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New blow for BiFab yards as offshore contract bid collapses

October 22, 2020

By Paul Homewood

 

 Where did all those green jobs go (Part 97):

 

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The future of three BiFab fabrication yards in Fife and on Lewis are in even more doubt after its Canadian owners withdrew a bid for a major contract.

DF Barnes had been negotiating to build jackets for wind turbines to be installed off Fife by French firm EDF.

But the company has pulled out, citing a refusal by the Scottish government to provide financial guarantees.

The government said rules on state aid limited the amount of support it could offer.

All three fabrication yards – at Burntisland, Methil and Arnish – are currently mothballed.

The Scottish government took a stake in the Bifab yards when they were saved from permanent closure in April 2018.

But it said it was legally barred from guaranteeing contracts while the majority shareholder was not funding the company or the yards.

BiFab’s board of directors said they were "now considering the path forward for the company".

A company statement said the government’s decision meant "it can no longer provide assurances for the NnG jacket fabrication contract".

It added: "BiFab recognises that this makes an award of the contract very challenging. The company and its partners have worked extremely hard to secure this important contract."

Economy Secretary Fiona Hyslop told BBC Scotland: "The situation at BiFab is serious."

She added that as a minority shareholder the amount of funding ministers could provide had been "exhausted".

The Scottish government highlighted that it had already invested £37.4m through a combination of equity and loan facilities and converted this to a 32.4% equity stake in BiFab.

"A loan facility of £15m has also been provided to support working capital," the spokesman added.

Trade unions have been highly critical of the failure to secure more renewable power engineering work for BiFab.

Work on turbine jackets was seen as the best hope for Scotland’s offshore fabrication sector.

However, contracts have repeatedly gone to overseas yards, including Spain and Indonesia.

BiFab also recently lost out on work for the Seagreen wind farm off the coast of Angus, with those jackets being constructed instead in China and the United Arab Emirates.

Overseas yards are able to build at scale and with prices far lower than BiFab can achieve. They may also gain from government subsidy.

https://www.bbc.co.uk/news/uk-scotland-scotland-business-54630628

13 Comments
  1. October 22, 2020 10:34 am

    The GWPF article on this story refers to Salmond’s long-ago quote of Scotland being potentially “the Saudi Arabia of renewables”. Only a few weeks ago Boris Johnson referred to the UK as being potentially “the Saudi Arabia of wind”. What a pair of wishful thinking technical illiterates!

  2. Geoff B permalink
    October 22, 2020 10:38 am

    As the Scottish wind farm projects never made any sense, under any financial analysis of net return, this can hardly have come as a surprise. Scottish tax payers are now out by £34.7 million. More to come methinks. Incidentally is the Western connector fixed?

    • pardonmeforbreathing permalink
      October 22, 2020 3:41 pm

      Not one of these projects can work on a level playing field. What they produce is an unreliable supply of energy in pitiful small penny packets at an eye watering cost.

  3. CheshireRed permalink
    October 22, 2020 10:57 am

    So the cost of renewable energy helped make the Scottish bid (to build more renewable energy!) economically uncompetitive while EU state aid rules stopped the Scottish government offering assistance.

    You’d need a heart of stone not to laugh.

  4. Penda100 permalink
    October 22, 2020 11:05 am

    Loads of green jobs – just not in Britain.

  5. Harry Passfield permalink
    October 22, 2020 11:28 am

    My cynical eye leads me to the belief it was nothing to do with Government (lack of) backing: I bet it was more to do with (lack of) backsheesh.

  6. October 22, 2020 11:34 am

    The Chinese business of climate action supply to the West is booming, thanks to the West’s climate insanity.
    Never give a sucker an even break!

  7. dave permalink
    October 22, 2020 11:37 am

    “Permanently closed” versus “mothballed.” A distinction without a difference in this endgame.

  8. October 22, 2020 1:00 pm

    Overseas yards “may also gain from government subsidy”, unlike BiFab, which is, Chinese-style, partly government owned ?

  9. MrGrimNasty permalink
    October 22, 2020 1:33 pm

    BBC says air quality to be made worse by extra Gas CH use working from home.

    https://www.bbc.co.uk/news/business-54634166

    Interesting how every dubious BBC article gets ever more intricate in its explanations as it has to weave ever past bit of misinformation into the new story.

    I already noted that despite the media claims, city and roadside air pollution levels have shown no/weak correlation to the private car component variation in traffic levels, and noted it seems far more controlled by meteorology/weather, land (farming and natural) emissions, and possibly GCH use, and censors in bus/taxi lanes/stations in some cases!

    • MrGrimNasty permalink
      October 22, 2020 1:35 pm

      OMG sensors!

  10. Colin Megson permalink
    October 22, 2020 2:46 pm

    Over its 25 years lifespan, Seagreen Windfarm will generate 117.7 million MWh of intermittent electricity. Several news items reported a lifetime cost for Seagreen as £5.7 billion. That works out at a cost content of £48.43/MWh.

    But here’s the thing: Seagreen’s bid for a CfD contract settled at a price which is currently £48.09/MWh;

    Can anyone explain how investors sinking their pension pots into offshore wind projects manage to make a profit?

    Search for: costs per mwh are higher than the current strike price

  11. pardonmeforbreathing permalink
    October 22, 2020 3:39 pm

    We are told that Wind power is now so cheap to produce and on a par with fossil fuels. With that in mind why does a company need gold plated financial guarantees if it fails to deliver what it has promised at the price it has promised? What other industry has an economic model so based on subsidies kickbacks and “state guarantees”? In any other field they would be laughed out of court.

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