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Viewpoint: Gone with the wind

Lord Hunt, energy and climate change minister, has unveiled an offshore wind programme to deliver 25GW of new capacity in the UK renewable energy zone and territorial waters of England and Wales.

The document A Prevailing Wind: Advancing UK Offshore Wind Deployment, sets out a policy which enables the Crown Estate to proceed with the third round of leasing in UK waters.

There is also now commitment to an initiative welcomed by the utility companies, for further development of an offshore energy grid, which will be a fundamental enabler in making offshore wind projects happen.

“The risks with currency moves mean investment decisions have homed in on tried-and-tested technology and methods.”

Competition for internal funding within the energy utilities remains fierce and the additional risks associated with currency moves mean investment decisions have homed in on tried-and-tested technology and methods.

Offshore wind projects need to fight hard and to prove their value. In an industry where competition between energy technologies is extreme, this issue needs to be addressed if we are to support the development of offshore wind as a viable energy source.

These challenges are compounded by the offshore wind industry’s limited supply chain and a general lack of experience in developing and delivering offshore wind projects in the UK. But offshore wind remains the largest renewable energy sector and has the greatest potential for growth in the UK and the biggest opportunities globally. So how do clients ensure project viability and minimise the risks associated with investment in wind projects?

“Taking a traditional project delivery approach is high risk for offshore wind and will not drive the sector to adequately meet future demand.”

The industry has a huge part to play in controlling its own destiny. Putting front-end project strategies with robust cost modelling in place for major capital projects helps mitigate risk and ensures the project or programme is not only achievable, but meets desired outcomes.

Certainty of outcome for clients is underpinned by best practice, cost and risk management. These must form the basis of any development.

Taking a traditional project delivery approach is high risk for offshore wind and will not drive the sector to adequately meet future demand.

The solution lies in a new approach that includes utilising new and innovative contract models and best practice solutions and experience from other industries. Experience from other sectors can benefit the offshore wind industry by helping to clarify the opportunities for energy companies to:

  • move to appropriate parts of the value chain which services this global industry
  • ensure their delivery methods create greater control and certainty
  • robustly manage cost and time certainty from investments
  • manage their portfolio of competing energy generation technologies more effectively.

There is also a new contract model that offers cost and time certainty in the renewable energy market and is a world first for the offshore wind market. Developed by EC Harris, it looks at the supply chain and the constraints of a limited number of suppliers as well as project controls, such as stability, procurement and cost and time certainty.

  • Paul Stapleton is head of energy at EC Harris

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