UK Crown Estate forecasts 'attrition'
The UK’s Crown Estate expects to see a period of “tough decisions” and “healthy attrition” after the imminent firming-up of offshore wind policy, says a senior official at Britain’s seabed landlord.
Huub den Rooijen, the Crown Estate’s head of offshore wind, predicted that the conclusion of the UK’s protracted Electricity Market Reform (EMR) process will give investors the certainty they need to back the best projects in a “maturing” sector.
But he forecast that it also means “we will begin to see a healthy attrition as the UK pipeline moves from a potential 40GW towards a figure more in line with the government's current thinking for offshore wind” – which den Rooijen noted is between 8GW and 16GW.
His comments come with the final terms of the UK’s EMR – including support on offer for offshore wind – due to be published within weeks, and against a background of disquiet over the level of the UK government’s ambition for the sector.
In an article published on the Crown Estate’s website, den Rooijensaid: “[EMR’s] 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,” den Rooijen continued.
“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 Crown Estate official said his organisation “is taking a very active role in this process, working with developers to optimise development and identify the best sites”.
Den Rooijen added: "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 publication of the draft guaranteed ‘strike prices’ at the heart of the reforms, several UK developers have warned that the rate on offer would have to rise if they are to commit to invest in some projects.
However, Germany’s E.ON struck a different note last week when a senior official said the draft rate was sufficient for its 700MW Rampion project.