When Boris Johnson unveiled his 10-point plan for creating a ‘green industrial revolution’, it was no coincidence that the first three areas he outlined were in the energy sector.
Boosting generation of offshore wind, hydrogen and nuclear power was listed in the Prime Minister’s £12 billion investment plan above transport measures such as encouraging take-up of electric vehicles, cycling and walking.
Now the Treasury has published details of the UK Infrastructure Bank, which will have £22 billion of financial capability to pursue its aims of tackling climate change and promoting regional growth.
Contractors and consultants working across infrastructure have traditionally had large transport divisions (some have separate divisions for Rail, Highways and Aviation) and smaller energy divisions – and for good reason.
Data from the Construction Products Association shows that capital expenditure in the energy sector was roughly a tenth of that in the transport field from 1997 to 2005.
However that has started to change dramatically, with power investment actually outstripping transport spending from 2015 to 2017.
Energy spending is forecast by the CPA to grow by more than 50 per cent between 2020 and 2022.
There are three main reasons why growth in energy investment is likely to surpass transport expenditure over the coming years.
1) The zero-carbon agenda
The prime minister in December announced a target to slash the country’s carbon emissions by 2030. It is the latest step towards achieving his predecessor’s lofty – and legislated – ambition of achieving net zero carbon by the middle of the century.
A significant amount of change is required to achieve these aims and the technology involved is seriously unproven. Johnson’s green industrial revolution set out plans for the UK to create 5GW of low carbon hydrogen production capacity by 2030 along with carbon capture facilities to store 10MT of carbon dioxide by the same date.
Nuclear power and offshore wind will also play a big role, two areas that are further along the pipeline after receiving government incentives in the past. The UK Infrastructure Bank will doubtless look to spark investment in hydrogen and carbon capture projects among others so we can expect an upsurge in project development in these areas.
2 Energy security/pipeline
EDF recently announced plans to start decommissioning its West Burton A power station in Nottinghamshire as soon as next September. The French energy giant closed the nearby Cottam Power Station in 2019, meaning only the Ratcliffe-on-Soar plant is still producing coal-fired electricity for the national grid.
Meanwhile decommissioning of old nuclear sites continues rapidly, an industry worth almost £2 billion per year. Yet as these old sources of power diminish, future use is expected to soar. Forecasts attributed to the government by hi-tech meter roll out body Smart Energy GB suggest an 8 per cent hike in energy demand in the decade to 2035.
Hence EDF is producing the £23 billion Hinkley Point C nuclear scheme, which should become operational in 2026. And it has plans for another at Sizewell C in Suffolk. Many more big schemes are in the pipeline.
After a year of enforced home working, it is likely many people will continue to seek more time away from the office, potentially increasing the need for more power but more importantly almost certainly reducing the pressure on transport infrastructure.
Network Rail chief executive Andrew Haines cited the impact of the pandemic on passenger numbers in responding to claims the body is looking to reduce staff numbers as it makes changes to working practices.
Overall it is clear to see that there are fewer cars on the roads, more empty seats on trains and of course a massive reduction in numbers of people flying. The stress that was expected to come on to these services during this decade is no longer apparent and the business cases for some planned enhancement projects may be under close scrutiny.
So how do infrastructure supply chain companies take heed of this trend and gear their businesses up to take on more energy work?
Looking at senior positions, there are four major options.
1) Transfer leaders from elsewhere in the business
Some experience will be transferable from other infrastructure. About a third of the expenditure on a nuclear new build project is generally spent on civils work. So, if you have a highly rated civils project director in another sector, by increasing their understanding of nuclear projects they can certainly prepare for a move across when the time is right.
Similarly someone leading a business that delivers streetworks in the water industry could switch over to similar role in the gas or electricity sector. Oil & Gas offshore project staff have transferable skills to offshore wind.
2) Poach from competitors
You can consider other companies already working on energy projects to see whether they have people working successfully in top jobs that you could tempt across for the right opportunity.
Doing your research is critical here as you want to get individuals who match not just your skills requirements but your company ethos and ways of doing things. Then you need to make an approach in the right way that doesn’t ruffle feathers but does get a result. Going through executive search specialists such as ourselves can help you pinpoint and attract the talent you need.
3) Look overseas
If you can’t find the right people from within your firm or its immediate competitive pool then you may have to look abroad. Nuclear power is a good example here – before Hinkley Point C there hadn’t been any new nuclear build in the UK for more than 20 years so EDF had to spread the net wider to fill key positions. The fact the main client is based in France, where they have more recent experience of this type of project, can only be an advantage.
So think about where you might find the experience and capability you need and then work out how to go about securing it.
4) Train people into roles from elsewhere
The above are the three most likely sources of energy leaders for an expansion to meet expected demand in the sector. But don’t be blinkered. Keep your eyes open for possible opportunities to bring in someone useful to you from other places.
Perhaps a client organisation has someone with a lot of industry knowledge and a brimming contacts book who is open to a move. Maybe a supplier such as an equipment manufacturer is closing it’s projects arm and has good people looking for a challenge. With the right induction and training processes, you can create your next energy sector leader from a range of places.