Having pioneered offshore wind for more than two decades, installing more than 10 GW in its waters to date, the U.K. now finds itself at a pivotal moment as it shoots audaciously for an almost fourfold increase in capacity by 2030.
Getting to 40 GW will require critical reforms in policy, permitting and transmission, industry observers told S&P Global Market Intelligence, as well as a significant manufacturing and construction effort at a time when other countries globally are ramping up their offshore wind activities and competing for resources.
But in the U.K.'s favor are fortunate market fundamentals that helped it grow to become the world leader in the technology.
"We have the best resource and probably one of the best geographies for offshore wind in the world," Barnaby Wharton, director of future electricity systems at trade group RenewableUK, said in an interview. "We're very lucky that we have the North Sea, which is shallow and has great wind speeds."
A long journey
In the early days of offshore wind, the U.K.'s main challenges were about proving it works and bringing its costs down.
The technology is now proven: Offshore wind is already the U.K.'s leading source of renewable generation. And grid operator National Grid Electricity System Operator Ltd.'s latest "Future Energy Scenarios" report sees the sector growing rapidly to become "the backbone of [the U.K.'s] electricity supply in 2050," at anywhere between 70 GW and 113 GW, depending on the level of consumer and system change.
Cost is also no longer a roadblock: In the government's latest renewables auction in 2019, offshore wind projects were awarded contracts at prices significantly below the market rate for electricity.
But quadrupling capacity in less than a decade brings with it new hurdles. "It will come down to whether we can get enough volume through the planning regime, and enough grid connections in time," Alon Carmel, managing director at FTI Consulting, said in an interview.
Offshore wind projects, deemed nationally significant infrastructure, require approval from the national government. On average, it takes about a decade to bring projects from conception to operation, Wharton said.
Grid connections are increasingly becoming limiting factors in permitting projects. Vattenfall AB, the Swedish state-owned utility, saw its approval quashed for its Norfolk Vanguard wind farm in February because of the impact its transmission infrastructure would have onshore. A decision on its sister project, Norfolk Boreas, which would use the same onshore connection point as Vanguard, was delayed until late 2021.
The U.K.'s approach to offshore transmission to date has seen generators build individual cables to connect their wind farms, but the government is examining a more coordinated system to hook up multiple projects to one single onshore landing point.
"Unfortunately, the end [power] user is not out at sea, so you've got to find cost-effective ways to share connections between the next wave of mega-projects," Steve Read, managing director of Bridge Wind Management, an asset management company, said in an interview.
Lacking visibility
To some, a more pressing issue than permitting is policy reform, with critics arguing that the U.K. lacks a long-term vision for supporting new renewables capacity.
The U.K. runs contract for difference, or CfD, auctions where renewables developers submit fixed-price bids for their electricity. The government either tops up, or claws back, revenue from generators, depending on whether the wholesale power price is lower or higher than a project's CfD price.
The CfD and earlier U.K. government support programs for renewables have been critical to the success of offshore wind, attracting well-capitalized utilities like Iberdrola SA, rsted A/S, RWE AG, SSE PLC and Vattenfall which between them own nearly 8 GW of net wind capacity in U.K. waters, according to Market Intelligence data and a range of low-cost-of-capital investors and banks.
"Without government intervention, we wouldn't be where we are now," said Gary Bills, regional director for Europe, the Middle East and Africa at consultancy K2 Management.
The third and most recent CfD auction took place in fall 2019; the next is slated to open later this year and will be the largest yet, at 12 GW. As it stands, there is no auction roadmap beyond that.
That means a significant number of projects in the U.K.'s offshore wind pipeline, which stands at more than 23 GW, do not know when they will be able to bid for contracts. About 5 GW of projects have secured CfDs but are yet to begin construction, according to RenewableUK.
"We need to make sure we have enough projects coming through in the CfD [auction]. The government goes from one CfD to the next without any real visibility," RenewableUK's Wharton said. Government officials did not immediately respond to a request for comment.
