The UK has been at the forefront of the offshore wind industry over the last decade.
With more than 10 GW of installed offshore wind capacity today, the UK establishes itself as a world leader, a journey which has seen capacity significantly increase from less than just 1.5 GW in 2010. The rapid growth of the UK offshore wind sector can be attributed to several factors, including government support, technological advancements, and the falling cost of this renewable energy. Copper Consultancy looks back at the accelerated development of this crucial energy source, and looks ahead to what the future holds for the sector.
In 2011, the Government made it clear in its UK Renewable Energy Roadmap that significant reductions in the cost of electricity from offshore wind was required to encourage development in the technology. Offshore wind energy was recognised as a crucial part of the government’s commitment to decarbonising the economy, and that innovation was necessary to achieve cost reduction on a large scale, to enable a more competitive source of renewable energy.
The Offshore Wind Cost Reduction Task Force was established in 2011 to produce an action plan for cost reduction, and in 2012 The Crown Estate published an industry report covering the same topic. Combined, these set the path for industry and government collaboration for the next decade which has led to the cost of energy from offshore wind dropping below even the best-case industry predictions at the time. When the Climate Change Act was passed in 2008, UK offshore wind projects were producing energy at roughly £170 per megawatt hour. Fast forward to present day, and this figure now stands well under £50 per megawatt hour, signifying a monumental shift and a journey which has helped encourage mass development.
During the last decade
The Contracts for Difference (CfD) scheme was also set up by government to support low-carbon electricity generation thus incentivising investment in renewables. By ensuring developers receive a fixed, pre-agreed price for the low carbon energy produced, CfD provided financial assurance to developers which would incur substantial upfront costs and long project lifecycles before seeing a return on investment. For offshore wind, across the four CfD Allocation Rounds since the first in 2015, contracts have been awarded for 16 projects with a combined capacity of over 16 GW. This includes Orsted’s Hornsea Three in the latest round which is set to become the world’s biggest offshore wind farm.
While CfD is providing assurances to developers for projects that will become operational in the future, over the past decade a number of offshore wind projects pre-CfD have started generating electricity and adding tangible contributions to the UK’s low-carbon economy. Projects including Hornsea One (1.2 GW) and Walney Extension (0.7 GW) have been some of the first wind farms to navigate the development consent regime for Nationally Significant Infrastructure Projects (NSIPs), and have lived the project lifecycle from pre-application, through to construction and operation.
They have had to deal with the difficulties of traversing a new planning regime, including the requirements for developing detailed environmental information and delivering robust consultations to explain the impacts of these projects to stakeholders and communities. These projects helped pave the way and provided confidence to the industry that projects can successfully be delivered from start to finish under this regime. In total, 11 offshore wind farms have been consented through the development consent regime, three are in construction and eight are operational, with more currently in the pre-application stages.
Offshore wind has flourished.
This was more recently evidenced through Vattenfall securing the National Infrastructure Planning Association’s award for Best Project, for both its Norfolk Vanguard and Norfolk Boreas offshore wind farms, which demonstrates how offshore wind projects have excelled and delivered best practice while tackling challenges around protecting the environment and delivering consultation and stakeholder engagement at scale.
Looking to the future, offshore wind is expected to play an increasing role in the UK’s energy mix. In 2019, the government passed legislation committing the UK to a ‘net-zero’ greenhouse gas emissions target by 2050, and at the same time the government and the Offshore Wind Industry Council signed a Sector Deal for offshore wind in the UK which included a target of 30 GW of installed capacity by 2030. This was increased to 40 GW in the Ten Point Plan for a Green Industrial Revolution, which is nearly quadruple the installed capacity today, demonstrating the political backing and ambitions for the sector. In the 2022 British Energy Security Strategy the target was further increased to 50 GW of offshore wind by 2030.
Technological advancements will be a key factor in achieving this milestone.
We have already seen the size of the turbines increase, advances in technology to allow offshore wind farms to be built in deeper waters, the development of floating offshore wind, advances in cable technology, and more. Innovation is expected to continue, further reducing the offshore wind costs and facilitating even more, and larger projects to come forward.
However, this is not without its challenges. While the Crown Estate leases its offshore sites to developers all around the UK’s borders, there are only a limited number of onshore connection points where the electricity generated can be distributed to homes and businesses. With the UK’s grid capacity feeling the strain, offshore wind farms are often co-locating within the same local authority boundaries and being required to connect to the same onshore substations. Increasing the number of projects will exacerbate this, and significant upgrades will be required to the onshore transmission network over the coming years in order to meet the demands of not only offshore wind, but renewable energy generation in general. An independent report of the UK’s Offshore Wind Champion, released in March 2023, made recommendations and identified opportunities for government and industry to accelerate the deployment of offshore wind projects in the UK, and one of the key messages was to stress the urgent need to upgrade the national grid, as grid connections are increasingly becoming the rate-limiting factor for UK offshore wind deployment.
As more offshore wind projects come forward
The cumulative impacts are also likely to increase and the industry will face further challenges surrounding impacts to the environment, consultation fatigue and increased opposition from communities as a result. Stakeholder groups are already lobbying for an offshore transmission network review to help reduce the impacts onshore across multiple projects, and increased opposition during the consenting process could slow down project development and jeopardise the 50 GW by 2030 target.
It is more important than ever for developers to clearly explain their projects using accessible and engaging methods to build understanding and support among communities, and to continue developing projects within the policy framework set by the government. Collaboration will also be important to build understanding across projects and manage any potential cumulative impacts, especially during the construction phase.
Another key dependency for the development of offshore wind over the coming years is the capability of the supply chain. Having enough skilled workers available to construct multiple projects that move into the construction phase at a similar time will be a key challenge, and industry collaboration will be fundamental to managing this.
The offshore wind industry has already proven it can work together to innovate.
Through organisations such as The Carbon Trust’s research, deployment and development programme, the Offshore Wind Accelerator, and to collaborate, such as through the EastWind Offshore Cluster, which is set up to drive the implementation of the Offshore Wind Sector Deal (OWSD). Investment in local skills and employment will be critical to achieving the industry commitment set out in the OWSD of 60% local content by 2030.
Despite the challenges there is plenty to be optimistic about. Over the last decade the UK’s offshore wind sector has seen a period of rapid growth and development, making significant progress in reducing costs, increasing capacity, and driving technological innovation. Looking ahead, the fifth CfD Allocation Round, and both the Celtic Sea floating offshore wind and ScotWind 2 leasing rounds signify the next key milestones for the industry. The sector is poised for continued growth and success in transitioning the UK to a low-carbon economy.
For more information or to talk to us about Copper’s work in the offshore wind sector, please contact Sam Cranston at Sam.Cranston@copperconsultancy.com.