Following March’s announcement of the FLOWMIS fund, Celtic Sea Power’s initial review highlighted a number of areas where clarification was needed to help Ports in the Celtic Sea put forward compelling cases to secure investment from the fund.
With increased commitment around port utilisation in last week’s TCE announcement, it’s clear that there is collective desire to see the Celtic Sea ports supporting the test and demonstration phase and the much-anticipated leasing of 4GW of seabed in the Celtic Sea. However, as originally set out, a scheme aimed at de-risking investment in FLOW manufacturing capacity raised a number of questions that if unanswered, could have failed to incentivise/aid Celtic Sea ports in preparation for FLOW.
CSP raised these queries during to the formal clarification phase and last month, DESNZ issued responses to ours and the markets and also a material update to the timings. Luke Sharp, CSP’s Ports Project Officer has reviewed these and considered the implications for regional ports.
The Initial thoughts for many of those wishing to apply into to this scheme would surely have been of a missed opportunity, given that to maximise the funding opportunity in the stated timeframes, any port would have required a shovel ready project already engineered, consented with a preferred contractor ready to go especially for this financial year. CSP considered it was highly unlikely that many, if any Celtic Sea ports would be able to commit to meeting the essential criteria and benefit from meaningful capital funding before March 2025.
All of the major Celtic Sea Ports are in the early stages of the typical development cycle. During this time, they are DEVEX intensive due to the nature of planning and environmental impact assessments which span both on and offshore legislation. There is a clarified expectation that applicants must demonstrate appropriate progress towards obtaining consents and a timeline for resolving outstanding issues that will enable FID to be taken within the funding period.
DESNZ’s clarification to allow development expenditure as long as it is in line with the International Financial Reporting Standards and the applicant can demonstrate with supporting evidence of previous examples of capitalising development expenditure will be welcome by most.
However, the non-movement of essential criteria, such as minimum water depths of 10m below chart datum may leave others at a loss. The 10m figure comes from industry research and is considered to represent the basic attributes required to support a floating offshore windfarm. In order to deploy FLOW at industrial scale, the Celtic Sea will require ports for substructure manufacturing and the staging of turbines.
Rather than stating arbitrary depths from current levels of technological readiness, a more pragmatic approach which designs to local and utilises our ports for their attributes, might have been a better solution. The criteria as stated does not allow for development and use of new concepts which could provide credible engineered solutions the industry needs to meet the scheme’s objectives.
Maximum grant interventions have been reconfirmed at 60%, 80% and 90 dependent on the level of eligible project spend, i.e. £15 million, £15 – £40 million and £40 million+ and there is no minimum or maximum bid requirements stated.
The decision to reprofile the FLOWMIS window to the right one year (The scheme will now start March 24 and end March 26) and extend the application deadline to August is an important and welcomed commitment and enhances the potential for many Celtic Sea ports wishing to participate.
However, the timeframe for spending of grant funds has not been extended, with all funding defrayed by end of March 2026. Applicants may well still find this restrictive with regard to development and construction schedules and value engineering, perhaps racing to spend money inefficiently.
DESNZ’s Clarification to non-port owners leading bids to distribute funds to ports may well reduce the opportunity for collaboration around capacity building for FLOW. Whilst the Celtic Sea Ports are collaboratively minded, there are limited entities currently available in the Celtic Sea Region that could manage an application of this type. this clarification again seems to be positive for the Celtic Sea as to other areas in the UK where Freeports may be more established could be at an advantage.
Alignment with Developing Industry Thinking
The firm consensus is that no one port can deliver the Celtic Sea FLOW ambition and a multiport strategy is needed. This is what was stated in the Celtic Sea Clusters Ports Position Paper and has since been echoed by Tim Pick’s Seizing Our Opportunities Report and Floating Wind Offshore Wind Taskforce.
Applications will require some narrative around how the specific port development fits within the wider regional strategy and with a competitive process pitting the Ports off against each other, the result is likely to see each port operator stating their view, over a cohesive regional strategy that provides a compelling and joined up regional view.
Siloing funding and investment does not offer the synergy that could be achieved by well thought out, focused and timely issuance of funding that is initiated early supporting development and is built upon throughout all phases of FLOW deployment, but these clarifications are certainly paving the way for a highly competitive process in the coming months.
Celtic Sea Power are committed to support ports both during this competition and the foreseeable future to help deliver Celtic Sea FLOW.
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- Concrete Position Paper 2023
- Meet the Swansea Bay City Deal
- The Crown Estate July 2023 Update on Celtic Sea FLOW Leasing Round – Implications for development of a local supply chain