Slow going off British and Irish coasts -- Offshore supply chain fears

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After 2003's landmark year for offshore wind power in the UK and Ireland -- with the first wind farms built, hundreds of megawatts of consented projects, thousands of megawatts granted site leases, and £100 million in capital grants -- 2004 was much quieter. Just one offshore project was completed in each country.

In the UK, E.ON UK Renewables completed its 60 MW Scroby Sands wind farm off the coast of Norfolk. Scroby is the second commercial size offshore project to be built in the UK. Two more projects are under construction and due to be completed this year, while around four more are in the process of assessing tenders for turbine supply and installation, with construction and commissioning expected in 2006 (table).

Progress on the first of two rounds of UK offshore wind farm consenting has been slower than expected. Adrian Maddox from developer Wind Prospect believes this has partly been due to slower progress in granting planning approvals than the government had promised. The Department of Trade and Industry's much vaunted "one stop shop" approach to consents was reportedly overwhelmed by the sheer volume of projects, Maddox says.

Adding to delays was the change in ownership of all but a few of the round one wind farms, as the original developers found they did not have the financial clout to complete their projects. Eight round one projects have been bought up by utilities and in south Wales, United Utilities has announced a pending sale of its Scarweather Sands project to E.ON UK Renewables -- formerly Powergen Renewables. Negotiations over change of ownership can delay projects between six to 12 months.

Vessels bottleneck

Npower Renewables, whose North Hoyle wind farm was the first to begin operation in 2003, had hoped that more round one projects would be installed in 2004. The company's Neil Birch warns that the number of stations likely to be ready to build over the next few years will cause bottlenecks in the supply chain -- particularly lack of availability of enough vessels for installation and cabling. This could create bottlenecks with round two projects.

The company is pressing ahead with its round two 750 MW Gwynt y Mor site off north Wales. It plans to lodge an application for consents in the next few months, with the aim of a 2007-08 build. "That is an extremely aggressive target," Birch says.

On the other side of the country, the London Array consortium -- consisting of E.ON UK Renewables, Shell and small developer CORE -- is making progress with its 1000 MW plant in the outer Thames Estuary. The consortium hopes to be ready to apply for consents later this year.

Two big challenges for round two developers remain: getting the power ashore to the customer and the need for additional funding to close the gap between the price they can expect for their electricity under the renewables obligation (RO) and the higher costs of building further out to sea (Windpower Monthly, January 2005).

Both Gwynt y Mor and London Array are well placed to connect into existing onshore transmission lines, but for the bulk of round two projects off the north-east coast, a new onshore grid to take the additional capacity will need to be built, with its own lengthy consents process. Moreover, the government and the electricity market regulator are still in the process of deciding the rules and payment regime for an offshore grid.

The industry is also looking to government to provide the support needed to close the funding gap. It estimates that payments under the existing terms of the RO will leave a 10-20% shortfall from the cost of a project. Costs -- particularly for foundations, installation, turbines and grid connection -- have not come down as fast as British developers had hoped. The reason, claims one developer, is due in part to the limited number of suppliers, but also to the lack of experience with building commercial scale offshore projects. Once economies of scale kick in with later round two projects, prices will come down, he predicts. Meantime the industry needs help getting to that stage.

renewables obligation Review

Hopes are pinned on the outcome of the imminent review of the renewables obligation yielding that extra support. The British Wind Energy Association (BWEA) says that before responding to the review, it is taking its time to consider carefully the form of support needed to sustain offshore wind until it can survive without further assistance under the RO.

Ireland saw very little movement, beyond the commissioning of the 25 MW Arklow Bank project in the Irish Sea owned by Airtricity and GE Wind. Out of five further sites granted development licences in 2000, a project by the Kish Consortium is the most advanced. The group -- consisting of Saorgus Energy and Hibernian Wind Power, a subsidiary of national utility ESB -- plans to eventually install 100 turbines on the Kish and Bray banks off Dublin. The first 50 MW phase won an Alternative Energy Requirement (AER) power purchase contract in 2003, but over the past year the project fell victim -- like so many onshore projects -- to the moratorium on new connections to the grid. All material is in place for an environmental statement to accompany an application for a foreshore lease, but the company is waiting in the queue for connection offers from the two ESB grid companies. "We are pretty much ready to go ahead as soon as the connection issue is sorted out," says Aidan Forde from Saorgus.

Other offshore projects are stalling to see what form of support the government chooses to replace the AER. Realistically, no large offshore projects are likely to get built until a planned interconnector linking Ireland's small network with the larger UK grid gets built, says Paddy Teahon from Eco Wind Power, a company holding development licences for the Codling banks off Wicklow and Blackwater Bank off Wexford.

"There is potential for 1000 to 2000 MW of offshore wind in Ireland," Teahon says. "But there is little doubt that the solution for offshore wind is inextricably bound up with putting an east-west interconnector in place."

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