Market Status: UK and Ireland - Best ever year with more to come

UK AND IRELAND: In its best offshore year to date, the UK completed three wind farms in 2010 totalling 653MW, nearly doubling installed offshore capacity to 1.34GW and consolidating the country's position as world leader in offshore wind.

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This year will see more progress, with at least 333MW added by the end of December. And in 2012 total capacity is likely to be tripled when a further 1.9GW, already under construction, is due for completion.

The three wind farms commissioned last year were E.on's 180MW Robin Rigg in the Solway Firth in Scotland, Dong Energy's 172.8MW Gunfleet Sands off the Essex coast and Vattenfall's Thanet project in the outer Thames Estuary - at 300MW the biggest offshore wind farm to date. As supplier to both Thanet and Robin Rigg, Danish turbine giant Vestas overtook Siemens to become UK market leader with a 59% market share.

Due for completion this year are Vattenfall's 150MW Ormonde project in the Irish Sea in Cumbria and the 184MW Walney 1, a joint venture between majority partner Dong Energy, Scottish & Southern Energy and a Dutch consortium that recently bought a 24% share.

Meantime, developers are progressing a further 45GW of offshore projects - including extensions to round 1 and 2 sites granted by seabed owners the Crown Estate in May 2010 - to plug the development gap until the much bigger round 3 sites can be built. The go-ahead has also been given for E.on's 230MW Humber Gateway project off the Yorkshire coast in north-east England.

Investment promise pays off

Prospects for the UK to further benefit from the offshore wind bonanza were boosted when the new coalition government confirmed that it would honour £60 million (EUR71.2 million) of funding earmarked by the previous Labour administration for improving ports infrastructure to attract offshore turbine manufacturers to the UK. The Scottish government announced £70 million of similar funding.

The strategy worked. Siemens, GE and Mitsubishi have all committed to establishing UK manufacturing bases, with Siemens selecting the port of Hull in north-east England as its preferred site (see page 31).

A number of thorny grid issues were finally resolved in 2010. "A year ago the grid was seen as the biggest barrier for offshore wind," says Peter Madigan, head of offshore at RenewableUK.

The government has now given developers the option of building their own offshore transmission connections before transferring them to an offshore transmission owner (OFTO). Developers had successfully argued that the original plans - which allowed only OFTOs to build the connections - could lead to delays and add uncertainty, making projects difficult to finance. Madigan also points out that new rules - known as connect and manage - will allow generators to connect to the transmission system ahead of deep reinforcements onshore.

Looking ahead, energy regulator Ofgem is expected to propose reforms to the system of payments for use of the transmission network later this year when it completes its review of the British charging regime. "There is concern that charges for offshore wind are out of proportion," says Madigan.

Madigan expects to see at least some projects consented this year after a £20 million aviation radar agreement between the wind industry and government. Defence ministry objections over the "clutter effect" from wind turbine blades on its air defence radar screens had been blocking three projects in the Greater Wash off England's east coast: Docking Shoal (540MW), Race Bank (620MW) and Dudgeon (560MW).

Glimpse of hope in Ireland

In the Republic of Ireland there are signs of progress on the three key barriers that have been holding up the country's five offshore projects: consents, grid and the support system.

Three projects - the 520MW Dublin Array, 330MW Oriel and 100MW Sceirde wind farms - have grid connection agreements, although only for 364MW for the Dublin Array, but are awaiting permits. The 475MW Arklow Bank Phase II and 1,100MW Codling Bank have site leases but no connection dates.

In 2010, responsibility for site leasing was transferred from Ireland's agriculture and fisheries ministry to the environment ministry, which is already responsible for onshore wind consents. The move was welcomed by the wind industry which believes the agriculture ministry did not have the expertise needed to decide on offshore wind applications.

This year will see transmission operator Eirgrid finally issue connection offers under Gate 3, the lengthy process for dealing with grid connection applications. But the two projects that are not included in Gate 3 - Arklow and Codling - are looking across the Irish Sea at connecting into the UK grid. Developers Scottish & Southern Energy and Fred Olsen Renewables are understood to be at an early stage of negotiations with the UK government.

And the Irish government is about to apply to Brussels for state-aid clearance for its proposed guaranteed purchase price of EUR140/MWh for electricity generated by offshore wind turbines. The rate, announced in February 2008, is more than double the tariff for onshore wind.

Garrett Connell, council member of the National Offshore Wind Association of Ireland, says there has been no hurry to put in place the support mechanism while projects were held up by grid and consenting problems. "Overall, things are starting to look more promising," he says. "We have been plagued by delays and frustrations for the past couple of years, but it is only now that the three key elements are falling into place."

This year Ireland's government is to publish its offshore renewable energy development plan following a strategic environmental assessment of Irish waters and a consultation on scenarios for up to 4.5GW of offshore wind and 1.5GW of wave and tidal energy up to 2030.

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