So is the British government's new focus on offshore realisable - and ambitious enough?
The news came at the worst possible time. Vestas, the biggest manufacturer of wind turbines in the world, announced it was closing its facility on the Isle of Wight, an English island off the Hampshire coast, just hours after UK energy secretary Ed Miliband had laid out major plans to accelerating the growth of renewables in the country. "If the government was as committed to wind power as it claims, why is it acting so slowly to improve the planning process?" Peter Hunt, a safety administrator at the factory, told a UK newspaper. "We need a central planning body to overcome the not-in-my-backyard (Nimby) groups who are blocking British wind farms. But if it comes, it will be too late for us." In spite of being on the other side of the fence in the industrial dispute, Vestas' management agreed with its workers that the Nimby, a well-known archetype in middle England, was to blame for the closure seemingly undermining Miliband's new green energy push. "The Nimbys need to be more open and acknowledge that wind turbines would be good for the UK," Peter Wenzel Kruse, senior vice-president at Vestas, told the newspaper. "The government is doing a lot, but the final decision-makers are the local councils and boroughs."
The UK ought to be a world leader in wind energy. It is exposed to reliable westerly winds pushing in from the Atlantic. Although it is no stranger to heatwaves, high pressure and hot, still days, such sultry periods tend to be short-lived. And such summery spells occur when demand for power is at its lowest. A 2005 analysis by Oxford University, using 34 years of hourly wind data from more than 60 sites around the UK, says wind power delivers around twice as much electricity during the winter months of December, January and February as it does during the summer months of June, July and August. The study adds that there has never been a time over the past 35 years when the entire country has experienced a period of no significant wind. These raw meteorological qualities add up to the UK having the finest wind conditions in Europe, the university said.
Yet Windpower Monthly's own figures say that, per head of population, the UK lags behind 12 European countries in wind generation. Vestas might have a point when it blames the English planning system and nimbyism. In spite of a recent report by UK environmental industry magazine Ends suggesting that there are enough wind developments planned across the country to meet overall generation targets, many of these are in remote parts of Scotland, well away from major centres of population in the English South and Midlands regions (see Wind Fails to Make Friends, page 54).
The seemingly never-ending logjam over planning applications in the English counties might seem to be behind Miliband's decision to push for offshore wind, in which UK leads the world. But offshore is at an early stage in its development, and requires vast capital expenditure to push it from being an exciting niche industry to a serious renewables player. Clarke Simmons, offshore wind programme manager at the Carbon Trust, denies that the planning logjam is behind Miliband's drive for offshore. "The energy density offshore is greater than onshore," he says. He recalls the exploitation of England's Yorkshire region during the country's coalmining past: "Are you going to dig for coal in Surrey or are you going to dig for it in Yorkshire?" he asks. "You are going to go for Yorkshire, where the resources are, and you are going to make the most of them."
Simmons leads the Offshore Wind Accelerator, a programme designed to stimulate the development of technologies. Its aim is to reduce the costs of offshore wind farms by around 10% on current levels. The accelerator has a headline provisional budget of £60 million, of which the Carbon Trust expects to contribute £20 million. Five private-sector bodies are involved in the programme: Airtricity, Dong Energy, Scottish Power Renewables, RWE and StatoilHydro. The accelerator is still in its first phase, undertaking feasibility studies. In the second phase demonstration projects will be built. Exactly how the financing will break down and what the government's commitment will be beyond the early stages is to be finalised in the next six months.
Meantime, the industry is analysing the UK government's renewable energy strategy, which sets out how the UK will meet its legally binding target of providing 15% of all energy needs from renewables by 2020. In order to meet that overall target, the government projects that 30% of electricity must come from renewables by 2020 to counterbalance the fact that the contribution made by renewables to heat and transport energy use is expected to be considerably lower. Jonathan Farr, energy supply spokesman at Decc, says that offshore wind is expected to make the largest single contribution to the 2020 targets. As Farr says: "The government is therefore committed to incentivising the required level of new generating capacity."
A key mechanism for doing this is the UK government's renewables obligation, which requires electricity suppliers to source a rising proportion of their energy from renewables. Generally, for every MWh they produce from renewable sources they receive a tradable renewable obligation certificate (Roc) from the UK energy regulator, Ofgem. Suppliers that fail to meet the threshold must pay a buy-out fee calculated per MWh they fall short of their target. The proceeds of the fee are plunged into a central fund. Suppliers can then claim back income from the fund proportionate to how many Rocs they have presented (see Industry Warning Over UK Price Plan, page 49).
