Keeping the UK at the forefront of the offshore wind market
CEO of the Offshore Renewable Energy Catapult, Andrew Jamieson, explains why joined up thinking and innovation will deliver the offshore wind promise.
The offshore wind market in the UK has hit a critical juncture. As the results of the latest Contracts for Difference Allocation Round were published, there will have been consternation in Whitehall that, although there was a reasonably strong showing from solar, onshore wind and tidal projects, no new offshore wind project bids were forthcoming; an unprecedented result since the establishment of the CfD system. Has the flagship technology that the UK has been at the forefront of for a decade, the “jewel in the crown” of the UK energy sector recognised as critical to delivering our Net Zero commitments, suddenly hit turbulent waters?
Offshore wind has been an unparalleled success story in the UK. Innovation in the underlying technologies has developed larger, more efficient turbines while advanced digital capabilities, robotics and autonomous vehicles are bringing down operational costs over the lifespan of a wind farm. Offshore wind is at the heart of our energy security while boosting efforts to reduce climate emissions. However, buffeted by inflation and high interest rates, as well as supply chain pressures, developers have faced a sharp rise in the cost of financing and building offshore wind farms.
Offshore wind remains, nevertheless, the cheapest form of large-scale low carbon generation. With ambitious deployment targets in place for 50GW of offshore wind by 2030 and forecasts of the sector supporting more than 100,000 jobs and a pipeline of up to £150bn of investment by this milestone, the prize for rectifying this situation to get the sector back on track ahead of the next allocation round is significant.
To get back on an even keel we need to recognise that it must be delivered at low cost, not no cost, and that a significant effort to supercharge delivery is now required to recover lost ground. It is critical to restore bruised investor confidence in the market, not just for the projects themselves, but for infrastructure investments and for would-be supply chain companies, through provision of greater certainty in the long-term pipeline of projects and realistic prices.
Aligned with this, we must deliver innovation support to a supply chain that is not only vital to delivering the huge volume of technology and services that will be required but will also be the primary vehicle to deliver those promised jobs and the real economic benefits here in the UK. Further challenges to address include significant investment into grid connections and a refreshed approach to expediting consenting processes. Once the Government have indicated serious intent to overcome these key hurdles they will be well on their way of restoration of investor confidence.
We have seen across many sectors, including offshore wind, that securing late-stage R&D in the UK not only delivers cost reduction but can act as a magnet to root investment here. Companies undertaking research and testing in the UK develop a familiarity with the market and an understanding of the energy landscape that makes the UK a far more attractive and logical investment destination. JDR Cables is a great example of this at a regional level; having been a long-term partner for ORE Catapult’s National Renewable Energy Centre in Blyth, undertaking testing and validation for their products, they elected to build their new cable factory just across the river.
Likewise, the UK’s position in the international market benefits; Kinewell Energy, another company supported through the Catapult’s supply chain growth programmes, recently secured a multi-year global contract with Equinor for the use of its pioneering KLOC software to optimize offshore wind farm cable layouts.
The jobs created in this process are not only high-skill technical roles but also have the added value of often bolstering economic development in coastal regions where it is frequently most needed. Communities that have felt the greatest impact of the decline of industries such as mining, shipbuilding or fishing, and those with the most to lose from the long-term reduction in the oil and gas industries, are being revived by renewable energy.
Through securing investment in innovative companies, the UK can also bolster the domestic offshore wind supply chain. In the mindset of developers, security of supply chain is a great reassurance in a world increasingly subject to geopolitical instability. Equally, as nations around the world step up to meet their own green energy requirements, so demand for renewable energy infrastructure, products and services increases. Securing a strong and sustainable domestic supply chain is critical to providing future energy security.
Although project developers declined to bid for the price on offer for offshore wind CfDs at this allocation round, there are 10’s of GW in the pipeline to power the UKs green future. A secure pipeline of projects at realistic prices aligned with a strong R&D offer will not only power Britain, but will draw investment and bolster domestic supply chains, which will allow us to develop significant global export potential. The global demand for offshore wind is skyrocketing. The UK is at the forefront of this and must continue to demonstrate internationally that the country is open for business in offshore wind, and leveraging the extensive skills base, in part drawn from our oil and gas sector, to maintain our world leading position in both fixed-bottom and floating offshore wind.
We are not alone in these undertakings however. Competition as a leader in offshore wind is fierce from China, the United States and mainland Europe. The UK does not necessarily need to compete on a financial basis with these parties. We already have the skills, experience and technology to keep us at the forefront of the industry, not to mention some of the best geographic conditions for offshore wind in the world.
What business needs now from government is reassurance that stability will be restored and the headwinds facing industry properly recognized and addressed, with the next allocation round evolving the CfD and being backed by a solid long-term strategy for the sector. At the core of restoring confidence in the UK offshore wind market will be the ability to secure research and development.
It has been said that “innovation distinguishes between a leader and a follower”. With some of the top R&D Centres and universities and the most innovative companies in the world, the UK has no need to relinquish its position as a world leader in offshore wind. With the right support from government in innovation, and determined industry participation, we will be the ones carving a path for others to follow.
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