Seabed lease auctions for the next wave of offshore wind projects are also "not quick enough and not big enough," Bills said.
The Crown Estate, which manages the seabed in England and Wales, ran its first seabed lease sale in a decade earlier this year, but the capacity on offer was four times smaller than the last round, when industry interest was only a fraction of what it is today.
The latest round fetched sky-high prices and saw market newcomers outbid incumbent utilities. Oil giant BP PLC, in a joint venture with EnBW Energie Baden-Wrttemberg AG, won two 1.5-GW lease areas and committed to paying a total of 1.85 billion in option fees across four years until a final investment decision. The companies think they can bring the projects through planning and into operation within seven years.
Manufacturing crunch
Beyond planning and policy, the capabilities and capacity of the U.K.'s offshore wind supply chain may be issues.
With offshore wind development ramping up globally, and projects being built in new markets like the U.S. and in Asia, wind-turbine manufacturers like Siemens Gamesa Renewable Energy SA, Vestas Wind Systems A/S and GE Renewable Energy could quickly become stretched.
Some manufacturers are opening new facilities in the U.K. to cope with the expected rise in demand for turbines. Still, developers could hit a crunch point before the end of the decade.
"It's a completely arbitrary date but everyone says they want to start construction in 2027. If there are going to be bottlenecks, that's where it will be," Bills said.
The same could apply to shipping vessels and wind-turbine components. But observers say the issue of supply chain capacity could be partially solved by introducing regular CfD auctions, allowing companies to know exactly what projects are coming down the pipeline and when.
Without that visibility, the 40-GW target might be at risk. Only two of National Grid's four Future Energy Scenarios foresee the U.K. achieving its goal by the end of the decade. The remaining two get there by 2031 and 2035.
"The 2030 target is tough to hit," FTI's Carmel said. "It's definitely achievable, but there are some big obstacles."
Here is the original post:
An offshore wind heavyweight, UK squares up to 'tough' 40-GW target - S&P Global
- 7 Reasons to Retire and Relocate When Savings Fall Short ... - ThinkAdvisor - October 9th, 2023 [October 9th, 2023]
- Strive Asset Management vs. Engine No. 1: How Did the Activists ... - Morningstar - September 21st, 2023 [September 21st, 2023]
- New Taskforce to build UK nuclear skills - GOV.UK - July 31st, 2023 [July 31st, 2023]
- National Bank of Canada FI Has $16.22 Million Position in ... - Defense World - June 26th, 2023 [June 26th, 2023]
- RIT part of National Science Foundation grant to help spur next ... - Rochester Institute of Technology - May 22nd, 2023 [May 22nd, 2023]
- 2023 NAIA Outdoor Track & Field Regional Awards - U.S. Track & Field and Cross Country Coaches Association - May 22nd, 2023 [May 22nd, 2023]
- P&I wins ASBPE national gold award for managers microsite - Pensions & Investments - May 22nd, 2023 [May 22nd, 2023]
- The National - January 30th, 2023 [January 30th, 2023]
- Dimon Highlights Need For More Oil And Gas Investment As Vanguard Bails On ESG Group - Forbes - December 16th, 2022 [December 16th, 2022]
- About Us | National Vanguard - November 19th, 2022 [November 19th, 2022]
- Vanguard News Network - October 11th, 2022 [October 11th, 2022]
- Retirement Clearinghouse Announces Auto-Portability Network with Fidelity, Vanguard and Alight | PLANSPONSOR - PLANSPONSOR - October 11th, 2022 [October 11th, 2022]
