The energy sector has seen a great deal of uncertainty recently, hampered by a lack of definitive investment. But with wind and nuclear work picking up over the coming years, competition for skilled workers could grow stronger.
The energy sector is rarely out of the news.
Most of the headlines are about uncertainty of supply: political unrest in oil-producing states, drawn-out negotiations over new nuclear power stations and whether the UK has sufficient energy generation capacity to ‘keep the lights on’ in future are all hot topics.
The uncertainty has made for volatile construction output for energy projects.
Growth led by nuclear and wind
The Construction Products Association predicts annual increases in electricity construction output will not hit the 39 per cent high of 2013, but there will be growth.
It anticipates a rise in output of 15 per cent this year, mainly because of the decommissioning of old power stations, then 5 per cent next year and 15 per cent for the following two years before hitting 25 per cent in 2018, partly due to work on EDF’s Hinkley Point C nuclear power station.
Part of the rise from 2015 onward is down to a new round of funding for offshore windfarms.
“Some projects are now coming to site that have been in the planning stage for a considerable time”
Alan Robertson, VolkerWessels
The association says there is an urgent need for new investment in energy projects as 18 power stations were set to close between 2010 and 2030.
Uncertainty has been the dominant theme in nuclear and offshore wind power.
There have been protracted negotiations between EDF and the government over price guarantees for energy produced by its forthcoming nuclear power plant at Hinkley Point C, and a number of offshore windfarm projects have been cancelled over concerns about short-term financial viability.
Contractor VolkerWessels works in several areas of energy, all of which have experienced highs and lows for their own reasons.
Its main area of energy work is in offshore wind power. Its activities include offshore cable-laying, cable landfalls, onshore cable-laying, offshore turbine foundation installation and ports and harbour redevelopment works.
VolkerWessels UK chief executive Alan Robertson says: “Some projects are now coming to site that have been in the planning stage for a considerable time, leading to recruitment for site-based roles, project management, commercial and technical including specialist trades such as cable jointing. There is a lot of activity in Scotland in particular.”
However, he says there is still some uncertainty in the offshore wind sector, with projects stalled or scrapped and some other contractors leaving the sector.
Onshore wind, which was buoyant two or three years ago thanks to subsidies, has diminished as this source of funding has fallen and developers have faced difficulty getting planning permission, Mr Robertson adds. The firm is also bidding on nuclear-related work.
Clugston Construction has built a number of energy-from-waste schemes. Its managing director Steve Radcliffe says the number of these schemes climbed since 2011 but he believes it has now peaked and may fall back slightly in future.
Demand for construction workers increased considerably over that time, he says, but adds that the depressed levels of work in other areas of construction meant there were people to recruit.
“There will still be some large energy from waste or biomass plants to be built as merchant plants but not as many as the current numbers of municipal plants”
Steve Radcliffe, Clugston Construction
The demand for EfW was driven by targets for local authorities to cut biodegradable waste sent to landfill sites with an interim goal in 2013 and another, greater reduction by 2020.
Consequently, most local authorities’ plants are built or already under construction, so new construction is likely to come from businesses that create waste and need to find a cheaper way to process it. These plants are known as merchant plants.
Mr Radcliffe says: “There will still be some large energy-from-waste or biomass plants to be built as merchant plants but not as many as the current numbers of municipal plants.
“It is likely there will also be a requirement for plants which are smaller than the municipal plants currently being built.”
The skills needed to build a biomass or EfW plant are similar to those needed to build other waste and energy schemes.
All the traditional construction roles are needed on energy schemes, Mr Radcliffe says. Specialist knowledge of mechanical and electrical construction gained from previous work on power and industrial plants is essential.
“There are, without doubt, hotspots such as London where demand outstrips supply, but there are still other parts of the industry that have spare capacity”
Steve Radcliffe, Clugston Construction
He adds that planners and project managers need to be able to co-ordinate the interface between process – that is waste processing and energy generation – and the civil engineering or building work, but that the people doing the building could have experience from other sectors.
Mr Radcliffe says the main challenge will be competing for staff as the construction industry picks up and spare capacity vanishes. But that point has not yet been reached, he adds.
“The latest construction output figures released by the industry suggest that Q3 2014 is still 8 per cent below the pre-recession peak of 2008,” he says.
“There are, without doubt, hotspots such as London where demand outstrips supply, but there are still other parts of the industry that have spare capacity.”