Huub den Rooijen, Head of offshore wind energy division at The Crown Estate, said that the UK is one of the best places to invest in offshore wind in the world for a variety of reasons, besides the country’s vast natural resources. Read Mr. den Rooijen’s analysis below:
Since I began working in the offshore renewable energy, some 15 years ago, we have seen remarkable progress. From the two turbines deployed in 2000, we now have over 1,000 turbines operating. That’s an installed capacity of over 3 GW, providing on average about 3.5 per cent of the country’s electricity. Add to this the schemes currently under construction, or with funding commitments in place, and the percentage of our electricity coming from offshore wind is set to rise to about 5 per cent over the next few years. That’s electricity for around four million homes and capital commitment to a still maturing industry in the region of £15 billion; no mean feat.
The national debate around how we as a nation should deliver the right mix of energy sources has become polarised in recent months but what the UK needs is diversity of supply. These aren’t binary choices; it’s not about gas or nuclear, wind or wave. Government recognises this and is rightly encouraging investment in as diverse a supply as possible. It would be easy to infer from reading the news that support for offshore wind is falling away but this couldn’t be further from the truth. Current Government thinking suggests it wants to see between 8 and 16 GW of offshore wind capacity installed by 2020. 16 GW would see a tripling of offshore wind’s contribution to UK energy. Even at the lower end of these projections the sector would grow by 10 per cent year on year for a decade.
Electricity Market Reform (EMR) is putting in place a legislative and regulatory framework that will deliver the certainty needed to enable investors to commit to the best projects. Its imminent conclusion is forcing developers to look carefully at their pipelines to prioritise those projects that boast the most attractive commercial opportunities in the near term. As we begin to move from a period of unpredictability to more certain times, developers will be considering current market dynamics, technology availability, seabed conditions and anticipated project costs for their particular sites. Tough decisions will be made to draw work to a close on those projects deemed too costly, or that currently face insurmountable construction challenges. The industry is maturing. This means we will begin to see a healthy attrition as the UK pipeline moves from a potential 40 GW towards a figure more in line with the Government’s current thinking for offshore wind. The Crown Estate, as landlord of the UK seabed is taking a very active role in this process, working with developers to optimise development and identify the best sites.
Critics will no doubt use such news to sound the death knell for offshore wind, but they would be wrong to do so. Streamlining of the pipeline will deliver a leaner industry. One that’s more manageable for consenting bodies to resource and critically, one that offers greater certainty about the scale of near term opportunities; this will be critical to making offshore wind an even more attractive investment opportunity.
Since the UK offshore wind industry began to grow, a lot has been learnt. Not least that this type of at-scale nationwide engineering programme does not lend itself to firm targets set against specific dates, such as 2020. This is a long-term growth industry with a very promising future, in the near term but also way beyond 2020.
Together with a renewed focus on optimising near-term opportunities, it is this long-term thinking that drives The Crown Estate’s investment in the sector. Our recent announcement with Statoil on their Hywind project will set in motion plans for the UK’s first floating wind farm, Europe’s largest. This is an exciting new demonstration project with the potential to improve the economics of the most challenging sites.
As the next generation of wind farms are constructed and new technologies like this are tested, the cost of offshore wind will come down substantially. Given the number of variables, it would be a brave person that predicts how quickly and by how much. What is clear though is that new technology and cost reduction will be crucial in unlocking a low carbon future and realising more and more of our burgeoning offshore wind resource.
Press release, November 26, 2013; Image: niras