facing multiple

economic challenges.

The most important aspect seems to have been the establishment of the local economic

development group, funded by national and regional development funds, and its initiation of

effective strategies to galvanise action.

8 . 2 R E C O M M E N D AT I O N S

We recommend the following key messages based on this case study:

Establishing and/or supporting the work of local economic development groups with local

knowledge and trust has been a very effective strategy in Furness to ensure long-term local

benefits and job creation of RES investments.

In Furness, project developers have been transparent and realistic to local firms about what

level of economic activity can be expected locally, and for how long – close collaboration like

this is key.

A focus on local availability of a skilled workforce – by project developers, local authorities and

development groups together – has helped secure local economic benefits in Furness, and

made the area more attractive for investors.


24

Developing a clear strategy for how economic effects can be built into the local economy from

the beginning of the investment has been a big part of the success in Furness. This is something

all areas considering the economic case for enhanced renewables investment should do.

Long-term national strategies for energy decarbonisation should identify not just geographical

opportunities for renewables installation, but potential synergies with the needs of areas

suffering from challenges of both economic decline and relative geographical isolation.

Other points of interest

Continuity of vision, and predictability for investors, have been important to the success of the

investments around Furness.


25

A N NE X I – R E F E R E N CES - Interview with local economic development group, 06.05.2016 - Interview with local district council, 11.05.2016 - Interview with energy company, 17.05.2016 - Interview with local infrastructure manager, 18.05.2016 - Interview with local government, 18.05.2016

- Cumbria Local Enterprise Partnership (2014), ‘The four pronged attack - Cumbria Strategic

Economic Plan 2014–2024’. URL: http://www.cumbrialep.co.uk/wp-content/uploads/2014/03/Cumbria-LEP-final-report-1-April-2014.pdf. Accessed May 13, 2016.

- Cumbria Partners (2007), ‘Britain's Energy Coast: A Masterplan for West Cumbria - Executive Summary’. URL: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/66717/3956211546.pdf. Accessed May 13, 2016.

- Furness Economic Development Forum (FEDF) (2015), ‘Welcome To Furness Economic Development Forum’. URL: http://fedf.co.uk/. Accessed June 13, 2016.

- Furness Economic Development Forum (FEDF) (2016), personal communication, May 4, 2016. - Department for Communities and Local Government (2016), ‘Coastal Communities Fund’. URL:

https://www.gov.uk/government/collections/coastal-communities-fund. Accessed June 13, 2016.

- Department of Energy & Climate Change (2015) ‘Electricity Market Reform: Contracts for Difference’. URL: https://www.gov.uk/government/collections/electricity-market-reform-contracts-for-difference. Accessed June 14, 2016.

- Development, Control and Regulation Committee (2002), ‘Proposed offshore wind farm near Walney Island, Barrow in Furness’, From: Assistant Director (Development Control), Community, Economy and Environment. Item 8.

- Office for National Statistics (2016), ‘Labour Demand – Job Density (2014)’. URL: https://www.nomisweb.co.uk/reports/lmp/la/1946157076/report.aspx?#ld. Accessed May 21, 2016.

- VisitCumbria.com (2016), ‘The Furness Peninsula in the County of Cumbria’. URL: http://www.visitcumbria.com/sl/furness-peninsula/. Accessed May 13, 2016.

http://www.cumbrialep.co.uk/wp-content/uploads/2014/03/Cumbria-LEP-final-report-1-April-2014.pdf

http://www.cumbrialep.co.uk/wp-content/uploads/2014/03/Cumbria-LEP-final-report-1-April-2014.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/66717/3956211546.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/66717/3956211546.pdf

http://fedf.co.uk/

https://www.gov.uk/government/collections/coastal-communities-fund

https://www.gov.uk/government/collections/electricity-market-reform-contracts-for-difference

https://www.gov.uk/government/collections/electricity-market-reform-contracts-for-difference

https://www.nomisweb.co.uk/reports/lmp/la/1946157076/report.aspx?#ld

http://www.visitcumbria.com/sl/furness-peninsula/

M E M B E R CO U N T R IES O F T HE IEA R E T D T EC H NO LO GY CO L L A B O R AT I O N P RO G R A M M E

The International Energy Agency’s Renewable Energy Technology Deployment Technology

Collaboration Programme (IEA RETD TCP) provides a platform for enhancing international cooperation

on policies, measures and market instruments to accelerate the global deployment of renewable energy

technologies.

IEA RETD TCP aims to empower policy makers and energy market actors to make informed decisions by:

(1) providing innovative policy options; (2) disseminating best practices related to policy measures and

market instruments to increase deployment of renewable energy, and (3) increasing awareness of the

short-, medium- and long-term impacts of renewable energy action and inaction.

Current member countries of the IEA RETD Technology Collaboration Programme (TCP) are Canada,

Denmark, France, Germany, Ireland, Japan, Norway, and United Kingdom.

More information on the IEA RETD TCP can be found at

www.iea-retd.org

http://www.iea-retd.org/

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