- Abenaa Jones named Ann Atherton Hertzler Early Career Professor - Pennsylvania State University - August 6th, 2022 [August 6th, 2022]
- City of Detroit, Charles H. Wright Museum of African American History, join the Black Theatre Network (BTN) to host Broadway Comes Home to Detroit, a... - July 25th, 2022 [July 25th, 2022]
- California Senate Votes to Keep Legalized Slavery in its Prisons - The Peoples Vanguard of Davis - June 29th, 2022 [June 29th, 2022]
- Schneider National (NYSE:SNDR) Now Covered by Analysts at Credit Suisse Group - Defense World - June 29th, 2022 [June 29th, 2022]
- Introducing the Truckstop.com Partner Marketplace: A Comprehensive Transportation and Logistics Ecosystem Empowering the Freight Community - Yahoo... - June 29th, 2022 [June 29th, 2022]
- A Pilgrimage to the Birthplace of the Modern Womens Rights Movement - AFAR Media - June 29th, 2022 [June 29th, 2022]
- White Child Adopted by Black Reality TV Star Beaten to Death - June 24th, 2022 [June 24th, 2022]
- National Car Rental - Wikipedia - June 24th, 2022 [June 24th, 2022]
- Down 15% in 2022, is it time to jump on Vanguard Australian Shares Index ETF? - The Motley Fool Australia - June 24th, 2022 [June 24th, 2022]
- LIVE BLOG: 2022 Corps at the Crest - San Diego - FloMarching - June 24th, 2022 [June 24th, 2022]
- Greater Sacramento Attends Bio International Convention in San Diego - The Peoples Vanguard of Davis - June 22nd, 2022 [June 22nd, 2022]
- Vanguard International Semiconductor : VIS and National Yang Ming Chiao Tung University Cofound Intelligent Manufacturing and Management Laboratory -... - June 22nd, 2022 [June 22nd, 2022]
- The Shadow Of June 12 - The Left and Nigeria's Democratic Revolution, By Baba Aye - SaharaReporters.com - June 22nd, 2022 [June 22nd, 2022]
- Yolo County Honors Juneteenth with Celebration - The Peoples Vanguard of Davis - June 22nd, 2022 [June 22nd, 2022]
- Commentary: Why San Francisco May Not Be the Best Test Case for Progressivism - The Peoples Vanguard of Davis - June 22nd, 2022 [June 22nd, 2022]
- As tennis fans gather Wimbledon worries expansion won't get over the line - The National - June 22nd, 2022 [June 22nd, 2022]
- Vanguard Charitable survey: More than 1 in 3 American donors gave half or more of their charitable contributions to disaster relief efforts in the... - May 20th, 2022 [May 20th, 2022]
- National Grid warns on cost-of-living challenges after strong profit (NYSE:NGG) - Seeking Alpha - May 20th, 2022 [May 20th, 2022]
- Is it a good time to buy the Vanguard Australian Shares Index ETF? - The Motley Fool Australia - May 20th, 2022 [May 20th, 2022]
- Student Opinion: The Biden Administration and Cable Companies Working Together to Bring Internet to Millions of Households - The Peoples Vanguard of... - May 20th, 2022 [May 20th, 2022]
- THE POWER OF LEADERSHIP - THISDAY Newspapers - May 20th, 2022 [May 20th, 2022]
- Vanguard may be shorting much vaunted 'owners' of its low-cost index funds as it upshifts to more Wall Street-style exec-comp tactics to thwart... - May 17th, 2022 [May 17th, 2022]
- Opinion | BlackRock, Vanguard and State Street Control a Piece of Nearly Everything - The New York Times - May 17th, 2022 [May 17th, 2022]
- Somalis receive explosive threat reduction training | Shephard - Shephard News - May 17th, 2022 [May 17th, 2022]
- JV Article: Platinum Group Metals is at the vanguard of next generation lithium-ion batteries - The Northern Miner - May 17th, 2022 [May 17th, 2022]
- Neo-Nazi Alex Davies guilty of belonging to banned terror group National Action - Tell MAMA - May 17th, 2022 [May 17th, 2022]
