Siemens Invests $264 Million in U.K. Offshore Wind Plant

Siemens AG (SIE), Europe’s largest engineering company will invest 160 million pounds ($264 million) in a wind turbine factory in northern England to tap the world’s biggest offshore wind market.

The manufacturer will invest in two sites in Yorkshire, with a construction, assembly and service facility at its Green Port Hull project, and a new rotor blade factory in nearby Paull, Siemens said today in an e-mailed statement. Associated British Ports Holdings Plc is investing a further 150 million pounds in the Green Port Hull development, it said.

The investment is a boost for the offshore wind industry in the U.K., where utilities have canceled at least 5,760 megawatts of planned capacity since Nov. 26. It’s also helps for the government, which has reformed the electricity market in an effort to lure green investment and cut carbon emissions.

“We are attracting investment by backing enterprise with better infrastructure and lower taxes,” U.K. Energy Secretary Ed Davey said in a statement. “As well as helping to keep the lights on and putting more than 1,000 people in work, this deal means we will help to keep consumer bills down as we invest in home-grown green energy and reduce our reliance on foreign imports.”

Britain already leads the world in offshore wind, with 22 operational farms totaling 3,653 megawatts of capacity, according to the RenewableUK industry group. That’s more than half the global total of 6,930 megawatts.

Siemens’s Lead

Chancellor of the Exchequer George Osborne in his budget last week announced a plan to freeze a tax on carbon emissions from electricity generation starting April 2016 in a bid to boost British manufacturing and cut energy bills. The government last year said it would pay offshore wind developers triple the market price for electricity they generate. It expects about 10 gigawatts of total capacity by 2020.

“The British energy policy creates a favorable framework for the expansion of offshore wind energy,” Michael Suess, a member of the managing board of Siemens, said in the statement.

Siemens has about 2.7 gigawatts of turbines installed in U.K. waters, or about three quarters of the total, according to Sophia von Waldow, a London-based analyst at Bloomberg New Energy Finance. It’s been awarded contracts for another 3 gigawatts of machines due to begin generating mainly from this year through 2019, she said.

Almost half of all new offshore wind capacity last year was in U.K. water, according to figures from the European Wind Energy Association. Jobs in the industry may rise to 44,000 over the next decade from 12,800 now, according to RenewableUK.

‘Major Coup’

“This is a major coup for the British wind industry – it’s the green-collar jobs game-changer that we’ve been waiting for,” RenewableUK Chief Executive Officer Maria McCaffery said in an e-mailed statement. “This is just the start. Where Siemens are leading, a cascade of others will follow, and we’ll see very significant growth in the U.K. supply chain.”

Dong Energy A/S, the biggest developer of offshore wind farms, said the announcement is “a huge boost for the offshore wind industry in this country.”

The Siemens plan “demonstrates the huge opportunity to develop a thriving supply chain,” Benj Sykes, head of Dong’s U.K. wind operations said in a statement.

Projects Scrapped

Even with recent announcements by all of the U.K.’s so-called “Big Six” utilities that they’re shrinking, canceling or selling some offshore projects, RenewableUK estimates there’s a pipeline of U.K. offshore wind projects totaling nearly 15 gigawatts.

“By 2030, the U.K. offshore wind sector will need dozens of factories making innovative, hi-tech blades, turbine towers, cables and offshore substations,” McCaffery said.

Siemens said the Green Port Hull project will create 450 jobs, and is expected to be operational in “early 2016.” The factory in Paull is slated for completion in the middle of that year, and will employ 550 people, attaining full production levels in mid-2017, it said.

“We’re starting to see the benefits of making the U.K. a more attractive place to invest,” Nicola Walker, director of business environment at Britain’s main business lobby group, the Confederation of British Industry, said in a statement. “The U.K. is well placed to become a world leader in the construction and development of renewable energy generation.”

To contact the reporters on this story: Louise Downing in London at ldowning4@bloomberg.net; Alex Morales in London at amorales2@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net

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