Configuring floating production networks: A case study of a new offshore wind technology across two oil and gas economies

Abstract

The authors employ global production network (GPN) approach to analyse the development of the renewable energy sector. Through a case study of the development of a Hywind floating offshore wind project (Hywind) across two oil and gas economies, namely Norway and Scotland, the paper sheds light on the key drivers and role of core GPN actors. Methodologically, the authors investigate the process from both 'inside-out' and 'outside-in' perspectives, referring to the efforts of firms expanding into overseas markets and the efforts of host countries to attract investment from outside their territories. The analysis shows how the configuration of extractive production networks is shaped by the interactions between the network development practices of firms and the market development strategies of host states. The authors conclude that the distinct materiality of floating wind power technology shapes the territorial configuration of the 2 production network by enabling its spatial extension across a range of locations. By contrast, existing research on other extractive sectors has emphasized the spatially constraining effects of materiality (Bridge 2008).

Gaining lead firm position in an emerging industry: A global production networks analysis of two Scandinavian energy firms in offshore wind power

“…Our predominantly qualitative research design is informed by our research on the OWP sector since 2010 (e.g., Steen and Hansen, 2014, 2018; Afewerki et al, 2019; MacKinnon et al, 2019, 2021). As part of a broader research project (2016–2019), primary data were generated from 45 semi-structured interviews with representatives of different firms and non-firm actors (including two interviews with Equinor, and several interviews with consultancy firms and other actors with a broad overview of the OWP market) in the Northern European OWP sector from 2016 to 2019.…”

“…As a result, OWP production network configurations involve intense extra-firm bargaining activities to ensure enhanced value capture in the countries that host OWP projects. Hence, Ørsted was involved in Local Enterprise Partnership programs in the UK to accommodate the 50% local content expectations (Afewerki et al, 2019).…”

“…However, given that lead firms’ industrial organization strategies are shaped by key industry-specific characteristics, as argued also in the GPN literature (see Afewerki et al, 2019; Bridge, 2008; Bridge and Bradshaw, 2017; Gibson and Warren, 2016; Irarrázaval and Bustos-Gallardo, 2018), they should not be assumed to be uniform. In other words, contrary to the mature manufacturing industries, emerging PBIs such as those within renewable energy present rather different sets of competitive pressures that are likely to warrant different strategic responses by lead firms.…”

Firm agency and global production network dynamics

“…Furthermore, in order to further secure efficient sourcing and thereby keep costs down the company to some degree is involved in building local supply chains in collaboration with the local industry. In addition to organizing local meet the buyer events, Ørsted is also involved in the Local Enterprise Partnership programs in OW markets such as the UK, which has an expressed local content expectation of 50% (Afewerki, Karlsen & Mackinnon 2018). This is significant part of the company's extra-firm bargaining strategy and help it to accommodate the local content expectations of host countries.…”

“…Host states on the other hand, in an effort to embed OW developments within their territories can introduce local content requirements and various support schemes and this in turn can compel lead-firms to implement sourcing strategies that favor host country suppliers. Nevertheless, this can be highly contingent on the capabilities of the host country suppliers and may differ according to the different market and institutional contexts (Afewerki et al 2018).…”