UK needs a home-grown supply chain to bring down high costs of offshore wind farms, says UK Energy Research Centre report.
The UK faces significant challenges in meeting its renewable energy targets for 2020. Offshore wind is widely expected to make a major contribution. However, rising costs have been associated with its deployment.
UKERC’s report states that while the UK has big ambitions to maintain its position as a world-leading player in offshore wind, it is today importing 80% of equipment and services from abroad. There is therefore a substantial opportunity to bolster the UK’s manufacturing industry while building a low carbon economy.
“The UK is not yet fully benefitting from being a world-leader in the field; in effect UK consumers are subsidising Danish and German wind energy companies,” said UKERC head of Technology and Policy Assessment and chief author of the report Dr Robert Gross. “This report suggests that policies could do more both to bear down on costs and support a UK based industry.”
Ten years ago, when offshore wind technology was first deployed in UK waters, capital and generation costs were expected to fall substantially over time. Since then, producing electricity has become generally more expensive, but the rise in offshore wind costs has been particularly dramatic. Costs went up in part because of currency and commodity price movements but also because of supply chain shortages and bottlenecks. Planning delays also added to developers’ budgets and undermined supply chain confidence.
However, UKERC’s report points out that UK offshore wind is a technology that is still at an early stage of its development. Offshore wind currently only generates about as much power as a small conventional power station; the report emphasises that many developing technologies go through a period where costs rise before they begin to decrease.
Looking forward, the report finds grounds for optimism. The deployment of offshore wind is more advanced than any other emerging low carbon option, and there is evidence to suggest that a plateau in costs may now have been reached. The report cautions that costs are likely to come down slowly at first, but that material reductions are available if the right incentives are in place.
The report - Great Expectations: the cost of offshore wind in UK waters – understanding the past and projecting the future” is published by government think tank UKERC. The report is concerned with recent cost escalations in offshore wind.