Out-Law News | 07 Mar 2019 | 5:11 pm | 3 min. read
The latest 'sector deal' between the government and industry is backed by some of the UK's biggest renewable power companies, the Offshore Wind Industry Council and the Crown Estate and Crown Estate Scotland, which will begin leasing more of the UK sea bed for offshore wind projects over the next year.
The deal "provides very welcome policy commitment from the UK government", according to renewable energy expert Alan Cook of Pinsent Masons, the law firm behind Out-Law.com. It "responds to the opportunities which have been coming from ever-lower development costs, increased activity and a strong pipeline with further leasing rounds to come".
"The next generation of offshore wind projects will come on-stream in the late 2020s and early 2030s - when the targets in this deal are set to be met - which makes it a vital time for government and industry alike to have published this joint outlook on the future of the industry," he said.
"The government has reaffirmed its support for the Contracts for Difference subsidy regime, for R&D funding to increase UK competitiveness and further reduce costs, and for policies to support the export of UK expertise around the world. It seems clear that offshore wind is now firmly embedded as a key element of UK government energy and industrial policies," he said.
"The UK offshore wind sector has been attracting global interest in its development and investment opportunities, and the range of opportunities for investment will only continue and grow as the activity in the sector progresses so impressively over the next few years. With offshore wind set to generate 30% of the UK's energy needs, the challenge for the government is to reaffirm and develop its overall energy policy to ensure that the UK's energy requirements over the next 10-20 years will be met from the range of available resources," he said.
The UK already hosts the world's largest offshore wind farm, Walney Extension off the coast of Cumbria, and even larger projects are currently under construction. The cost of these projects has fallen considerably over the past two years, with subsidies awarded under the UK's competitive Contracts for Difference (CfD) scheme falling by over 50% during that time.
The sector deal sets out plans to construct 30GW of UK offshore wind generating capacity by 2030, or one fifth of projected total global wind capacity. Among the industry commitments in the deal is a target of 60% lifetime UK involvement in UK projects, up from the current 50% target, to include more UK involvement at the capital expenditure phase.
Offshore wind companies have also committed to £250 million worth of investment, including in a new 'Offshore Wind Growth Partnership' to deliver increased productivity and competitiveness in the UK supply chain and support innovative new products in areas such as robotics, advanced manufacturing, floating wind and larger turbines. The deal sets a target of increasing offshore wind-related exports fivefold by 2030, to £2.6 billion annually, and proposes support for smaller companies seeking to export for the first time. The government also pledged £4 million in funding to enable British businesses to share expertise globally and enable countries such as Indonesia, Vietnam, Pakistan and the Philippines to transition away from coal power.
The deal sets a challenge to the sector to more than double the number of women entering the industry to at least 33% by 2030, with the ambition of reaching 40%; proposes new apprenticeship targets for the sector; and pledges to work with further education institutions to deliver the skills that the industry needs. An 'Offshore Energy Passport', recognised outside of the UK, will be developed to enable offshore wind workers to transfer their skills and expertise to other offshore renewables sectors and to the oil and gas industry. The proposals on skills could triple highly-skilled jobs in the sector to 27,000 by 2030.
The government has re-stated its commitment to the contracts for difference programme for offshore wind, providing up to £557m worth of support to the industry into the 2020s through two-yearly auctions. These auctions will deliver between one and two gigawatts of offshore wind each year in the next decade, depending on the price achieved during the auction process.