The company said that following a strategic review of its offshore wind development portfolio, it will focus its efforts and resources on progressing the 750-MW Beatrice project, though a final investment decision is not due until early 2016.
As for its other projects, it is not proceeding with the 340-MW Galloper project in a 50:50 partnership with RWE or the 690-MW Islay proposal, and for its Round 3 interests — the 3.5-GW SeaGreen and 7.2-GW Forewind, SSE has decided that it will not proceed further than securing necessary construction consents.
Commenting on the decision Jim Smith, SSE’s managing director of Generation Development, said: “In offshore wind farm development, there are two major, related hurdles that projects currently have to overcome. The first is the Levy Control Framework, which has the reasonable objective of controlling costs to customers from government energy policies — but that also means there is limited support for offshore wind. The second is cost — the future of offshore wind farm development depends on a sustainable and lower cost supply chain.”
Reacting, RenewableUK Chief Executive, Maria McCaffery, said: “This announcement demonstrates very clearly the need for the government to provide greater confidence for investors in its long-term support for Britain’s offshore wind industry.”
McCaffery added: “If we could rely on more certainty and less risk, firm commitment to the huge financial investments involved would secure all the economic benefits of energy independence in a shorter timescale.”
A Fair Wind for Offshore
Of course, technology, economics and policy aside, any reasonable observer would suggest that, given the scale of the UK’s ambition for offshore wind, inevitably some projects will fall by the wayside as a result of numerous possible technical or financial reasons. And overall, the UK still has well over 3.5 GW of offshore capacity installed across more than 20 projects, there are a further five projects under construction and nine with planning consent with a further pipeline of close to 15 GW.
Furthermore, in 2013 four offshore wind sites — the 630-MW London Array, the 270-MW Lincs project, 62-MW Teesside and the 12-MW Gunfleet Sands demonstration project — came online, adding a combined capacity of 733 MW.
According to the latest figures published by the U.K. government, for the last quarter of 2013 offshore wind generation had increased by 42 percent in comparison with the same period in 2012.
This continued expansion into offshore waters has been driven by a number of policy and private development initiatives as well as significant investments.
For example, last August the government launched its Offshore Wind Industrial Strategy, a plan designed to consolidate the UK’s leading position.
The Strategy describes offshore wind as “a core and cost-effective part of the U.K.’s long-term electricity mix” and sets out a number of measures to be delivered by government and industry that “will build a competitive and innovative U.K. supply chain.”
And in March, Vince Cable, Secretary of State for Business, Innovation and Skills, formally opened the headquarters of the Offshore Renewable Energy Catapult, an organization set up by the Technology Strategy Board to drive innovation and deliver affordable offshore renewable energy and which in April merged with the National Renewable Energy Centre (Narec).
Commenting, Iain Gray, the Technology Strategy Board chief executive, said: "Combining Narec's outstanding research, testing and development facilities with the Catapult's leadership and expertise will create a single, powerful champion for the development of the UK's offshore renewable energy industries.”
And despite the policy uncertainty, perhaps these efforts are starting to pay off too. As the OREC/Narec deal was being revealed, Siemens announced that it is to build a blade manufacturing facility on the UK’s east coast. The company is investing more than EUR €190 million (US$262 million) in blade production facilities for its 6-MW called offshore wind turbines, with a new logistics and service center in Green Port Hull.
Together with its partner Associated British Ports (ABP) a total of EUR €371 million (US$512.7 million) will be invested at the project sites. Green Port Hull is scheduled to take up operations at the beginning of 2016, rotor production is scheduled to begin in 2016 and full capacity reached by mid-2017.
Michael Suess, Siemens’ energy sector CEO said: “Our decision to construct a production facility for offshore wind turbines in England is part of our global strategy: we invest in markets with reliable conditions that can ensure that factories can work to capacity. The British energy policy creates a favorable framework for the expansion of offshore wind energy. In particular, it recognizes the potential of offshore wind energy within the overall portfolio of energy production.”
Andrew Mill, outgoing chief executive of Narec commented: “Having one of Europe’s leading wind turbine manufacturers invest in the UK market will have a huge impact on, and help to strengthen and develop, a home-grown supply chain enabling the industry to reduce costs and achieve its offshore wind goals.
There is other evidence of the health of the U.K.’s offshore wind sector. In March Moray Offshore Renewables Ltd was awarded Scottish government consent for the construction and operation of 1.1 GW of offshore wind generation in the Outer Moray Firth, simultaneously SSE’s Beatrice Offshore Windfarm Ltd (BOWL), was granted consent by Marine Scotland for the 750-MW Beatrice project, also situated in the Outer Moray Firth.
In December last year final planning permission for a major offshore wind industrial base on the east coast of England was announced by the government. The £450 million [US 756 million] Able Marine Energy Park covers nearly 800 acres of the south bank of the Humber.
And in January the first power was generated by DONG’s 389-MW West of Duddon Sands project being developed together with ScottishPower.
The project utilizes a new £50 million (US$84 million) offshore wind terminal at Belfast Harbour, the first purpose-built offshore wind installation and pre-assembly harbour in the UK and Ireland.
Last year DONG Energy also acquired ownership of the 580-MW Race Bank offshore project in the Greater Wash from Centrica at a cost of £50 million (US$84 million).
Meanwhile, the U.K.’s state-backed Green Investment Bank (GIB) announced two investments in the U.K. offshore wind sector at the end of March. Alongside Japan's Marubeni Corporation, the GIB will jointly purchase a 50 percent stake in the Westermost Rough offshore wind farm — set to use the new Siemens 6-MW machine — from DONG Energy.
GIB has also agreed to acquire a 10 percent stake in the Gwynt y Môr offshore wind farm, from RWE Innogy. The purchase price is £220 million, [US $370 million] which together with the Westermost Rough investment sees £461 million [US$ 774 million] going into offshore wind from the bank in the two deals.
With much of the policy turbulence set for final resolution this year, the UK’s offshore wind sector has its fingers crossed for an extended period of policy stability in which the major investment required in the supply chain and installation and operational infrastructure can manifest itself. However, with a general election due next year and a possible change of government with it, there are no guarantees.
The Gunfleet Sands Offshore Wind Farm. Credit: Dong Energy.
With over 52,000 subscribers and a global readership in 174 countries around the world, Renewable Energy World Magazine covers industry, policy, technology, finance and markets for all renewable technologies. Content is aimed decision makers...