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BiFab boss: ‘Tighter regulation needed’ if Scottish wind firms are to win contracts

Sean Power, director of BiFab.
Sean Power, director of BiFab.

The owner of the BiFab manufacturing yards has called for tighter regulations on offshore wind developers and manufacturers to help prevent it missing out on vital contracts.

It wants to ensure developers stick to commitments in UK Government contracts on proportions of work to carried out in Scotland and for regulation to exclude any firms not abiding by state aid rules.

DF Barnes, a subsidiary of Canadian Firm JV Driver, acquired BiFab’s three yards – at Arnish on Lewis and Burntisland and Methil in Fife – last year in a Scottish Government-backed rescue package.

Previously, 1,400 people were employed across the sites but MSPs were told now 30 people are employed in Fife and 85 in Arnish, up from the seven part-time jobs offered at the takeover.

BiFab director Bill Elkington told Holyrood’s Economy, Energy and Fair Work Committee so far no bids for offshore wind contracts – a key source of business for the sites – had been successful.

He said on one main project, the Kincardine floating offshore wind development, his firm was outbid by Spanish state-owned firm Navantia.

It runs at a 35% revenue loss and he questioned how this adheres to state aid rules.

“Right now we’re quite concerned about competing against businesses that lose money,” Mr Elkington said.

He said Scottish taxpayers subsidise the UK Government’s Contract for Difference for offshore wind, which he said include commitments to a proportion of work being carried out in Scotland but there’s “nothing to hold (developers) to that”.

Mr Elkington said elsewhere companies are punished for breaching that type of commitment, with one developer in Canada fined 150 million Canadian dollars (£86.3 million).

“Scotland and the UK Government is doing a fantastic job of bringing in wind development and actually lowering the cost of wind (energy) with the 8GW that’s been installed and yet on some of these projects they are getting no direct benefit on the infrastructure,” he said.

“And that really is a travesty that needs to be addressed through either regulation or government intervention of some sort.”

He added: “I’d recommend controlling who is bidding and if they are not living up to the requirements of state aid they should be excluded from it, and then we would have a bunch of people back to work.”

GMB’s Peter Welsh said the Marine Scotland planning consent for the Kincardine project refers to a “commitment to the construction of substructures which was expected to be undertaken within a Scottish port”.

Unite’s Pat Raffertysaid: “We seem to be abiding by them (European laws) but it seems to be getting ignored by the Spanish and elsewhere.

“We were told … about Scotland being the new Saudi Arabia for renewables.

“I think if we continue in the way that we are in terms of how these contracts are getting awarded then we certainly are not going to be the Saudia Arabia of renewables.

“They will be getting built in Saudi Arabia and shipped across here. And that’s something that we need to try to make sure does not happen.”

Labour’s Jackie Baillie said: “The dogs in the street know there’s state aid breaches in Spain … why aren’t we doing the same as happens in Spain to create that level playing field?”

Andy McDonald from Scottish Enterprise said the organisation is not in a position to breach state aid rules.

Nick Sharpe, of Scottish Renewables, said historic under-investment in UK yards compared to Europe had enabled them to provide round the clock fabricated steel manufacturing to a quality and cost “that at the moment … we are just not capable of, by and large.”
He added: “There are certainly things that can be done here and the issues are fixable.”

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