LONDON -- One of the few highlights in an otherwise relatively muted 2013 renewable energy market has been offshore wind in the UK. Furthermore, 2014 is shaping up to be a pivotal year for the sector.
Indeed, a number of new reports have suggested that the UK will be one of the big winners as offshore wind bulks up.
Just three G-20 countries, among them the UK, saw an increase in clean energy investment in 2013. The U.K. saw 13 percent growth, to $12.4 billion, much of which was based on the strength of offshore projects and increased activity in public market financing, according to the 2013 edition of the Who’s Winning the Clean Energy Race?
The document highlights what it describes as the U.K.’s “abundant offshore wind resources and on-going commitment to develop the sector” as factors that have “helped to bolster clean energy investment, enabling the U.K. to jump from seventh to fourth among G20 countries.”
Bolstering the economic case for offshore wind further, analysis from the Offshore Renewable Energy Catapult, a government-backed body to support accelerated economic development for offshore, suggests the U.K. economy could gain by as much as £6.7 billion (US$11 billion) per year by maximizing offshore wind.
Under an ‘accelerated growth’ path, which drives cost reduction and quality improvements through innovation and investment, some 15 GW of offshore wind capacity would be installed by 2020 generating 34,000 direct jobs, an increase of 25,500 on 2013 levels and 150,000 jobs in total in the wider UK economy.
Even at the lower-end scenario, which foresees 8 GW installed by 2020, added gross economic value reaches £2.3 billion in 2020 and more than 11,000 additional direct jobs.
Alongside manufacture and deployment of turbines, foundations, cabling and substations, expertise in installation, operations and maintenance is perceived as the biggest long-term opportunity for the UK by providing an exportable service industry, similar to that achieved by the oil and gas industry.
Driving U.K. Wind Offshore
Despite the apparent economic advantages in developing offshore wind there is, however, clear evidence that significant challenges remain. In its latest Global Wind Report – Annual Market Update the Global Wind Energy Council (GWEC) acknowledges that “the apparent cost gap relative to more conventional power (including onshore wind) remains substantial, and we are at least a decade away from wholesale grid parity.”
But beyond the technical and economic issues associated with installing, connecting and operating thousands of individual offshore wind turbines, policy uncertainty is perhaps the key obstacle for developers.
A series of measures, chiefly passage of a new Energy Act last December and the Energy Market Review (EMR), have beset the policy landscape.
With the EMR has come reform of the Renewables Obligation (RO) renewable energy support mechanism into a Contract for Differences (CfD) scheme in which support for renewables comes in the form of a guaranteed ‘top-up’ on a reference electricity market price.
Undoubtedly policy uncertainty has been a factor in an alarming number of recent announcements abandoning or downsizing offshore wind proposals, but the range of technical, geological and environmental influences that have put paid to offshore wind proposals admirably illustrates the scale of the challenge for offshore projects to get over the line.
For example, in December 2013 ScottishPower Renewables confirmed that it will not be taking forward the Argyll Array project, citing technical ground conditions.
Jonathan Cole, Head of Offshore Wind at ScottishPower Renewables, said: “The rate of progress in development of foundation and installation technology has been slower than anticipated. The current outlook for offshore wind deployment in the UK suggests this will not significantly improve in the short term. This supports the view that it could take 10-15 years for the required technology improvements to be available for this project.”
In January RWE npower Renewables revealed that it was halving the capacity of its Triton Knoll project of the U.K.’s east coast. In a statement npower said work on the site design resulted in a decision to progress the development with a reduced capacity, ranging between 600 and 900 MW, rather than the permitted capacity of 1200 MW. The development came hot on the heels of another npower project announcement, the November news that the 1200-MW Atlantic Array to be sited off the U.K.’s west coast, was being effectively abandoned.
Part of the U.K.’s Round 3 of offshore wind development, in the Bristol Channel Zone, npower said it identified a number of site-specific technical issues that made the project unfeasible.
And the bad news keeps coming. In February 2014, the consortium behind London Array announced it will not proceed with the development of Phase 2 of the offshore wind farm, keeping capacity at the currently operating 630 MW — still the world’s largest offshore wind project to date. Phase 2 had the potential to provide a further 370 MW of capacity. The decision apparently follows a review by the consortium members of their respective portfolios, the technical challenges and the environmental uncertainties surrounding the site.
The London Array Offshore Wind Farm. Credit: London Array Limited.
And in late March, in perhaps the most significant development, SSE, another of the UK’s ‘Big Six’ energy utilities announced that it is not proceeding with the bulk of its offshore wind portfolio.
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