Manpower, rather than wind power, could prove a stumbling block for the UK as it looks to secure its place as a major player in green energy. Earthstaff’s Paul Flynn examines the growing disconnect between economic policy and demand for more highly skilled engineers in the renewable energy sector.

Renewable energy technologies such as wind, wave and biomass promise a ‘third industrial revolution’ in the UK. Like the two before, it will be driven by leading lights from the world of science and engineering. Only this time, any nation seeking to establish itself as a market leader will be competing for talent on a global scale.

Investment in the UK’s renewable energy, or ‘green energy’ sector is rising as the government looks to harness the economic opportunity and meet its commitment to supplying 15% of its energy consumption from renewable sources by 2020 under the EU’s 2009 Renewable Energy Directive. The devolved administration in Scotland has gone even further, with first minister Alex Salmond committing to supplying 100% of electricity demand from renewable resources by 2020.

However, there are concerns that cuts being made now in science and engineering will hamper the ability of the UK’s research base and workforce to compete on the world stage, with the main political parties yet to put these disciplines at the heart of economic policy. Not only does this mean a shortage in home grown engineering talent as demand grows and skilled engineers retire or gradually migrate to more attractive markets, there is also a real danger that the UK will fail to grasp a once in a lifetime opportunity.

Strong headwind of investment
Renewable electricity production in the UK has been growing by 11% per year since 2002, with offshore renewables in particular seeing significant activity, according to the Offshore Valuation Group. The report studied offshore wind and marine technologies in use or in development today, and concluded that large scale investment in these technologies could provide access to a permanent energy flow of comparable scale to current North Sea oil and gas production.

By early 2011, there were 29 offshore wind farms in operation or under development in the UK. Much of this activity centres on Scotland, which enjoys an estimated quarter of Europe’s offshore wind and tidal energy resource and a tenth of its potential wave capacity. It is already home to Whitelee, Europe’s largest onshore wind farm, the Moray Firth’s Beatrice Wind Demonstrator Project, the world’s first deep water offshore development, while planning consent was granted recently for the world’s largest tidal array in the Sound of Islay.

In June, two of Europe’s major energy companies, Spain’s Repsol and Portugal’s EDP Renováveis, confirmed plans to develop up to 2.4GW of offshore wind projects in Scottish waters, while France’s Alstom acquired a 40% stake in Inverness-based AWS Ocean Energy. AWS has been awarded a £1.4m grant by Scotland’s government to support testing of its AWS-III wave power device in Loch Ness and the Cromarty Firth.

International companies such as Doosan, Gamesa, Iberdrola and Mitsubishi have also committed themselves to developing turbines in Scottish waters. Gamesa recently selected Strathclyde Business Park as the location for its planned Offshore Wind Technology Centre, which could represent an investment of around £50m in Scotland and create 300 direct jobs. A partnership comprising France’s engineering and construction services provider, Technip, and Spain’s Iberdrola are also poised to launch an offshore wind business based at Technip’s new centre of engineering excellence for offshore wind in Aberdeen.

Supply chain strain
With its strong base of supply chain skills, much of which are rooted in offshore oil and gas, Aberdeen in Scotland is widely regarded as a centre for energy in Europe. Moreover, as a devolved administration based in Holyrood, Scotland believes it could earn billions of pounds a year by exporting electricity if it is handed full powers over its energy sector – with wind, wave and tidal power forming the main thrust of Alex Salmond’s bid to secure Scotland’s place as the ‘Saudi Arabia of renewable energy’.

However, a new report by the Institution of Mechanical Engineers throws doubt on these ambitions, listing a number of concerns. These include the fact that a reliance on intermittent electricity sources, such as wind, requires a large amount of back-up power when the wind doesn’t blow, that the infrastructure and market incentives required to meet the 100% target so quickly will cost billions, and that Holyrood’s policy doesn’t appear to be based on any published strategy or engineering analysis of what is physically required. Crucially, it warns that the 100% target would need renewable energy capacity to be built at five times the rate of the last decade over the next eight years, despite the fact that all the best sites for onshore wind are already taken, while Scotland’s workforce currently lacks the skills and manufacturing base to make it happen.

Specifically, the report highlights major concerns in the engineering community regarding Scotland’s ability to provide the human resources needed to design, project manage, install and commission the volume of equipment that will be required to meet its ambitious targets. And although Scotland is by no means devoid of manufacturing industries, the report says that the country does not have a sufficient manufacturing base for the large volume of equipment that will be required to meet the 2020 targets.

Similar doubts have been expressed for the UK as a whole by The Royal Academy of Engineering in a report published in June 2011, which also points out that the UK is manifestly failing to capture the economic benefits of offshore wind. The world’s largest offshore wind farm at Thanet, for example, saw less than 20% of the £900m investment go to UK firms, with the report arguing for greater focus on the supply chain if it is to retain more value from deployment of offshore wind. Most significantly, it notes that the UK’s offshore wind industry faces a shortage of suitably skilled workers in both technical and commercial disciplines, as well as stiff competition for talent with other industries.

The fight for talent
The success of the North Sea oil and gas industry represents one of the greatest feats of modern engineering, and has witnessed the construction of massive structures in an inhospitable environment and called for sophisticated steel and fabrication technology, advanced vessels and helicopters, as well as the logistical support systems needed to get people to and from the rigs. This experience has been developed over the past 45 years and is now just as applicable to turbine technology, with many of the companies involved in their design and construction typically active in both sectors.

