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Manufacturing, Policy Clarity Needed To Advance UK’s Offshore Wind Success

At industry trade body RenewableUK’s offshore wind event in Manchester, UK energy minister Michael Fallon has announced that the government will launch a new Offshore Wind Investment Organisation (OWIO) this summer, with the aim of increasing investment in the nation’s offshore wind sector.

Fallon acknowledged industry concerns that investors need a stable, long-term policy framework, and he recognised the importance of offshore wind for the UK’s future economy.

“Offshore wind is a major success story for the UK, and we want to boost levels of inward investment. This will be an important part of our Industrial Strategy for the sector later this year, and we are creating the Offshore Wind Investment Organisation to drive that activity,” he said.

RenewableUK chief executive Maria McCaffery responded: “This news is a welcome boost for British industry and restates the government’s acknowledgement that offshore wind represents massive economic potential for the UK. The fact that this new organisation will coordinate government’s work with business is important as it further cements the positive relationship between government and industry, as we work together to build the investment climate we need to go forward.”

We Need Manufacturing, Trade Body Says

RenewableUK and The Crown Estate's Building an Industry report was also launched at the event. The report "outlines both the scale of the opportunity offshore wind affords us, and the risk of missing out on creating manufacturing hubs in the UK if we don’t get the policy right," said McCaffery. According to the report, less than one-fourth of Europe's 42 existing or planned offshore wind manufacturing facilities are located in the UK. The report says the UK will need to build around 32 factories in order to meet its targets for offshore wind farm development.

McCaffery said, "This is a once-in-a-generation opportunity. If we don't seize it, the large scale offshore wind supply chain factories of the future, making the blades, towers and foundations that we'll need to retain the UK's global lead in offshore wind, will be sited elsewhere. We are determined to work with the government to ensure that the UK capitalises on this chance to build an industry that will be the envy of the world."

The report says tens of thousands of jobs can be created by the need to build components for the UK’s wind farms. So far, only 10 such factories have been built or are planned in the UK.

Could the UK Lose Its Throne?

RenewableUK’s estimates are based on the government's renewable energy road map, which sets out plans for 18 GW of offshore wind generation capacity to be built by 2020, against the 3.3 G W installed to date. That equates to nearly 1000 offshore turbines at present and about 4000 more to be installed in order to reach the target.

In a conference session entitled “A Game of Thrones – Is the UK’s Number One Lead in Offshore Wind Secure?”, the panelists identified the greatest risk factors for the UK’s continuing global dominance as finance, cost, timing and manufacturing volume. Jonathan Cole, offshore managing director with ScottishPower Renewables, said the offshore wind industry needs policy to drive volume, cost reduction and UK content — but he warned not to try to achieve too much too soon. “We don’t want to expect too much too quickly and stifle volume,” he said; building local manufacturing “needs to be done over a reasonable period of time.” And he advised that policy should focus on making UK content competitive globally rather than on mandating levels.

Carolyn Campbell of the Department for Business, Innovation and Skills, who is working on the government’s offshore wind industrial strategy, pointed out that the Green Investment Bank already exists to catalyse some of the needed investment. She noted that increasing support for a UK supply chain is “really important” and that it is vital to reduce costs in the offshore wind sector.

Cole said that within five years he expects to see more UK manufacturing, and five years later he hopes for “almost cost parity”, more volume, and a large manufacturing sector. “Unfortunately this means reasonably high strike prices for the next few years,” he cautioned; “We need government and others to bear with us.”

Clark McFarlane, managing director of Siemens Wind Power Offshore UK, said that the UK’s future dominance in offshore wind is “not yet secure, but it is securable”, and the UK “has all the ingredients to be the major player in offshore wind”. Continuing dominance depends on two factors, he said: “implementation of the measures we’ve got,” and beating out other countries which may take up the offshore wind supply chain. The UK is “not the only country that borders the North Sea,” he cautioned.

He also revealed that Siemens is planning to build a manufacturing facility in the UK, but said it is “taking longer than expected.”

Policy Clarity Called For

The need for clear, coherent and certain long-term policy was a theme running throughout the conference. Tom Greatrex MP, the shadow energy minister, announced at the event that the next Labour Manifesto will include a commitment to decarbonise the UK’s electricity supply by 2030. He said, “Labour will continue to push for a 2030 target as it’s absolutely crucial to give the renewable energy sector long-term certainty.”

Last week an attempt to introduce an Energy Bill amendment setting a 2030 decarbonisation target was narrowly defeated in the House of Commons; an attempt will be made to reintroduce the amendment in the House of Lords. The coalition government says issue should be re-examined in 2016 (after the next election). At the conference Greatrex said, “Today I can announce that that if we don't get that target set in the Energy Bill, it will be in Labour’s manifesto for the next election.”

Greatrex also spoke out on the planned referendum on Scottish independence as it affects the renewable energy sector. “I believe it is crazy to jeopardise the single energy market in Great Britain by making both your biggest customer base, and where the support is derived from, a commercial rather than a co-operative relationship,” he said, adding that there is no guarantee that Scotland's energy would continue to flow to the UK, or vice versa, were Scotland to become an independent nation. "Delivery is an issue," he said, noting that the UK's installed capacity is largely in English waters.

Greatrex also said his party has a “relentless desire to take forward the offshore wind industry”, which it will put into practice if it wins the next election in 2015. He added that “Offshore wind has huge potential and can be an important part of our energy sector in the future".

Lead image: Offshore wind turbines at Scroby Sands, Caister, Norfolk, UK, via Shutterstock

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