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Hard Brexit warning over UK offshore wind auction

Departure from EU on WTO terms could drive down volume awarded in may allocation round, says Wood Mackenzie

A ‘hard Brexit’ could hit the level of offshore wind capacity awarded in the UK’s upcoming auction round, and uncertainty over departure from the EU has already slowed expansion of the nation’s supply chain, said research group Wood Mackenzie.

The UK’s departure from the EU with no transition deal, leaving trade with the bloc relying on World Trade Organization terms, would leave key offshore wind components subject to an average 2.7% WTO import tariff and projects exposed to “various uncertainties” in areas such as component delivery arrangements and access to skilled employees, according to a study.

That could damage the financial case of projects bidding into the next UK contract-for-difference (CfD) auction round scheduled for 29 May, said Wood Mackenzie, meaning less overall capacity would be awarded. The CfD round plans to award up to 6GW of capacity.

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Wood Mackenzie noted that more clarity over the situation is likely before the auction round. UK Prime Minister Theresa May is currently racing to finalise an exit deal with the EU that's acceptable to the British parliament before the country leaves, currently scheduled for 29 March.

The research group claimed “the uncertainty raised by Brexit has slowed investment” in the UK offshore wind sector, but expects the long-term impact of even a hard exit to be limited, given the nation’s commitment to development and decarbonisation goals.

The UK offshore wind sector is expected to unveil a 'sector deal' with the UK government within days, a partnership seen as key to the industry's ambition to have 30GW installed by 2030.

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