Ambitious offshore wind targets in the UK could result in the country becoming the world leader in the technology and help accelerate the global industry through lower costs, a British energy minister said yesterday.
“We have to accept that there are some technologies where we can really influence the global price and there are others where we can’t,” said Charles Hendry, minister of state for the Department of Energy and Climate. “UK offshore is a fantastic example of where the work that we do here will influence the global price. There are other areas, solar for example where the UK market is not significantly large enough to change the price. So we’re focusing our resources and efforts on where we can see the change in the pricing structure.”
“This is a massive opportunity for a decade of building about 3.5 GW a year worth of offshore wind in this country. It’s very rare that in any technology the UK determines whether the world is going to do it or not. But we can do it in offshore wind,” said Matthew Knight, director of business development at Siemens Energy.
Hendry also told the Energy Institute’s Countdown to 2020 conference in London this week that after decades of underinvestment in its energy sector, the UK faced a greater challenge than any other European country. Of the €1 trillion in investment required by the 27 EU member states, £200 billion of that would be needed for the UK alone. This decade, 25% of the country’s power plants were closed, reducing a 20% capacity gap to only 5%, he said.
The Offshore Wind Bridge
Offshore wind is one of eight core technologies identified by the UK government to bridge that gap. The UK already has the most offshore wind capacity in the world with 1.3 GW installed at 15 windfarms, which generated over 3 TWh last year.
This July the UK government launched its Electricity Market Reform white paper which said that £200 billion of new energy investment was required to meet the capacity gap. The Renewables Roadmap published at the same time set out the path to 2020 goals and indicated that up to 18 GW in offshore could be deployed by 2020. Beyond 2020 there is a very high potential for deployment with over 40 GW possible by 2030.
“Any company which is serious about wanting to play in this area on a global basis must look at the UK if they want to be in the offshore wind sector,” Hendry said. “We will have the biggest market in the world and we’ve also got tremendous enthusiasm to make it happen. The interest of Vestas, Siemens and Gamesa and others is very encouraging.”
The white paper also created an offshore cost reduction task force to set out a path and action plan to reduce the costs of offshore wind, from development, construction and operations to £100/MWh by 2020. The government has also committed £60 million for offshore wind manufacturing infrastructure at ports, up to £30 million to support innovation in offshore wind component manufacture and up to £20 million for the development of marine technologies.
The task force will report in the spring of 2012, while the world’s first Green Investment Bank will begin operating from 2013 with £3 billion initial capital, to “ensure that we can create a real vitality in this country”, he said.
Across The Atlantic
Hendry said that although the US would probably continue to prioritize onshore wind, the cost reductions driven by UK policy could make offshore wind more attractive.
“There are many countries to which we can show leadership,” he said. “But the US has got a much larger land area relative to its population and a strong wind resource that can be developed. There may be areas where they want to develop the offshore side as well. But I hope that by the work we are doing to bring down the costs that over the next few years that will be not just relevant to the US but to every country with a coastal resource so they can see how they can be players in this area.”
Natural gas would continue to play a role in the UK energy mix, he said. Last year, gas-fired power stations provided around 75% of the UK’s electricity. Although the British Geological Survey has identified “significant potential areas” for shale gas in northern England, its development would be at a slower rate and reduced scale compared with the US, the minister said.
“There are very real practical differences between us and the states on shale gas,” he said. “Most importantly in the US you own the resources beneath your home. In the UK, they are owned by the Crown, which issues a licence to a developer. The developer needs to get permission from those homeowners where the fracking will be taking place.
“Shale gas will develop at a much slower pace in the UK than in the US. We’ve seen very high estimates of the potential amounts of gas in place. But recoverable gas is probably 10% of the gas in place so those figures are not an indication of what could be secured.”
Power From Home
Offshore wind could be a reliable source of energy for the UK but with very little indigenous manufacturing capacity. According to Hendry, the country is at a critical stage and at risk for developing a market with a supply chain outside the UK.
Critically we want the technology, the skills, the manufacturing to be often emanating from the UK.
The UK has yet to address its tax system on the same scale as the US where the 48C advanced manufacturing tax credit was among the incentives that encouraged Vestas, Siemens and Gamesa and other European companies to invest in local manufacturing and R&D facilities.
Of its 22,362 global employees, Vestas only has 600 workers in the UK, but plans to expand with a new facility at Sheerness, Kent. Siemens opened an energy training centre in the north-east city of Newcastle this month, with plans for an additional 700 jobs in Hull to serve the potential offshore industry in the North Sea.
“We have to stop saying we can’t make things in this country,” said Martin McAdam, CEO of wave power start up Aquamarine Power. “We’ve done it before. We do have one other very important export market and that’s based around offshore oil and gas. There are two centers for excellence in offshore oil or gas–Houston and Aberdeen.”
Photo Caption: Rough seas batter the coast as a woman walks her dog in Blackpool, north-west England, on December 8, 2011. Scotland closed schools and travellers were warned to expect disruption on key routes on December 8 due to gale-force winds, as Britain’s first major winter storm of the season swept in. Although Scotland was set to bear the brunt of the bad weather, strong winds were also expected in parts of England.