Offshore wind is set to provide more than 30 per cent of UK electricity by 2030 after the government today launched a landmark deal with the renewables industry.
The Offshore Wind Sector Deal is intended to cement Britain’s position as a global leader in the market – it is currently the largest in Europe – and for the first time ensure that more electricity comes from renewables than fossil fuels.
The deal will see £250m provided to UK companies working in offshore wind technologies such as robotics, advanced manufacturing, floating wind and larger turbines.
It also provides to boost global exports to areas like Europe, Asia and the US fivefold to £2.6bn per year by 2030; cut the cost of projects in the 2020s and overall system costs; see Crown Estate & Crown Estate Scotland release new seabed land from later this year for new offshore wind developments; and provide over £4m for British business to share expertise globally and open new markets for UK industry through a technical assistance programme to help countries like Indonesia, Vietnam, Pakistan and the Philippines develop their own offshore wind projects instead of fossil fuel plants.
Energy Minister Claire Perry said the deal “will drive a surge in the clean, green offshore wind revolution that is powering homes and businesses across the UK, bringing investment into coastal communities and ensuring we maintain our position as global leaders in this growing sector”.
Business Secretary Greg Clark said: “The offshore wind sector is a UK success story: we have the largest installed capacity of offshore wind in the world and costs have fallen faster than anyone could have envisaged 10 years ago. Offshore wind’s share of annual UK generation increased from 0.8 per cent in 2010 to 6.2 per cent in 2017, and is expected to reach around 10 per cent by 2020.”
Danish energy company Ørsted operates the world’s largest offshore windfarm, Walney Extension, off northwest England, and is building Hornsea One off the Yorkshire coast which will be nearly double the size. Benj Sykes, UK Country Manager for offshore wind at Ørsted, said the deal was “transformative” and added that offshore wind was “revitalising parts of the country which have never seen opportunities like this for years, especially coastal communities, from Wick in the northern Scotland to the Isle of Wight, and from Barrow-in-Furness to the Humber”.
“Companies are burgeoning in clusters, creating new centres of excellence in this clean growth boom. The Sector Deal will ensure that even more of these companies win work not only on here, but around the world in a global offshore wind market set to be worth £30 billion a year by 2030.”
His colleague, Matthew Wright, UK Managing Director, said the Sector Deal “marks the coming of age of offshore wind as both a significant part of the UK’s energy transformation and an industrial powerhouse driving economic growth”.
He said Ørsted will have invested over £13bn in the UK by the end of 2021. “This deal will unlock significant additional investment from the whole industry and put offshore wind at the front and centre of the UK’s Industrial Strategy.”
The deal was also welcomed by other key wind industry players. Keith Anderson, chief executive of utility ScottishPower, which has sold fossil fuel assets to instead focus on renewables growth, said: “The Sector Deal will attract even more businesses in the UK to join the offshore wind supply chain and we are excited to see the transformative impact this will have on our projects.”
Dr Jenifer Baxter, Head of Engineering at the Institution of Mechanical Engineers, said the deal was “good news for engineering across the UK”, however she stressed that “we must ensure that we are able to maximise the power produced by new offshore windfarms. There will need to be equal effort placed on developing energy efficiency programmes to reduce power demand as well as effective storage technologies that will enable power to be dispatched when needed. Onshore grid systems need to be managed to ensure this low carbon electricity can be accessed across the UK.”
However, some feel the deal does not go far enough in promoting renewables because of recent developments which have seen plans for a fleet of six new nuclear reactors stall, with groundwork underway on only Hinkley Point in Somerset.
Rachel Reeves, Chair of the government’s Business, Energy and Industrial Strategy Select Committee, has said that “investment decisions over nuclear plants at sites such as Moorside and Wylfa have left the UK facing a giant hole in its energy policy. This heightens concerns that the government is not doing more to encourage alternatives such as offshore wind and other renewables. Given dirty coal is due to go offline, and the prospects for nuclear looking uncertain, it’s vital the government comes forward with a Plan B to plug the energy gap.”
Greenpeace UK believes that offshore wind will need to be producing at least 45 GW by 2030, and possibly more, depending on whether the government also supports more solar and onshore wind.
Executive Director John Sauven said: “The government’s plans for a fleet of new nuclear reactors has collapsed. This leaves Britain with a big energy gap in future. It means the government’s latest offshore wind target of 30 GW by 2030 is woefully inadequate.
“Renewable power now presents the best opportunity for cheaper, cleaner and faster decarbonisation. Wind and solar must be tripled between now and 2030, with offshore wind the future backbone of the UK’s energy system.
“It’s a technology where the UK is already a global leader. And we could turn that leadership into more jobs and opportunities to export British know-how to the rest of the world.”
Offshore wind and Brexit
Today’s new deal comes as a report examines the potential impact on the offshore wind sector of a Hard Brexit – where the UK would leave the EU and also the EU Single Market and the EU Customs Union.
The study by consultancy firms Wood Mackenzie and Verisk Maplecroft stresses that
approximately 68 per cent of Britain’s offshore wind supply chain is sourced currently from non-UK based firms.
And while it states that “hard Brexit is expected to have a less severe impact on the offshore wind power industry than other industry sectors”, it adds that “even so, the non-UK based supply chain will face an average WTO tariff of 2.7 per cent plus a significant degree of uncertainty over labour, financial and legal perspectives until a new trading agreement is reached with the EU”.
However, it concludes that “considering decarbonization as a long-term energy strategy, the impact of hard Brexit on the long-term growth of the offshore wind power industry in the UK will be limited”. To read more about the report, click here.