UNLOCKING THE POTENTIAL OF THE UK’S OFFSHORE WIND INDUSTRY. BY DANIELLE LANE
Aso-called ‘green industrial revolution’ is set to be the centre piece of the Government’s post Covid-19 economic rescue plan. This is welcome news and yet there are also reasons to be cautious about the level of ambition in those plans.
The UK’s offshore wind industry has potential to be a guiding light in the successful transition to net zero for the rest of the world. With upcoming project leasing rounds in 2020, and the fourth round of the Contracts for Difference (CfD) scheme due in 2021, decisions made in the next couple of months will give a good indication as to whether renewables will indeed form the engine room of the UK’s green recovery.
Building on firm foundations
The UK offshore wind industry is already world leading, thanks in part to the approach of successive governments.
We now boast the largest installed offshore wind capacity in the world, at 9.8 gigawatts (GW), which is expected to rise to 19.5 GW by mid 2020s
In March 2019, the UK Government and the offshore wind industry published the Offshore Wind Sector Deal, which sought to rapidly scale out this ambition. It set out a plan to deploy at least 30GW of offshore wind generation capacity by 2030 – and the Government has subsequently increased its ambition by a further 10GW. A key objective of the Sector Deal is to achieve a 60 per cent local business content, supported by a £250m industry fund to increase productivity and foster innovation. Like many in the offshore wind industry, Vattenfall welcomed the plan. It was a clear statement of intent for a renewable future.
Renewable UK say the UK’s offshore wind sector could power a £17.5bn investment in the UK economy by 20211 and support 27,000 direct jobs in the UK by 20302. By 2030, Vattenfall wind farms alone could power around five million UK homes, helping make wind the backbone of a reliable, affordable and fossil-fuel free energy system.
However, to meet net zero, more investment is needed to drive new offshore wind projects. And investors require certainty.
Navigating difficult headwinds
Despite these firm foundations, the sector is now facing serious challenges, and stands at something of a crossroads in its development. The response in these unprecedented times will either strengthen or limit the industry’s ability to grow and contribute to the fight against climate change.
Covid-19 is a health, societal and economic tragedy, and is all consuming at the moment. But we cannot allow it to push us off course if we are to transform our energy system to meet the needs of our environment.
Nonetheless, we are seeing delays to key decisions. In the past week [at time of writing] the decision on Vattenfall’s proposal for one of the world’s largest wind farms, Norfolk Vanguard, has been postponed until 1 July. Likewise, our proposed extension of our Thanet wind farm has been rejected. Coming so soon after the decision on Norfolk Boreas was pushed back until October, the offshore wind industry will be left wondering about the UK government’s true intentions for this sector. There is also a risk due to Covid-19 that the fourth round of the CfD scheme could be delayed. The government has so far insisted that they plan to honour the current timeline, which is welcome against such an uncertain backdrop, and it is essential that they give certainty for the industry and investors so that we can plan ahead.
Charting a clear course
The offshore wind industry does not just need continued investment – which is of course welcome – but also cross-sectoral engagement that allow us to plan for the long term.
The process of developing offshore wind farms is rightly subject to intense regulation. The Government states that “there is a balance to strike between the need to secure our energy future, and clean up our energy sector – while preserving the UK’s natural environment for future generations.”3
Wind developers like Vattenfall therefore pay very close attention to this balance, examining the needs of residents, other users of the sea and the impact on marine and bird life, and the local area. This brings challenges, but also and opportunities, including contributing towards decarbonisation of the oil and gas sector and offshore green hydrogen production.
But to achieve any of the ambitions this country has for clean energy, there must be a common objective across sectors for decarbonisation. This means compromises need to be found on both sides and innovative solutions that allow good projects to be delivered. In other words, that “the need to secure our energy future” is overwhelming. It is unquestionable that the UK must meet net zero to preserve our environment for future generations, hence why planning for offshore wind projects must always offer solutions over barriers.
A clear goal
We’re in a race against time to reduce emissions, and the next few weeks will be crucial in revealing whether the UK government is going to place renewables, and specifically the offshore wind industry, at the heart of the ‘green industrial revolution’ in the post Covid-19 economy.
To help get us there, government and regulators must also work closely together to encourage investment and create the right environment for long term planning.
In the meantime, a clear statement of intent would be to quickly announce decisions on projects that are ready and waiting.
Danielle Lane is Head of Portfolio & Transactions Offshore & UK Country Manager at Vattenfall. Vattenfall is a European energy company with approximately 20,000 employees. For more than 100 years it has electrified industries, supplied energy to people’s homes and modernised our way of living through innovation and co-operation. It now wants to make fossil-free living possible within one generation.
For further information please visit: https://group.vattenfall.com/uk