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News

Offshore wind at a crossroads

Research shows offshore wind industry can meet 6% of power needs by 2015 but in danger of stalling without additional Government support

Tuesday 4 April 2006

The UK's leading renewable energy body BWEA, together with Renewables East, the renewable energy agency for the East of England, today releases new research which shows that the offshore wind industry is at a critical crossroads.

The research, which will feed into the Government's Energy Review, shows the sector is capable of meeting some 6% of the UK's power needs by 2015 but additional support is needed. Without additional Government intervention the roll out of the UK's major offshore wind programme risks being stalled. As a result the enormous environmental and economic potential of this sector may not be fully realised and the opportunity for the UK to be a world leader could be missed.

The report; Offshore Wind: At a Crossroads, undertaken over the past four months through extensive interviews with over thirty companies active in the sector, has shown that without additional support for the sector only 2,000 megawatts (MW) of offshore wind capacity will be installed in UK waters by 2015.

This is only 25% of what is possible over the next ten years. The major reason cited for the difference between what is possible and what is expected is the gap between the current costs of developing offshore wind and the revenues available to developers through the current Renewables Obligation.

The report also examines what level of new offshore capacity could be built if a new policy impetus was put in place by Government. The findings are encouraging. With additional financial support there is a four fold increase in the amount of offshore wind capacity that can be delivered in UK waters. The report identifies that the industry could deliver some 8,000 MW of offshore wind capacity by 2015. This amount of development is equivalent to 6% of UK electricity supply, representing some £10 billion of investment and would prevent the emissions of up to 20 million tonnes of carbon dioxide.

BWEA is today, at its Offshore Wind Conference in London, urging the Government to ensure it prioritises offshore wind in the current Energy Review and to put in place the necessary measures to ensure the current economic gap for offshore wind is closed while maintaining the strong progress being achieved onshore.

Commenting on the new research, Marcus Rand, Chief Executive BWEA said:

"This new research yet again identifies the enormous potential of offshore wind to deliver significant quantities of secure carbon free power over the next decade. Our offshore wind resource is of immense strategic importance to the UK. There is a huge amount of activity in the sector with over 8,000 MW of schemes in development. However, this potential will only be realised if the current economic gap is closed. Government must use the ongoing Energy Review to put in place a new policy impetus for offshore wind. With this in place, offshore wind can join its sister technology onshore wind in the delivery of the bulk of the Government's 20% by 2020 renewable aspirations."

James Beal, Managing Director of Renewable East added:

“The East of England is at the centre of the majority of offshore wind currently in development. We have already recognised the significant benefit that these developments can bring to the local economy, in building the UK's second offshore wind farm at Scroby Sands, Great Yarmouth where local companies won orders totalling over £12 million. With the future developments we are looking for up to £2 billion to be captured in this region. For that reason the Suffolk County Council, East of England Development Agency and Europe are investing in a new £6 million business centre in Lowestoft to house and nurture the evolving offshore renewable energy industry. In support of this, Renewables East is directly investing over £500,000 of support into these companies. We are confident that Government will support our aspirations to deliver offshore wind.”

For more information, including interviews, contact
Alison Hill, BWEA Head of Communications, on 020 7689 1966 or 07956 859 749

Notes to editors:

About the report:

• The report, Offshore Wind: At a Crossroads was prepared for BWEA and Renewables East by BVG Associates and Douglas-Westwood, and is based on detailed consultation with developers and the supply chain. It provides an assessment of developers' plans to build their projects, and the supply chain's capability to deliver that capacity, under two policy scenarios: no change to current policies, resulting in little delivery and minimal investment in the supply chain, so costs would remain high and few companies would participate in the sector or, on the assumption that policies are put in place that make projects economic, strong growth will result late this decade and into the next, with some constraints from the supply chain limiting delivery slightly. The report can be downloaded from www.bwea.com/pdf/OffshoreWindAtCrossroads.pdf
• The report identifies some 8,000 MW of offshore wind capacity that could be delivered by 2015. This would generate 24.5 terawatt hours (TWh), equivalent to the annual electricity needs of over 5 million homes, or some 6% of total UK electricity supply, and would displace 9 million tonnes of coal burn in power stations and thus avoid 20 million tonnes of carbon dioxide emissions, or displace 4.5 billion cubic metres of gas, reducing imports and avoiding 10 million tonnes of CO2.
• Presently there are four working offshore wind farms around the UK (Blyth Offshore, North Hoyle, Scroby Sands and Kentish Flats) producing 213 MW of electricity, the equivalent of around 135,000 UK homes, with a fifth, the 90 MW Barrow project, currently undergoing final commissioning. See www.bwea.com/offshore for full details.
• The UK was the only country in the world to build offshore wind farms in both 2004 and 2005, making the UK a pioneer in this sector.
• Previous research from BWEA, Onshore Wind: Powering Ahead, released 27 March, identifies that by 2010, the onshore wind industry could generate 50 per cent more electricity than previously predicted, and could deliver nearly half of the Government's 2010 renewable energy target. The report indicates that the onshore wind industry could install 6,000 MW of capacity by 2010, generating almost 5 per cent of UK electricity supply, equivalent to the needs of over 3 million homes, and potentially displacing six million tonnes of coal burn in power stations and avoiding 13 million tonnes of CO2 emissions or displacing 2.9 billion cubic metres of gas, reducing imports, and avoiding six million tonnes of CO2 emissions. The full report and Executive Summary are available at www.bwea.com/media/news/060327.html

About BWEA:

• The British Wind Energy Association (BWEA) is the trade and professional body for the UK wind and marine renewables industries.
• Formed in 1978, and with over 310 corporate members, BWEA is the largest renewable energy trade association in the UK.
• In 2004, BWEA expanded its mission to champion wave and tidal energy and use the Association's experience to guide these technologies along the same path to commercialisation.
• BWEA's primary purpose is to champion the UK wind and marine renewables industry.

About Renewables East:

• Renewables East is a not-for-profit, independent company, grant funded by the East of England Development Agency, tasked with advocating the growth of renewable energy opportunities whilst simultaneously seeking to capture economic benefit in the East of England.
• The company addresses issues underpinning the Government's long-term strategic vision for a national energy policy that encompasses a response to the threat of climate change, the need to address the security of the UK's energy supplies, and the opportunities to improve our economic competitiveness by the development and deployment of renewable energy technologies to achieve a low carbon future.
• Lowestoft Business Centre: The £6m offshore renewable energy business centre begins construction at Ness Point, Lowestoft in June 2006 and is expected to be completed in 2007. It will house around 40 new and medium sized enterprises delivering value into the offshore renewable energy industry.
• Given the East of England proximity to the Thames Estuary and Greater Wash Strategic Areas Renewables East has lead the region towards making substantial investments in offshore wind, wave and tidal. A new £6m business centre beginnings construction in Lowestoft in June 2006 that will house many of the business involved and seeking involvement in renewables. Renewables East has also been tasked with a further £545k to support the growth of companies in this area. For more information see www.renewableseast.org.uk

About Government policy and targets:

• The UK Government launched its Energy Review consultation on 23rd January 2006. The 12 week consultation sets out the UK's energy challenges and considers all aspects of our energy system including both energy supply and demand. The consultation document "Our Energy Challenge: securing clean, affordable energy for the long term" is available at www.dti.gov.uk/energy/review/
• The Renewables Obligation (RO) is the primary legislation in the UK to deliver the Government's targets on renewables. The RO and associated Renewables (Scotland) Obligation came into force in April 2002, and requires power suppliers to derive a specified and increasing proportion of the electricity they supply to their customers from renewable energy sources. Originally set at 3% in 2003, this now stands at 5.5% in 2006/6, rising incrementally to 10.4% by 2010
• Eligible renewable generators receive Renewables Obligation Certificates (ROCs) for each MWh of electricity generated. These certificates can then be sold to suppliers, in order to fulfil their obligation. Suppliers can either present enough certificates to cover the required percentage of their output, or they can pay a ‘buyout' price of price of £32/MWh for any shortfall. All proceeds from buyout payments are recycled to suppliers in proportion to the number of ROCs they present.