UK Leasing

Opinion: What could prevent the UK from achieving its offshore wind targets?

If all goes well, then the UK’s offshore wind industry should be on track to meet the government’s target of 40 GW of generation capacity by 2030 – but it is not an industry used to what all goes well.

Chris Towner, Partner and Renewable Energy Specialist at Womble Bond Dickinson Law Firm, examines what needs to be done to ensure goals are met.

The innovation and determination of the British offshore wind sector have proven themselves time and time again and have enabled the country to become the world leader in offshore wind power generation.

An optimistic assessment of UK offshore wind capacity, including current generation capacity (about 10.4 GW), “ongoing” projects, plus the roughly 8GW of projects awarded in the fourth lease cycle earlier this year – suggest we should hit the 40GW target by 2030 with capacity to spare.

We saw more good news from our wind farms over the May 2021 bank holiday weekend like a new record for wind energy production takes place in England, Scotland and Wales. Even though it was based on very strong wind conditions, it shows that the capacity is there and that we are really on the right track.

However, a pragmatic assessment of the task at hand would highlight the many obstacles that remain in the way of these projects. If we have the ambition to achieve the 2030 goals, but also to go beyond and achieve net zero as a country by 2050, then many improvements still need to be made to the functioning of the world. industry, from the start of the project to its completion.

And now it’s time to start: with so many gigawatts of generation to install, here are a few things to consider.

Can supply meet demand?

Currently, the demand for low-carbon, ready-to-invest projects is greater than the supply. We need a regulatory regime that brings more clean energy innovation projects quickly into the system, to attract that investment to the UK and help accelerate our decarbonization targets.

The private sector is the key to all of this – developers can deliver on time, but only if a regime that allows this is in place.

Authorize offshore wind projects

Top current concerns for the projects include permit risks, highlighted by the recent revocation of approval for Vattenfall’s Norfolk Vanguard offshore wind farm and certainty over the scale and timing of the scheme’s support. contracts for difference (CfD).

It’s no secret that obtaining permits for offshore wind farms is the most problematic part of the process. Project economics, technical constraints, supply chain capacity, social impact (aesthetics and amenity) and environmental impact all need to be considered as part of the licensing process. This is a complicated process that can lead to significant delays – or cancellations – of projects and significantly increase the risk for investors.

It is also far from a new problem: the pace at which permits are obtained has always crippled the UK offshore wind industry and threatened progress.

It is essential to take into account the impact of offshore wind farms, whether on the seabed, the animal, marine and avian life that surrounds them, the point of connection with the land, the people who live nearby. But it can and should be done with more speed and fewer obstacles than it currently is. There has to be a balance between all of these interests. With the experience we’ve gathered so far, finding that balance should be faster, not slower than with previous projects.

Without major improvements in the management of permits for offshore wind farm projects, the 2030 target could be missed. Many of these barriers can only be overcome with better collaboration between industry, those consulted and regulators.

The very size of the scale required

The UK’s offshore wind capacity has grown from around 1 GW in 2010 to just over 10 GW in 2020. Definitely a big step forward, but this effort needs to be more than tripled over the next nine years to achieve the goal.

Aurora Energy Research suggests this will require the equivalent of a 10-12 MW turbine installed every weekday throughout this decade, as well as around £ 50bn (€ 58bn) of investment and an additional 20 GW of rental towers over the next few years.

We’re going to need more turns.

The offshore wind projects currently underway will almost certainly be sufficient to meet the 2030 target – barring a hitch – but more towers would still be beneficial to the industry and contribute to all goals set beyond 2030.

It’s unrealistic to expect them all to be on the same scale as the fourth rental cycle – especially keeping in mind the value of the deals involved – so maybe a “micro” approach Crown Estate rental will be the way forward, offering more frequent but smaller tours.

Infrastructure – both onshore and offshore

The current system whereby each network connects to earth via its own infrastructure, with earth substation, is not sustainable. Some of the biggest licensing issues focus on connection points and onshore communities.

The most likely solution to reducing the number of points at which our offshore wind farms have to make landfall is to develop an offshore distribution network but, again, this will require colossal investment and collaboration.

Likewise, the rest of the onshore grid is currently not designed to support offshore generation: significant investments in onshore infrastructure will be needed to ensure that the electricity produced can reach homes and businesses. This work involves land purchases for linear infrastructure projects – which can be complex projects involving multiple landowners. with the potential to cause delays and disruption.

Can the CfD scheme cover its own obligations?

The CfD program has played a major role in the success of our offshore wind industry to date, but Aurora Energy Research also estimates that increasing installed capacity to 40 GW would cost an additional £ 2.6 billion per year in payments. complementary CfD – almost five times the allocated budget – during the first years of these CfDs.

This shortfall could be a political challenge as the cost will be paid for by consumers. The evolution of the CfD program will be at the center of the industry’s concerns over the next few years. Changes are proposed to ensure that only competitive renewable energy projects receive government support. While the strike prices for offshore wind remain around £ 40 / MWh, this remains significantly lower than the costs of nuclear (£ 92.50 / MWh) and the projected costs of carbon capture and storage.

It remains to be seen, however, whether the price certainty offered by a CfD, so valuable to investors, will offset the potential for wasted development costs by meeting CfD criteria but not succeeding in the auction process – in especially for smaller scale technologies. Some onshore wind and solar projects may choose not to participate in the process. We are also awaiting details on the overall budget allocation and how this should be distributed among the pots.

Regional differences in wind at sea

Largely due to the different legal regimes in decentralized administrations in the UK, the process for obtaining permits varies considerably depending on the country to which you are applying.

In England, a development authorization order is granted under the Planning Act 2008. This order includes a number of authorizations, including a maritime license and land authorizations. In Wales, the maritime license is determined by Natural Resources Wales. In Scotland, Marine Scotland reviews applications for work at sea while Scottish ministers grant or deny consent under the Marine (Scotland) Act 2010 – up to 12 nautical miles (22.2 km) from shore – and the Marine and Coastal Access Act 2009 for projects 12-200nm (22.2-370.4km) from shore.

It would certainly be easier for everyone if these differences could be ironed out, but in the current political climate, they are unlikely to be resolved quickly.

Shortage of skilled workers

Most industries are currently struggling with skills shortages, and offshore wind is no exception.

As we move away from traditional oil and gas-based power generation, the need for a new skilled workforce – an environmentally-ready workforce – becomes even more pressing. for schools, colleges and universities to provide courses in STEM (science, technology, engineering and mathematics) subjects.

What can be done?

This is just a glimpse of some of the challenges the offshore industry faces as it seeks to meet these 2030 targets. It is not meant to be pessimistic. Instead, scanning the horizon and examining the challenges ahead as we continue to support projects across the UK aim to help post-pandemic reconstruction unfold in a sustainable manner.

Better collaboration from all stakeholders and a willingness to have open and honest discussions about what needs to be done and the balance of interests – and to act on those conversations – should get us across the line. Private sector funds are available to advance innovation for renewable energy and will play an important role in the UK’s continued success as a global leader.

It’s also worth remembering that 2030 is not the end goal here. The biggest challenge is to aim for the net zero target of 2050 and the likely doubling of electricity demand that this will entail, as home heating and transportation are electrified. Tackling each of the issues mentioned above will only help the UK achieve this greater ambition.

Leave a Reply

Your email address will not be published.