From port and supply chain bottlenecks to a creaking grid connection queue, Britain’s once world-leading offshore wind province risks failing to meet hugely ambitious government targets for build-out at sea without major shift in ‘wider industrial strategy’, says outgoing UK offshore wind ‘champion’ Tim Pick
By Darius Snieckus
Britain’s offshore wind industry was storming ahead at full sail in 2022. Weathering the aftermath of a Covid-fuelled supply chain crunch and the polycrisis sparked by Russia’s invasion of Ukraine, the sector had continued to trim costs below those of fossil-fired generation, culminating in a seabed leasing round that saw winning bids come in at a once-inconceivable €43.86/MWh ($30.35/MWh) – almost ten times cheaper than gas.
Yet even as the UK government under then Prime Minister Boris Johnson was flying high on the prospects – and raising its end-of-decade target for the sector 25% to 50GW on the back of a “made in Britain, for Britain” vision that put wind-at-sea at the heart of a booming, future renewables-powered economy – warnings were already being sounded.
Expanding operating offshore wind plant off Britain almost five-fold from the 11GW then turning was stoking market excitement. But without fit-for-purpose port or supply chain infrastructure and an outmoded national permitting system, as several developers were quick to articulate at the time, it was “not going to be deliverable, even with the much-vaunted Contracts for Difference (CfD) tender process that had supercharged the sector in recent years.
The past 12 months have brought the scale of the challenge of this ambition into sharp relief, says Tim Pick, the energy industry veteran brought in by the government as its offshore wind ‘champion’ to deliver recommendations on how to underpin this critical next phase in the sector’s evolution.
“When I started this role [in 2022], my role was very much focused on the pure ‘acceleration’ topics, so areas such as the consenting process,” he says. “And as we moved through the year, the focus shifted quite a bit towards ports and supply chain capacity bottlenecks, which is very much tied to acceleration and aligns with many of coastal nations in Europe, getting stuck-in to offshore wind ramping up their targets.
“In the UK, but indeed across Europe, there's a big challenge. Everyone upping their offshore wind capacity targets, but not necessarily with the accompanying port infrastructure investment yet. It’s a very tricky thing to crack.”
So while Pick believes it is “reasonable” to suggest that the 10-plus years it currently takes for an offshore wind project to go from agreement for lease to final investment decision could be almost halved, “this assumes the passing and properly resourced implementation of consenting changes [including legislation including the recent Energy Security Bill] and the implementation of a sophisticated seabed leasing process [such] as is being trialed in the Celtic Sea” by UK seabed landlord the Crown Estate.
And this does not factor in the coastal manufacturing infrastructure that will be required to construct the coming tens of gigawatts of new offshore wind plant – or the need for “timely” grid connections for all this clean energy production, “a matter which calls for significant further work to address”, he says.
‘Wartime footing’ for grid connections
The issue of grid connections must be put on “a near wartime footing”, he says, echoing widely expressed concerns in the industry that the UK’s transmission queuing process is “broken and needs to be reformed” if aspirations for offshore wind power contributing meaningfully to Britain’s low-carbon future are to come good.
“Even with the intention to see change you have big challenges: one is the consenting for new [power export] cables, particularly where they reach landfall – and this is much like the issue across the US and elsewhere; and then there's the supply chain challenge where there simply are not that many suppliers of both cable and the electrical equipment in the substations etc.
“It is certainly easy enough to make the argument that the more offshore wind farms the better. But those seabed leasing, marine planning and transmission decisions also constitute major policy decisions as to the timing, location and technology of the nation’s future electricity generation capacity,” Pick noted in his Seizing our Opportunities report, which was published last month.
“The framework within which those decisions are currently being made needs to be carefully considered, especially when viewed in the broader energy system context.”
Pick sees the notion of ‘stewardship’ – which he views as currently “still too siloed” in Britain – as being central to the branch-and-root reforms necessary if the UK is not only to reach its offshore wind power production targets but also capture the economic development – and just transition – prize that will come with it.
Need for a 'robust, holistic, strategic stewardship'
“Given the sheer scale of transformational change taking place across our energy system, whether in terms of the mass deployment of renewables, the upgrading of our national grid, the roll out of CCUS [carbon capture utilization and storage] or the future roles of oil & gas and hydrogen in the energy mix, I strongly believe that there is a need for more robust, national level, holistic, strategic stewardship of the integrated system,” he says.
The main engine of progress to-date in UK offshore wind – the CfD auction system, which helped drive costs down by affording investors and developers with longer-view price stability – has “done a great job” but now needs retooling to support the bigger industrial development picture emerging in the sector, says Pick.
“The price-only approach for auctions has done a great job of encouraging innovation and bringing down the LCOE [levelized cost of energy], which has benefited the entire global offshore wind market. But at a point I feel you need to take a more nuanced view when it comes to advancing new technology and getting supply chain development off the ground. It needs to be part of a wider industrial strategy.
“Trying to cherry-pick just the easy elements of a strategy [for offshore wind in the UK] is not going to get you to the overall right outcome,” he says.
“This is obviously about affordable power prices for consumers, but it’s also about jobs and economic development and then there is the energy security part to work in. There is a balance to be struck of course: we can’t load up consumer electricity bills but there is the wider societal interest that has to be considered.”
Floating wind needs ‘particular focus’
Floating wind power – where the UK still retains global leadership with two flagship projects, Hywind Scotland and Kincardine, and has a 5GW 2030 goal for deployment – should be a “particular focus [of the government’s] care and attention” at this stage in the offshore energy sector’s redevelopment, says Pick.
“Seizing our first-mover advantage in the development of the new floating wind industry… will require a focused strategy on a number of elements,” he says, “supporting innovation, R&D and industrialization efforts as the technology transitions from bespoke demonstration projects to serial production and commercial scale deployment; taking a sustainable approach to CfD auction parameters and cost reduction; and catalyzing investment in the large-scale port infrastructure which will be so vital to delivering projects and securing the largest possible share of supply chain jobs, growth and know-how from this new industry.”
That the upcoming AR5 offshore wind auction – unlike AR4 – has no ring-fenced budget for floating projects, Pick sees as shortsighted. “We need as a country to be taking a much more strategic view of [floating wind] using the CfD process to provide a sort of sustainable, nurturing path downwards on cost and upwards on deployment. It is quite clear we are not quite there yet. We will see what happens in the auction. No one wants it to fail.”
He points to Scotland’s 2022 ScotWind auction where 75% of the 26GW awarded lies in waters too deep for fixed offshore wind as spurring floating wind forward in its industrialization. “I expect grid connection pressures are going to result in a phasing of that capacity’s development timeline. And the port and supply chain development will need to happen in parallel. But to be sure it was big chunk of capacity to give out in one go – and much of that is in deep water, so only for floating projects. "
Ultimately, Pick says, the “cost of delaying deployment” of offshore wind will cut against progress toward the UK’s net-zero objectives, as well as the overall affordability of power in the country – he cites the calculus that offshore wind would be “40% of the price of substituting [gas] generation".
“And neither of these metrics of course ascribes a value to energy security, a key concern in today’s world,” he adds.
“Offshore wind, an increasingly global industry, has been substantially incubated with support from UK taxpayers and consumers: if we are to implement a just transition, it is imperative to ensure it delivers as much opportunity for UK businesses and communities as possible, even more so given the correlation between coastal areas targeted for ‘leveling up’ and the next decade of anticipated offshore wind development off Britain,” Pick concludes.
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