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The energy and decommissioning sectors and their supply chain

15 December 2016

As demands for energy to supply an increasingly energy-intensive lifestyle have grown over the last two centuries, securing a safe, reliable energy supply has become one of the most important jobs governments are responsible for around the world. Here, Austen Adams of Avingtrans urges politicians to agree on a clear, long-term Energy policy to support the supply chain as the energy sector transforms and decommissioning becomes increasingly important.

Sizewell A (left) is being decommissioned and Sizewell B (right) should be in 2035
Sizewell A (left) is being decommissioned and Sizewell B (right) should be in 2035

In the UK, we live in a relatively benign political environment but that does not mean that the energy sector is immune from the negative impact that political wrangling inevitably brings. From the balance of our energy sources to commissioning new plants and decommissioning infrastructure safely, every decision is analysed by various interested parties to the ‘nth’ degree, increasing delays to essential infrastructure decisions. And with politicians’ eyes inevitably on the next election, a lack of clear leadership combined with a reluctance to make the big decisions that are needed but which may be politically unpopular, is also a real hindrance to progress. 

Given the importance of securing affordable, safe energy supplies for both domestic and industry users, it is perhaps surprising that there has been no clear Government energy policy since the days of the coalition government.

So what does this lack of clarity mean for our Energy industry and the UK companies and individuals that make up the supply chain?

In the UK, we are largely reliant on three main sources for our energy needs: oil & gas, nuclear and, inceasingly, renewables, all of which are impacted in different ways.

While, politically at least, the focus remains on developing new renewable technologies, at current adoption rates, and absent stabilising storage technologies, it will be many decades before our renewable energy infrastructure is sufficiently developed to become a reliable major player in the UK’s energy landscape.

Power generation and – most importantly – storage technologies are advancing well, but the onus on proving and developing that technology rests very much on the shoulders of private companies and the supply chains that support them. 

Only recently, the Energy and Climate Change Committee pointed out that the government’s capacity market policy is skewed in favour of fossil-fuel sourced energy, with contracts for new fossil-fuel generation projects lasting 15 years compared to just four years for energy storage projects.  The committee also said the UK government should redesign the capacity market to encourage energy storage and consider a system of subsidies to speed up the deployment of storage technology.

From recommendation to green paper, to white paper to implementation, without greater clarity over official government direction and the support of the kinds of subsidy programmes suggested by the committee, it is difficult to see how the process of bringing renewable energy enabling technologies – such as Highview Power’s Liquid Air Energy Storage system (currently operating  as a demonstrator project in Pilsworth, Greater Manchester) – will be rolled out across the country in the short-to-mid term.

So, if we accept that is the case, where does the UK turn to secure its energy supplies in during this period?

While it may be politically unpalatable to say so, the UK will remain reliant on fossil-fuel based energy supplies and nuclear technologies for the foreseeable future.

Even with Hinkley Point C now given the go ahead, it will be many years before nuclear new build programmes in the UK deliver their first energy supplies, so the pressure on ageing technology continues.

In practice, this is manifesting itself in the form of delays to planned decommissioning programmes and increased numbers of hastily-arranged life extension programmes coming into force.

As a designer, manufacturer and installer of components for energy systems, this represents both a challenge and an opportunity for our business – and it is one that is shared by many supply chain companies across the country. We are receiving growing volumes of enquiries for components and systems to extend the working life of power stations originally earmarked for closure.

This includes both systems we originally designed and those designed elsewhere – often already operating beyond their expected working life: With systems previously designed in house, we can of course go back to the original design drawings and even offer improvements to those designs based on what has been learned since; but for the latter, it means drawing on the skills of experienced engineering teams to retrofit solutions to someone else’s system, which is often a costly option.

The most forward-thinking companies work hard to retain this experience in their design and process engineering teams but, elsewhere, constantly-shifting policies have led to the loss of key skills as programmes and contracts are delayed.  The oil & gas industry in particular is going through a difficult time as a result of falling oil prices and it is likely that industry will face similar challenges as projects continue to be cancelled or mothballed indefinitely.

At first glance, this may seem like a problem for individual companies rather than the industry as a whole, but genuine energy security requires the development and retention of a skilled, locally-based supply chain, that has the workforce and facilities needed to deliver on key infrastructure projects.

Much is spoken about the manufacturing skills crisis and it is true to say that the impending retirement of a generation of skilled workers – such as welders and machinists – represents a real threat to the sector. Firstly, supply chain companies need to overcome the general misconception that UK manufacturing is dead and offers few long-term career opportunities. Secondly we need to recruit and train specialist workers to deliver on key projects, and this is where apprenticeships are key.

But, while a typical engineering apprenticeship takes two- to- four years to complete, specialist skills such as welding, particularly working with exotic materials, take much longer to hone. Becoming a good welder takes years, and support and training must be provided throughout this period.

Whatever area of the energy industry you’re working in – whether its nuclear new build, decommissioning, offshore oil & gas or renewables – the country needs a clearly defined strategy, backed up by government initiatives that align with achieving those aims, if we are to secure our energy future.

It is not the case that private companies are not willing to invest in the sector – the scale of opportunities presented by nuclear decommissioning in the UK alone is vast – what is needed is a clear government policy and commitment to delivery timelines that enable companies to do so with confidence to meet that demand.

This means recruiting more apprentices in the knowledge that work will be there for them when they complete their courses – not 10 years later when two governments and multiple policies have pushed difficult decisions into the long grass. It means recruiting enough workers to cope with the inevitable ramp up in demand that follows the start of previously-stalled programmes. It means building trust throughout the supply chain that the industry is working towards a shared vision for the sector, giving companies the confidence to retain facilities or invest in new equipment and training that will support the delivery of that vision.

In turn, supply-chain companies need to diversify so that skills can be transferred from one sub-sector to another in what is an inherently volatile sector – retaining the skills so important to UK PLC. We must also invest in the next generation of engineers and new technology to ensure we continue to offer world-leading expertise and best value.

The energy sector is a challenging and crucial industry to work in but all too often, decisions are made for political reasons, costing the country money, skills and, ultimately, its long-term energy security. A clearly defined Energy policy from Government is an essential first step to improving the situation.

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