The Blog - Wind energy market analysis

Posted 13/12/2019

Richard Heap

   

Community Q&A: Gary Bills, K2 Management

We speak to A Word About Wind community member Gary Bills, country director and MD for UK and Ireland at K2 Management, for his views on the wind market, including offshore wind, the supply chain squeeze, and more.

Gary Bills, K2 Management

Hi Gary. You recently moved to K2 Management from Mott MacDonald. What does your new role entail?

My focus is on developing the UK and Ireland business, and providing some assistance into Scandinavia. It’s different because I’m not doing the travelling and I don’t have that wider brief of looking after Africa, Latin America or anywhere else.

In the UK and Irish market, K2 Management is seen as a due diligence provider but, if you go elsewhere, we’re known as an engineering and solutions provider for construction management. My job will be combining those activities.

Why have you chosen to focus again on the UK?

It was interesting for me because, when you look around and see various projects taking off with merchant risk, and you see round 3 and 4 moving on, then you think: 'Yes, the market isn’t going to be like it was in the past but it is an interesting time to come back and make things happen.' That was my main motivator: to find something back in the UK.

It’ll be a challenge for onshore wind. There are opportunities for onshore wind and solar because of where we need to be in 2050. There are opportunities in offshore wind too with prices having come down so much, and Irish offshore wind seems to be taking off too.

Do you look at any sectors beyond wind and solar? 

We also look at wave and tidal, battery storage and hydrogen but, at the moment, we don’t have the mechanisms to make these very interesting in the UK. For example, with wave and tidal, I wouldn’t call them infant industries but they don’t seem to be getting the profile lift they need to make them scalable.

As for hydrogen, that’s really going to take off over the next two to three years. We know it’s coming down the road, and producing hydrogen is relatively straightforward, but the question then is what do we do to deploy the hydrogen. There’s no point putting one in the north of Scotland where there is no demand for hydrogen. That’s the problem we’ve got. How to mix the two technologies and where the deployment’s going to be.

What’s your view on the impact of Brexit on renewables?

Look, Brexit or no Brexit, we still have a renewable energy obligation by 2030 or 2050, and that’s all I’m focused on. My primary objective is to find a way for K2 Management to help the UK get to a target of zero carbon emissions by 2050. The politics will sort themselves out.

Wind and solar are now the cheapest form of new electricity, and I don’t think being inside or outside the European Union is going to affect that.

How will the cost squeeze affect growth in offshore wind? 

The first thing to say is that the auction system at the moment suits the UK government very well, but now we’ve got two major manufacturers, possibly three, that are racing each other to the bottom of a very deep pit. You’ve got to the point that offshore wind is cheaper than anything you can do onshore. To me, that’s ridiculous. There has to be an acknowledgement of what offshore wind brings and, to me, that message has been lost somewhere.

I’m not saying that everyone should be making excessive profits but we do need to help get a balance between cost and quality in the supply chain locally, and the first thing we have to do is stop racing to the bottom.

Look at Senvion or Enercon, which are both great examples of the damage that has been done to the supply chain. Look at Nordex: they’ve got a massive order book, but they’re really struggling for cash because they’re not making enough profit. You see this over and over again. The supply chain is being damaged by this squeeze.

We also have these contra-indicators. You see the Labour Party announcing this difficult to reach 37GW of offshore wind that they’re going to build, and the Conservatives planning 40GW offshore wind by 2030. We have a massive push for expansion at the same time as we’re trying to cripple the supply chain. We need a healthy industry and we’re in danger of damaging that.

 

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