United Kingdom

United Kingdom

UK capacity may reach only 12GW by 2030

New report casts doubt on fulfillment of Round 3 plans

The UK's hopes of delivering 40GW of installed offshore wind capacity by 2030 may be unrealistic, according to a new report commissioned by the Crown Estate, which manages its seabed.

The UK Offshore Wind Market Study, produced by GL Garrad Hassan and Redpoint, concludes that UK offshore wind capacity by 2030 could be as low as 12GW. The bulk of this would be constructed before 2020.

This pessimistic scenario could unfold if the UK government moved away from low-carbon and renewable commitments to focus on competitiveness overseas. Questions over government commitment remain the biggest barrier to future progress, the report states.

Following interviews with developers, manufacturers, financial institutions and government stakeholders, it lists other industry concerns including the availability of finance, capacity issues, the lack of supply chain competition especially in transmission, and difficulties in equity recycling once a project is completed. This is partly because offshore wind technology has a poor track record.

The report says consultees questioned "the government's long-term commitment to offshore wind and the political uncertainty created by the impending reform of the electricity market." The UK government has said it will publish draft strike prices for future offshore wind projects this summer.

Elsewhere, the report flags up a perception that a reduction in the cost of energy is a prerequisite for investment and government backing. However, the industry said long-term political support and investment was needed to bring this about.

Those consulted were sceptical about the availability of finance and new sources of capital - exacerbated by "the asymmetry between construction risk and the number of players who can manage these risks effectively". The report also lamented limited cooperation among industry players and the treatment of joint venture structures by credit rating agencies.

The UK ranked second, just behind Germany, in Ernst & Young's latest offshore wind index. The consultants said that insurance and other forms of guarantee were likely to attract a growing number of investors to offshore wind in 2013.

The UK Offshore Wind Market Study envisages a more optimistic outcome for UK offshore wind if firm political support underpins significant investment in offshore technology and infrastructure. This in turn could lead to a reduction in the cost of energy and increased confidence from investors, it concludes.

Meanwhile, the Crown Estate has developed a new portal carrying data on the UK’s territorial waters and beyond. The Marine Data Exchange aims to boost the 'blue economy' by offering access to more than a terabyte of data including visual and landscape assessments, bird and mammal population studies, habitat characterisations and archaeological studies. It is accessible at www.marinedataexchange.co.uk.


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