UK offshore wind could suffer funding paradox - study
Deployment of offshore wind power generation capacity in the UK could be caught in between political support and reducing costs, a new study warned on Friday.
Developers are becoming increasingly concerned about a "perceived paradox" in which future political commitment is contingent on cost reduction - which cannot be delivered without significant political support to enable the long-term investments in the sector that can drive costs down, warned the report commissioned by The Crown Estate.
But The Crown Estate energy and infrastructure chief economist Richard Howard said that any vicious circle could be reversed to work in the industry's favour.
"It is possible to create a virtuous circle of political support and industry investment which builds critical mass and leads to cost reduction; in which case we could envisage significant deployment of offshore wind to 2020 and beyond."
The UK is heavily reliant on deployment in its offshore wind sector to alleviate its well-publicised 2015-2016 electricity capacity margin pinch-point (see EDEM 5 October 2012), as well as using the technology as the primary driver in its push to hit 2020 renewable energy targets.
The Crown Estate manages rights to most of the seabed up to 12 nautical miles off the UK shore. As of April 2012, developers had registered their interest in deploying 46GW of capacity - more than 16 times the current installed capacity of 2.7GW, according to figures from trade body RenewableUK. Of these potential projects, around 10GW had progressed to consent determination, construction or operation, the report said.
French connection
The successful mass development of offshore wind will mean the UK is host to the largest chunk of installed offshore capacity in the world, potentially opening up major export opportunities to France, the Netherlands and Ireland, with physical connections already in place to these markets.
The construction programme has previously been compared to France's mass development of nuclear power in the 1970s by Oxford University professor Dieter Helm (see EDEM 26 January 2011).
But because of the size of the scheme, and the first-of-its-kind nature, the programme is exposed to a long list of potential pitfalls, including policy and regulatory uncertainty, and cost reduction.
Appropriate action
The head of offshore wind for The Crown Estate, Huub den Rooijen, said the range of factors central to the industry realising its potential "can be summarised as the three C's: confidence, capacity and co-ordination. Whilst the sector faces a range of challenges, none of these are insurmountable, provided that appropriate action is taken," he said.
The UK government has for some time been working on what it hopes will come to be seen as "appropriate action". Two years ago, the UK government established an offshore wind cost reduction task force to focus on pushing generating costs to £100/MWh (€116/MWh) (see EDEM 13 July 2011).
While on the policy side, the government is backing a new subsidy regime long-term feed-in tariffs with contracts for difference - to boost investor confidence through the offer of stable revenue streams for low-carbon power generation. Jamie Stewart
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