Offshore, Project Development, Wind Power

Britannia to rule the waves? Ambitions for offshore

Issue 1 and Volume 11.

The UK has staked its claim to become one of the world’s leading developers of offshore wind with a move to massively expand the development areas available. Crispin Aubrey explains how Britain can exploit its increasingly valuable natural assets

In a dramatic announcement at the end of 2007 the UK government said it was setting Britain on course to become the world leader in offshore wind power development. Launching the process to start a third round of seabed leasing, the Secretary of State for Business, John Hutton, said that the UK could reach a level of 33 GW of installed offshore wind capacity by 2020. In terms of electricity output, this would be enough to supply every home in the country. It would also be more than planned by any other nation with offshore wind ambitions.

‘The UK is now the world’s number one location for investment in offshore wind,’ Hutton enthused, addressing an energy seminar in Berlin.’I want to ensure that it remains one of the best places for renewables business.’

At a time when British newspaper headlines have been dominated by the expected revival of nuclear power’s fortunes

– seen by the government as a vital part of any carbon reduction programme – this was a definite shot in the arm for the renewables lobby. Offshore wind power is clearly viewed as being in the vanguard of the UK’s push to make its contribution to the European Union target for 20% of all energy to come from renewable sources by 2020. The British Wind Energy Association (BWEA) was more cautious about the government’s large numbers. Whilst praising the announcement as ‘a decisive step forward,’ BWEA chief executive Maria McCaffery described the 33 GW target as ‘extremely ambitious.’What is certain, however, is that Europe’s windiest country has already become the most popular port of call for investors in offshore wind.

Even before December’s announcement, things were looking good for the UK’s offshore wind industry.Two previous rounds of seabed leases, which grant the right to locate wind turbines in a defined area of the seabed, had brought forward enough projects to see a potential 8.7 GW of capacity installed. Although only 404 MW is so far up and running, a further 3000 MW has full approval to proceed.This includes the giant 1 GW London Array wind park at the entrance to the Thames Estuary, the largest offshore project so far approved anywhere in the world.

This year is scheduled to be the busiest ever for construction around the British coastline. As Table 1 on p78 and the box panel above show, four substantial projects with a total capacity of 472 MW are already underway in UK waters, prompting Energy Minister Malcolm Wicks to predict that the country will soon overtake Denmark as the European offshore wind leader. By around 2014, the government projects, 8 GW of capacity could be operational in British seas.

The surge of interest in the UK offshore market is driven not just by the relatively well organized site approval process, however, which has delivered a reasonable number of consents. Last summer the government confirmed that it would increase the rate of payment in Renewable Obligation Certificates (ROCs) for offshore wind farms to 1.5 ROCs per MWh of output.This is 50% more than for turbines located on land. Expected to come into effect in 2009, the result has been to further boost the market’s attractions, especially for the large European power utilities that now dominate offshore wind investment.

NEW LEASING ROUND

The new leasing round announced in December will work slightly differently from its predecessors.Whereas the second – and largest round so far – was confined to three specific sea areas, the new process will examine all of the UK’s territorial waters and adjacent areas up to a distance of 200 nautical miles (370 km) from the coast and where the water depth is less than 60 metres. Scotland and Northern Ireland are excluded, on the basis that ‘there is limited scope for development’ with little by way of shallow water around their respective coasts.

The first stage will involve a Strategic Environmental Assessment (SEA) to be carried out by the Department for Business, Enterprise and Regulatory Reform (DBERR), which replaced the Department for Trade and Industry last year.This will establish broadly which areas are suitable for further offshore wind development, taking into account such issues as shipping, fishing, nature conservation and birds, and whether the 25 GW of new capacity envisaged by the government is feasible. It is expected to be completed by the end of 2008.

Once the SEA process is complete, developers will be invited to make a pre-qualification application, establishing their financial and development credentials. If successful, they will then be invited to tender for leases on specific areas. These areas are expected to be larger than under Round 2 and more like the blocks allocated for oil and gas exploration, allowing developers more choice about where they site their turbines. Details of the competitive process and commercial terms for leasing are due to be published early this year. As in previous rounds, leases will be issued by the Crown Estate, which controls the seabed in UK waters.

Whereas up to now, companies which won initial offshore leases have often sold on their development rights to another company to complete the construction, it’s understood that the DBERR would prefer it for the whole process – from site leasing through to commercial operation – be undertaken by the same owner. This would help ensure faster progress towards the 2020 goal, the government believes.

If the process runs smoothly then the first Round 3 site leases could start to be agreed as soon as the end of 2009 or the beginning of 2010. One suggestion is that instead of allocating all the leases at one go – as happened for Rounds 1 and 2 – they could be spread across regular, possibly annual, bidding rounds, as happens for oil and gas blocks. This would provide a steady flow of projects to mesh with the industry’s supply chain of turbines, foundations and installation vessels.

