Posted on Wednesday 20 June 2012 by Ulster Business

Belfast Harbour

When a business spends £50m on a single project you’d like to think they would have a reasonable chance of that investment paying off.

For Belfast Harbour, the development of a new terminal for the assembly of offshore wind turbines represented the largest ever project in its 400-year history.

But, says Commercial Director Joe O’Neill, there is no doubt in anyone’s mind that the substantial outlay will pay dividends.

Government targets for renewable energy generation by 2020 – ranging from 15% UK-wide, to 40% in Northen Ireland and 100% in Scotland – mean that there is a guaranteed market for the turbines.

“If you’re setting up in a business usually you have a reasonable idea about your raw materials, who your customers are and whether they will buy from you. In the renewable energy sector, Government targets mean there is a cast iron certainty there will be customers,” says O’Neill.

Figures put out three years ago by the Crown Estate and Department of Energy suggested there would be a need for 11,000 turbines in UK and Irish waters by 2020 if UK plc is to meet its renewable energy targets.

“To put in that amount of turbines is probably a £100bn investment. I don’t know of any other sector that is planning to spend so much, so quickly on our doorstep,” adds O’Neill.

The 50-acre facility will initially support the construction of the West of Duddon Sands offshore wind farm – a 50/50 joint venture between DONG Energy and ScottishPower Renewables that will generate 389MW of electricity.

The facility will then be used by Denmark-based DONG, a market leader in the wind farm industry, for its future Irish Sea Operations.

“There aren’t many better brand names to associate yourself with if you’re going into offshore wind than DONG Energy,” says O’Neill. “They are a £6bn company, 77% owned by the Danish government, so they are pretty secure, they are the largest offshore wind farm developer in the world, currently building the largest offshore wind farm in the world.”

DONG has planning consent for three wind farms in the Irish Sea and, unlike some other wind energy companies mainly interested in the electricity that comes out at the end of the process, DONG’s offer runs through the design, development, installation and operation of wind farms.

The terminal is due to be finished in October and handed over in January to DONG, with components for wind farms arriving soon after. The development is the first bespoke offshore wind installation and pre-assembly harbour in the UK.

Belfast’s ability to go from initial enquiry to completion of the site in under two years has caught the attention of other big companies in the sector and several other investments could be confirmed soon, said O’Neill, though details remain under wraps at this stage.

What is clear, however, is that Belfast has stolen a march on other UK ports in the scramble to get into renewables, putting itself in the same bracket as the leading European ports involved in the sector Bremerhaven in Germany and Esberg in Denmark.

“By delivering for DONG we have put ourselves in a prime position and now we’re getting quite a few enquiries from other people saying can you do the same for us? So we’ve established a good reputation for Belfast and we are trying to capitalise on that,” says O’Neill.

“No other port in the UK has responded the way Belfast has. There is probably the need for two or three other ports, probably on the east coast of England to be doing what Belfast is doing but none of them have responded yet. We took the leadership on that and that has been recognised,” he adds.

Though there are limited opportunities to create other big logistics facilities to serve the Irish Sea market, Belfast Harbour sees big potential in the wind farm supply chain, with Danish and German companies that provide components possibly setting up manufacturing operations here for assembly and logistics.

“They need to invest in new production facilities in the UK closer to the development sites,” says O’Neill. “We probably won’t get the really big manufacturers who want to be on the East coast (of England) where more developments are, but there is still a huge opportunity to get manufacturing jobs in.”

The next phase of the masterplan to carve a niche for itself in renewables will involve a new programme of land reclamation.

DONG’s site covers 50 acres and there is strong interest in another 44 acre site, but after that the Harbour has limited waterfront real estate.

“The renewables sector, while hugely promising for us is very land hungry. We need to accelerate our plans for probably 60 acres but possibly up to 120 acres,” explains O’Neill.

The plan is currently out to tender for planning consultants and is likely to take a couple of years to get consents and physically do the work, he estimates.

TRADE ACTIVITY

The Irish Maritime Development Organisation’s annual report, released in April, indicated that in terms of tonnages trade across the Irish ports sector was essentially flat last year.

In that environment it is therefore encouraging that in 2011 Belfast Harbour was able to post a 7% increase in tonnages to 17.64 million tonnes, driven by strong increases in the break bulk and roll on / roll off or freight vehicles sector.

O’Neill says the figures made Belfast Harbour the strongest performing major port in incremental tonnage terms by some margin.

“Stepping back from our performance I don’t disagree with IMDO figures that showed a stagnant marketplace where for most ports export volumes were up, largely on the back of a reasonably healthy manufacturing sector, but any gains were offset by declines in imports for consumer related products,” he says.

Like all ports, O’Neill says some individual sectors were up and some were down. The diversity of its business helps to offset that volatility, for example a sharp rise in scrap metal volumes because of buoyant prices across Europe came as grain levels decreased.

Coal volumes have increased because of industrial demand, with coal tonnages last year up about 75% to half a million tonnes of coal. That is partly down to the work done to deepen the channel in the port and allow it to take up to 50,000 tonne vessels.

Another big positive is the large volume of stones / aggregates being exported out of Northern Ireland for the road building and maintenance sector in the south east of England, Holland and Belgium. Last year it exported a million tonnes of stone and is on track to do considerably in excess of that this year.

However, most of Belfast Harbour’s tonnage increase was down to market share gain in the RoRo sector.

The port picked up business when Stena Line closed its Larne-Fleetwood service last year and then bought the Belfast-Heysham and Belfast-Liverpool services. It has also benefited from Stena building a new port terminal in Cairnryan in Scotland and operating two new ships which are bigger and more reliable on those routes, taking business off P&O’s Larne-Cairnryan service.

The port is also set to see further gains in 2012 after Seatruck, which had been operating a freight only service to Heysham, transferred its service to Belfast in May.

“We are making huge strides in the RoRo sector,” says O’Neill. “We used to be the largest RoRo port in Northern Ireland but lost it for a number of reasons. P&O put on bigger ships and Stena was constrained because it couldn’t until it built another port and we had a bigger depot. All those pieces of the jigsaw have now fallen into place.”

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