The Wind of Change?

Two separate reports published last week came to the same, very welcome conclusion: that it will be possible for offshore wind power to compete with the cost of onshore and biomass energy in the UK by the end of this decade. The two reports – one published by the Crown Estate which manages the sea bed around the UK and the other by the Offshore Wind CRTF (Cost Reduction Task Force) – both predict that the cost of offshore wind energy can be reduced by at least 30% by 2020, making it a much more financially viable cost of sustainable energy than it has been until now. That’s great news for the renewables sector, for the consumer and for the environment.

The news follows the establishment of the CRTF by the Government last July, when it was given the remit of identifying ways of reducing the cost of offshore wind power to £100/MWh.  The resulting report has numerous recommendations but the chief premise is that the delivery chain needs to work together to drive savings in the construction and commissioning of offshore wind farms.

That central recommendation, that companies need to work together for the greater good rather than compete relentlessly to win contracts, is the game changer in this story. The world has changed during the course of the past five years…..and not only in the growth of the renewables sector but also in the way in which businesses need to nurture the wellbeing of their sector, not simply their own balance sheets.

Thanks to the global economic downturn, there have been fewer contracts to chase and a good deal of cost cutting used to generate some form of competitive advantage in order to win them.  The question is, is lowering prices and creating an expectation of lower cost products and services amongst customer groups really giving anyone a competitive advantage; or is it putting everyone at a commercial disadvantage?

My recommendation

The idea that forging relationships with others in the sector could provide cost savings without destroying margins and help secure the long-term viability of the sector is, for me, the most important recommendation here.  What’s more it’s a recommendation that can be applied across the renewables and the construction sectors.

In marketing terms, that means that you shouldn’t just be thinking about who you need to sell to, but also about whom it would be useful for you to know. Partnerships, co-operation agreements, joint-ventures, preferred supplier deals….they all begin by ensuring that your voice is heard, with volume and credibility, by the right people in the right places.