The UK expects to get one-third of all its electricity from offshore wind by 2030 after putting the renewable source at the heart of both its energy and industrial strategies.
Britain also wants wind at sea to be a £2.6bn ($3.4bn) post-Brexit export opportunity after making offshore wind the first renewable source to get a ‘sector deal’, formalising a partnership between the UK government and the industry designed to spur £40bn of infrastructure investment.
The sector deal sets the industry on course for 30GW of capacity by 2030, up from 8GW now, accounting for more than 30% of national electricity supply, meaning the UK will produce more power from renewables than fossil sources, said the government.
The agreement will see the industry invest £250m to boost the sector, including through a new Offshore Wind Growth Partnership. It will also target 60% local content for UK projects, up from about 48% now, an ambition touted in an industry-backed study last year.
For its part, the UK government restated earlier commitments to power auctions every two years and a £557m support pot.
The government wants the sector to “reduce the cost of projects in the 2020s and overall system costs, so projects commissioning in 2030 will cost consumers less as we move towards a subsidy free world”.
The next big test for the sector’s cost-cutting trajectory comes at the end of May, when the next contract-for-difference auction will be held following earlier rounds that drove prices as low as £57.50/MWh, halving the previous level.
The UK’s seabed landlord The Crown Estate, and its counterpart in Scotland have already set the ball rolling on plans for new leasing rounds to underpin development next decade. The UK is still the world’s biggest offshore wind market by cumulative capacity, but China last year for the first time took the lead in terms of annual additions as the Asian giant finally got rolling at sea.
The UK’s Department of Business, Energy and Industrial Strategy (BEIS) said it wants to promote the country’s sector as a major exporter to emerging offshore wind sectors around the world.
That includes a £4m “technical assistance programme to help countries like Indonesia, Vietnam, Pakistan and the Philippines skip dirty coal power and develop their own offshore wind projects”.
The agreement, which took months longer than expected to negotiate, contains few surprises in terms of its headline numbers – including plans to triple the number of skilled jobs in the sector to 27,000 – many of which formed part of the offshore wind sector’s Vision 2030 strategy that formed the basis of its discussions with government.
But industry insiders said the value of having the sector deal enshrined alongside similar partnerships with the likes of automotive and life sciences will be considerable in terms of promoting investor confidence.
It also places offshore wind on a par with the nuclear industry, which got its own sector deal last year. Since then, however, the UK’s nuclear programme has fallen into disarray, prompting calls for offshore wind and other renewables to play an even larger role to plug the gap left by failed projects.
Industry players queued up to welcome the sector deal as a massive positive signal for the future of offshore wind in the UK.
"Innogy already has a portfolio of seven offshore wind farms in the UK, and the announcement of this deal will give developers like ourselves the confidence and security to develop projects into the next decade and beyond," said Paul Cowling, director, offshore wind, at the German renewables group.
Matthew Wright, UK managing director at the sector’s leading developer Orsted – currently building the world’s biggest offshore wind farm at 1.2GW in the North Sea – 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."
ScottishPower Renewables, the Iberdrola unit that’s building major wind farms off eastern England, said it would actively pursue more projects “both north and south of the border” following the announcement.
Julian Brown, country manager at offshore wind turbine manufacturer MHI Vestas, said: “The launch of the sector deal sets the long-term context for MHI Vestas’ continued growth and job creation in the UK by putting the UK on a path to deliver at least 30GW by 2030. Our recent investment on the Isle of Wight is already delivering on the sector deal ambitions.”