As such, there are two dimensions to the renewable energy industry’s skills shortage. Firstly, there is an aging workforce within oil and gas, meaning the availability of specialist skills and the level of experience is tailing off. The industry has simply been unable to replace this quickly enough – from the geologists and geophysicists working at the early stage of exploration, through to drilling engineers, reservoir and production technologists.

Moreover, not all oil and gas professionals will necessarily want to work in renewable energy, as they can also feed into a variety of other sectors such as automotive and aerospace. Secondly, the UK faces fierce international competition, especially from markets such as Brazil, Indonesia, Singapore and Thailand where there is booming demand for experienced oil and gas professionals, as well as China and Germany, which have emerged as leaders in the renewable energy space. According to analysts at Ernst & Young, Germany’s 100% increase in clean energy investment in 2010 saw it become the number two ranked country in the G-20, while the UK saw a 70% decline in investment. At the same time, China attracted a world record US$54.4bn in investment to become the number one nation for installed clean energy capacity and has also established itself as the world leading clean energy manufacturer.

Through flow and flight
Global investment in renewable energy hit a record high of $211bn in 2010, driven by a combination of stimulus package funds making their way into the market, the introduction of smart policies like Feed-in-Tariffs and target setting, according to the latest figures from the UN Environment Programme (UNEP). Wind continued to dominate in terms of financial new investment, with $94.7bn compared to $26.1bn for solar and $11bn for third placed biomass and waste to energy.

With the first three rounds of offshore wind activities in place, the UK has a genuine once-in-a-lifetime opportunity it must grasp. The UK coastline provides the ideal physical environment to cultivate a thriving offshore wind market, while much of the necessary engineering skills and experience in offshore technology already exists and although the UK is not competitive from a manufacturing point of view, it can be a leader in ideas and innovation. According to the Offshore Valuation Group, the renewable energy sector could generate anywhere up to 342,000 direct jobs in the UK.

However, the reality is that the skill sets tied to renewable energy and traditional oil and gas are genuinely mobile, while the UK’s competitiveness is also affected in the short to medium term by current policy on immigration and education. Changes to the Points Based System of Immigration, that took effect in April 2011, make it almost impossible for firms to recruit talent from non-EU countries, while many of the limited training places offered in the UK for MScs and PhDs are going to overseas students, who then return to their home countries.

As such, while there is through flow, there will be continued flight over the longer term because highly skilled engineers are being drawn to emerging markets in Asia, Australia and the Middle East, or developed countries with good standards of living, high growth economies and preferential tax rates for those with MScs and PhDs. For example, nations such as Germany and Denmark encourage close ties between education and industry and also offer financial incentives to attract highly qualified professionals from other countries.

Winning hearts and minds
Whilst it is certainly true that there is a growing skills shortage, whether or not this is attributed to a failure at grass roots level of the UK’s education system or global competition for talent, the fact remains that there are not enough UK-based individuals coming through with MScs and PhDs.

A report written by inventor Sir James Dyson in 2010 on improving the UK’s potential for exports and based on data from the Higher Education Statistics Agency found that over the previous five years, there had been a 16% increase in the number of students taking first degrees in science, technology, engineering and mathematics (STEM) and a 35% increase in students getting masters degrees. However, more than a third of this increase in STEM undergraduates had come from overseas. Based on this trend, the report surmised that in engineering, the number of UK resident PhD students had more than halved over the past ten years. The report also warned of the dangers of making the UK’s immigration system more restrictive, arguing that failure to keep the best overseas STEM students in the UK after their graduation could have ‘a significant economic cost’.

It’s easy to forget that the government supported the oil and gas supply chain in its early days with generous tax incentives, training programmes, strategic infrastructure and supportive regulation. The result has been a world leading industry generating £16bn each year including £5bn in exports and employing more than 300,000 people in the UK, around 80% of them outside London and the south east. Today, the boom in offshore wind technologies calls for mechanical engineers skilled in gear box technology, loads and aerodynamics, as well as chemical engineers with knowledge of composite materials that are used in the design of turbine blades.

At the same time, the energy industry in general needs more electrical engineers experienced in generator, converter and grid technology. However, with the way the economy is at the moment, and the level of investment available to the education sector, the UK’s renewable energy is a long way off from that happening, which means the ‘third industrial revolution’ could well pass us by if economic policy does not change soon. EngineeringUK reports that an extra two million engineers will be needed in the UK by the time primary school children of today reach working age. With engineering generating £1.15 trillion in turnover in the year ending March 2010, the industry association predicts a massive surge in engineering jobs, but says these might well disappear overseas if the UK skills base cannot meet demand.

Furthermore, although the UK’s engineers are amongst the best in the world, they are not currently held in high enough esteem. This was recognised recently with the announcement of the Queen Elizabeth Engineering Prize, which will award £1m biannually to an individual or team of up to three people for exceptional advances in engineering. Certainly, from an identity point of view, it’s about making sure there is a cohesive strategy in place to win the hearts and minds of students.

Rather than the political grandstanding we see today, there needs to be a long-term plan in place to ensure the best talent is cultivated and kept within the UK to provide the calibre of people required to compete on a global scale. The UK needs more engineering schools like Scotland’s Herriot Watts, one of the globally renowned schools in petroleum, oil and gas. It also needs to raise the identity of engineering within the UK and ensure that its importance and credibility cascades down to grass roots level so that when a child starts school, instead of wanting to be like Alan Sugar, they are talking about Isambard Kingdom Brunel, Sir James Dyson and James Watt.