Stimulated by Rocs
But in recent years, the value of Rocs has been ramped up by the government as a way of stimulating offshore development. Under existing rules, Ofgem issues 1.5 Rocs for every MWh of energy produced by offshore wind as a way of making generation more lucrative and, as such, stimulating offshore wind development. The government is consulting on proposals to offer two Rocs for every MWh of offshore wind power produced, following a recognition that the international financial crisis had choked off cheap and plentiful credit for offshore wind farms and, as such, increased the cost of building them. The doubling-up of Rocs for offshore wind generation is only a temporary measure, however, and the government plans to push down their value in coming years. But it is also consulting on proposals to extend the Roc system from 2027 to 2037 (see Industry warning over UK price plan, right). The extension is expected to go ahead.
Lack of certainty
Yet some in the industry are still concerned that the plans fail to offer sufficient certainty for those considering investing in new offshore farms. "There is already a date by which government would take that incentive away," says Gabriel Ruhan, CEO of Global Marine Systems, a UK company that claims to be the largest provider of submarine cable installation, maintenance and related engineering services in the world. "From a supply chain point of view, what we really need is stability in the market," he adds. "Although there are lots of good noises from Decc, because of the time it takes to build cable-laying vessels, we have to take a decision today on what we are going to need in two years' time - and because of the uncertainty, that's hard to deal with."
The UK commands half of all offshore wind resources in Europe, says Allastair Dutton, an offshore programme manager for the Crown Estate, which owns most of the seabed out to the 12 nautical mile limit of UK national waters. "That's a big responsibility (if we are going to meet) the offshore targets for all of Europe," he says.
For his part, Ruhan estimates that European companies will need to build another ten vessels at least to meet the continent's demand for inter-turbine cable laying vessels. Each vessel, he says, will cost around £60 million. So the total investment required for inter-turbine transmission cable-laying alone is £600 million to cover Europe. "You could quite easily double that projection once you account for export cables," he says. "No way now is there the confidence in the market to build that capacity."
Certainly, a report for the Crown Estate suggests Ruhan's concerns over the supply chain are justified. "Unlike in onshore wind," the report by BVG Associates said, "there is not yet the confidence in the supply chain to invest prior to customer commitment". Although it argues that the industry's views on the availability of vessel laying supply chain have softened recently, it cites statements from turbine manufacturers that there "is no point in preparing to supply more wind turbines to the offshore market because there would not be enough vessels to install them". Transmission, or the lack of it, is one of the most serious potential hurdles for UK offshore (Windpower Monthly UK Offshore Special Report, June 2009).
At the British Wind Energy Association (BWEA), spokesman Nick Medic agrees there are potential concerns over the confidence in the offshore supply chain but refuses to blame the government for failing to promise bumper Roc values beyond the next couple of years. "We might agree that our members should get the best possible deal," he says, "but asking the government to commit to a Roc price in ten years' time would be slightly unrealistic." Instead, he adds, the offshore build target itself is to blame for the weakness of confidence across the supply chain in areas such as vessel construction and the manufacture of steel. The UK government has set out plans to create a capacity of 14 GW of offshore wind by 2020. That might be deemed demanding - given that it is around seven times the entire existing global offshore wind capacity - yet BWEA says the bar has been set too low. "The 14 GW target is unambitious," says Medic. "We think make it 20 GW by 2020 and everything else will flow from there."
No upper limit
Although the government stresses that there is no upper limit to the amount of offshore capacity in the UK, Medic says the industry will always tend to work towards actual government targets: "If you are a steelmaker, you want to invest in foundations and towers. Say we need 5000 turbines each requiring 600 tonnes of steel. That's three million tonnes in total. That amount could probably be produced but you'd need to invest heavily in your production capacity to do it and you are not going to expand if the guaranteed demand is not there."
Aside from a target the UK offshore industry considers unambitious, there is another potential policy under consultation that could actually stymie offshore development. Although the government looks very likely to expand Rocs until 2037, under the consultation any single project will only be entitled to support through the Rocs system for its first 20 years. This has led to uncertainties over what constitutes a single project.
Peter Madigan, offshore wind development manager at BWEA cites the London Array project as an example. The first phase of the London Array scheme is planned to be complete by 2012, he says. "The second phase cannot begin until phase one is complete," he adds. "What constitutes a single project? Will the London Array's second phase get its full 20 years of Rocs? People need to know what they are going to get for the life of the project. If support could be reduced, it makes it less appealing. It's a matter of putting greater clarity on the policy."
Yet if the UK can close the loopholes and erase the grey areas in the legislation and, as such, increase confidence in the supply chain, the country can one day perhaps live up to its massive potential as a major wind energy producer. Onshore development will still be important but, if the UK can do more of its development offshore, the Nimbyocracy that Vestas said was in part responsible for killing its operation on the Isle of Wight might no longer matter quite as much.
Can the UK achieve its aims? "I would say it is doable," says Clarke Simmons at the Carbon Trust. "We have to build thousands of turbines and lay miles of carbon fibre. So we need the project finance and we need to mobilise industry. But I think we know how to make, say, steel. It's just a matter of getting out it there."