The war for talent – the elephant in the room for offshore wind?

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According to IRENA*, the global installed capacity for offshore wind is set to increase almost ten-fold to 228 GW by 2030. Post-COVID, we expect to see this growth accelerate as governments commit to ‘building back greener’. Offshore wind is increasingly central to these plans as the cheapest, large-scale renewable energy source.  Floating offshore wind will also be commercially attractive within the next 10 years, accelerating deployment further as all countries with enough wind resource gain access to the technology.

Taylor Hopkinson has carried out research into what this means for jobs growth and the mounting challenge this presents.

There are several metrics used to determine how many jobs are created during these four key stages of the project cycle per MW installed:

  1. Development & Financing
  2. Design & Manufacturing
  3. Construction & Installation
  4. Operations & Asset Management

According to a recent study in Denmark by State of Green, job creation ranges from 3.1 FTEs (Full Time Employments) to 14.6 FTEs per MW depending on the following considerations:

  • where the offshore wind farms are located, in-country or abroad
  • whether indirect FTEs are accounted for, and
  • the extent to which the country in question exports goods and services to offshore wind farms abroad.

So, getting a mean ratio across global offshore wind markets is a complex task.  Based on similar reports for all the maturing offshore wind markets in Europe, our own calculations show that 7.5 direct FTEs are required per MW.  That’s made up of 4.5 FTEs per MW in the stages prior to commercial operations and 3 in the operations and asset management phase.

Many of these roles will be taken on by people already active in the offshore wind sector as they complete one project and move to the next, and natural attrition in the industry will create more openings. So, the ‘true’ net increase in FTEs per MW is again a complicated task to ascertain.

The hard-to-fill roles
Not all of the FTEs require specific offshore wind experience. But it’s the ‘hard-to-fill’ roles that pose the biggest problem.  These roles are defined as requiring very specific skills, qualifications and, most importantly, experience – or ‘offshore wind competence’.  Without any industry-wide data published on this subject, Taylor Hopkinson analysed its own proprietary data and estimates that 70% of these FTEs do actually call for this level of offshore wind competence.

As the total number of offshore wind projects expands, candidates with these attributes are in increasingly high demand and short supply.  When compiling resource risk registers for our clients, these roles fall into categories 3 and 4 below:

Based on our own market data, we predict that the net increase in new category 3 and 4 roles required between 2021 to 2030 globally (excluding China) will be 10.8 times today’s existing talent pool.  This equates to the creation of 15,000 net new roles over the period. Breaking this down, we envisage category 3 and 4 net new jobs will increase from today’s numbers, by:

  • 3.5 times in Europe,
  • 14.3 times in North America, and
  • 14.7 times in APAC.

Timing
If the growth was spread evenly across this period, the annual growth would be a significant challenge.  However, based on projections, 64% of this growth in net new jobs in categories 3 and 4 will occur in the next five years.  As more projects are announced and reach FID, these numbers will inevitably grow larger and the shortages more acute. The rate of demand in these particular roles is faster than the time needed to acquire offshore wind competence.

This rampant expansion of offshore wind is thanks to the efforts of industry to rapidly reduce the Levelised Cost of Energy (LCOE) from offshore wind faster than anyone predicted. This has been, in part, driven by the auction system that is now prevalent in most developed offshore wind markets.  The recent UK Round 4 auction demonstrated just how competitive this system has made the market.  But this comes at a real cost to the long-term sustainability of the industry.  Achieving commercial returns from the prices that have been bid requires developers to overlook the development of local supply chains in favour of the lowest cost solution.  Investment in the future is often not possible within this auction system.

The mounting problem
Establishing offshore wind competence takes many years to cultivate, and comes as a result of companies investing time and money in developing this talent by providing them with opportunities to learn.  As we all know, by its very nature, learning often involves making mistakes and unfortunately the auction system does not allow for potentially costly errors caused by lack of experience.  Therefore, companies demand the most experienced candidates to avoid additional costs and overruns that will erode their already stretched commercial models.

This situation is now leading to soaring salary inflation for those lucky enough to have gained this experience. However, it is also creating barriers to entry for those with relevant transferable skills but who lack the real-world experience that results in offshore wind competence.  The problem is particularly acute across all roles in resource risk categories 3 and 4.

What’s the solution?
The key to addressing the increasing skills shortage is intertwined with the issues affecting localisation of supply chains in general – the auction system.  The race to cost competitiveness has already been achieved.  Continuing to use this system in developed markets now threatens to turn the industry into a victim of its own success, as it suffocates the ability to nurture and grow the human resource supply chain needed to deliver the ever-growing pipeline of projects safely and effectively.

If we are to tackle the looming skills shortage, industry and government must work together. We welcomed the extremely positive news around the investment in ports and infrastructure and the attraction of GE’s blade manufacturing plant in the North East. This is what our industry needs. But investment in equal measure is also required to ensure a competent offshore wind workforce of the future.

Should that responsibility lie with industry or government? I believe it needs to be shared.  Yes, individual companies will benefit from newly skilled workers in the short term but, longer term, tens of thousands of these individuals will work in international locations and bring in revenue for HRMC. It’s also essential to ensure national and international standards prevail, allowing for improved mobility of workers and increased competition along with exceptional health and safety standards for workers offshore.

No need to reinvent the wheel
A roadmap towards a world-leading offshore wind workforce already exists.  In the ‘dash for gas’ in the 1970’s and 1980’s we saw a huge increase in the skilled workforce building and operating gas-powered power plants.  The industry had pride in its links to education and a sought-after apprenticeship programme.  Young people saw the industry as a secure career for life and invested their futures in it.  There is a huge opportunity for industry and government to collaborate and really drive home the message to schools and universities of the outstanding opportunities presented by the offshore wind sector.

Whilst many companies already are engaged in outreach programmes, it is often done in isolation or in competition with others.  We believe the results would be much more impressive and closer to what is actually needed if resources were pooled, and responsibility for outreach standardised and driven by one body.  The Offshore Wind Industry Council is perfectly placed to deliver this programme, with funding and support from government and the largest industry players.

The time is now
There is a looming crisis in the human resource supply chain globally for offshore wind.

By creating a task force of industry and government, with appropriate support and funding, we can engender the type of offshore wind competence that sits within the risk categories that are critical to the long-term success of our industry.

We need to act now. Not only will it ultimately save lives, but it will also keep the lights on, trigger the infrastructure investment the country badly needs and will capture longer term skills export opportunities as international markets emerge.

If you would like to discuss further, contact Tom.

Tom Hopkinson
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* IRENA Renewable Energy Jobs

 

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