It might then take a minimum of another three years for full assessment of the site to be made, including a detailed environmental study, before building consent could be agreed. The first construction could follow on a year or more later, so at the earliest by about 2015.

BWEA ANALYSIS

Announcement of the third leasing round followed hard on the heels of the publication of a BWEA report,’UK Offshore Wind: Moving up a gear,’ which examines how up to 20 GW of wind capacity could be installed offshore by 2020. Taking into account a likely Round 3 process, this analysis shows offshore wind moving forward at a steady but impressive pace, reaching a delivery level of almost 3 GW a year from about 2019, as shown in the graph left. Given supply chain and other constraints, says the BWEA’s Head of Offshore, Dr Gordon Edge, this is a more sustainable growth path than the government’s projection, which would require about 5 GW annually from 2015.

The report also analyses the potential roadblocks which might make this difficult to achieve. Its conclusions, the result of detailed consultation with leading industry players, are even more relevant to the government’s new ‘goal’ of 33 GW.

One important issue raised by the BWEA is the time it takes for projects to move through the site assessment and consenting procedure. From the award of a site lease to actual installation of the turbines in the sea has been taking 8-9 years for many proposals, sometimes more.’If that pattern continues,’ says Edge, ‘we’ll struggle from a simple consenting point of view to get enough done by 2020.’The hope is that the new licensing and approval system proposed by the DBERR and other innovations will speed up the process.

The second big issue is the electricity grid, which may struggle in some locations to cope with the input of large quantities of offshore power. Unlike in Germany and Denmark, where offshore grid connections are paid for by the transmission companies, UK developers have to pay for the capital cost through ‘use of system’ charges.

The biggest challenge, however, is the ability of the supply chain to get the projects in the water at an acceptable cost. Growing global demand for wind turbines, coupled with rising raw material prices, has already increased offshore installation costs. The recently contracted Rhyl Flats wind farm, for example, is scheduled to cost #2.1 million (US$4.2 million) per megawatt installed. This compares with about #1.2 million ($4.2 million) per MW for the first large UK offshore projects at North Hoyle and Scroby Sands, built in 2003 and 2004 respectively.

In terms of equipment, there is a specific shortage of turbines, with only two companies – Vestas and Siemens – currently in the offshore mass production market.There is also a dearth of vessels specifically designed for offshore installation work, one reason why the specialist Danish companyA2Sea, whose fleet contains just two boats and a jack- up rig, has been working overtime to keep up with demand.

The BWEA is optimistic, however, that these shortages will be overcome, partly by a new generation of larger dedicated offshore turbines of 5 MW capacity and larger, and partly by new companies both offering their installation services and commissioning new vessels. Last December’s European Offshore Conference in Berlin provided plenty of evidence that the industry is fast gearing up to fill the gaps.

A more difficult question is how much of the hardware required to install up to 33 GW of wind capacity in UK waters will be manufactured in the UK. Only 15% by value of the contracts for the most recently completed project – Burbo Bank off Liverpool – went to British companies and all the turbines installed so far around Britain have come from Denmark. ‘I think we’re going to need UK manufacturing if we’re going to get anywhere near these targets,’ says Edge.

In the wake of the government’s new commitment to offshore, the Carbon Trust and the newly created Energy Technologies Institute announced that they would be jointly spending #40 million ($80 million) on initiatives to cut the cost of offshore wind power and accelerate its deployment. Whether this will prove the genesis of a stronger UK manufacturing and service base for the offshore industry remains to be seen.

Despite these uncertainties, the BWEA is solidly positive about the new government plans, if not convinced that their optimistic capacity projections are achievable.’Our members are generally very pleased,’ says Edge.’This is pretty much what we were asking for to keep the show on the road.’

Crispin Aubrey is a UK-based freelance journalist focused on wind technology e-mail: [email protected]



2008 – BRITAIN’S BUSIEST YEAR

2008 will be the busiest year so far for construction of wind farms round the UK coast, with over 570 MW of capacity moving forward to completion.

In Scotland, the 180 MW Robin Rigg project is being built by the UK arm of German power utility E.ON. Sited in the Solway Firth estuary it will use the purpose-built installation vessel Resolution to install the 60 monopile foundations.

Further down the west coast, npower Renewables is planning to start work on the foundations for the 90 MW Rhyl Flats project in April this year. When complete it will join two other wind farms – North Hoyle and Burbo Bank – that are visible from the coastline near the city of Liverpool.

Off eastern England, the combined Lynn and Inner Dowsing sites in the Greater Wash will see a total of 194 MW constructed by UK utility Centrica, which owns British Gas. The Resolution will also be working here, installing the foundations for 54 Siemens 3.6 MW turbines.

Closer to the Thames Estuary, Danish power company Dong Energy has started initial work on the 108 MW Gunfleet Sands wind farm, a project many years in gestation.

Several other projects are on the construction horizon, including the massive London Array development, whose 1000 MW of capacity would be able to supply enough electricity for a quarter of all the households in London.