- Firearm-Related Homicides Reach an Unprecedented Level in the 21st Century - The Peoples Vanguard of Davis - May 17th, 2022 [May 17th, 2022]
- Satellites, the Space Race, and Supercomputing: How NASA Goddard's Beowulf Cluster Computer Became an Award-Winning Space Technology - NASA (.gov) - May 17th, 2022 [May 17th, 2022]
- Vanguard may be shorting much vaunted 'owners' of its low-cost index funds as it shifts to Wall Street-style exec-comp tactics to thwart competitors... - May 15th, 2022 [May 15th, 2022]
- Senate Democrats Fail to Codify Abortion Rights; Don't Have Votes to Overcome Filibuster Dem Manchin Votes with GOP - The Peoples Vanguard of Davis - May 15th, 2022 [May 15th, 2022]
- The School Buzz: Vanguard rocketry team competing for national title - KRDO - May 9th, 2022 [May 9th, 2022]
- The Anglo-Indian-Nigerian designer at the vanguard of British fashion - The National - May 9th, 2022 [May 9th, 2022]
- Candidate for Yolo County District Attorney Cynthia Rodriguez Announced Her Growing List of Endorsements in a Press Release on Thursday - The Peoples... - May 9th, 2022 [May 9th, 2022]
- Commentary: Trends Are Pushing Tech, Housing Toward Sacramento Region - The Peoples Vanguard of Davis - May 9th, 2022 [May 9th, 2022]
- UK Government announces 2 billion investment into nuclear submarines - The National - May 9th, 2022 [May 9th, 2022]
- Workers grapple with new stresses as they return to office - Tampa Bay Times - May 9th, 2022 [May 9th, 2022]
- Who is Ib Kamara, the new Off-White art director to fill Virgil Abloh's shoes? - The National - May 9th, 2022 [May 9th, 2022]
- Vanguard Lions Defeat Statesmen To End The Year - Victory Sports Network - April 15th, 2022 [April 15th, 2022]
- Other days - Arkansas Online - April 15th, 2022 [April 15th, 2022]
- Democrats are in danger of losing three congressional strongholds in South Texas - Standard-Times - April 15th, 2022 [April 15th, 2022]
- Remembering the WNBA's Portland Fire - Vanguard - Psuvanguard.com - April 13th, 2022 [April 13th, 2022]
- Honoring the life of Amara Marluke - Vanguard - Psuvanguard.com - April 13th, 2022 [April 13th, 2022]
- The grim outlook of owning and renting - Vanguard - Psuvanguard.com - April 13th, 2022 [April 13th, 2022]
- 2022 NAIA Women's Outdoor Track & Field Rating Index Week 3 - U.S. Track & Field and Cross Country Coaches Association - April 13th, 2022 [April 13th, 2022]
- ECOWAS and Nigeria Agree on a Roadmap to Institutionalise a Government and Society Wide Approach - African Business - March 17th, 2022 [March 17th, 2022]
- LA Treasurer joins other states in divesting Russian investments - KATC News - March 8th, 2022 [March 8th, 2022]
- How the US and Europe helped Ukraine prep for insurgency - ArmyTimes.com - March 8th, 2022 [March 8th, 2022]
- A Trailblazing Engineer Says Invention Is in Everything I Do - Tufts Now - March 8th, 2022 [March 8th, 2022]
- Russias Invasion of Ukraine and Implications for the Korean Peninsula - Council on Foreign Relations - March 8th, 2022 [March 8th, 2022]
- Vanguard University saying goodbye to the Pit - Los Angeles Times - January 14th, 2022 [January 14th, 2022]
- Energy Ended Up as a Good Bet Last Year. But Now What? - The New York Times - January 14th, 2022 [January 14th, 2022]
- Kensington Vanguard National Land Services - December 19th, 2021 [December 19th, 2021]
- Barry Harris, Pianist and Devoted Scholar of Bebop, Dies at 91 - The New York Times - December 10th, 2021 [December 10th, 2021]
- From Our Archives: a Profile of Bob Dole, Once the Senate's "Funniest Member" - Washingtonian - December 7th, 2021 [December 7th, 2021]
- National Auto Care on acquisition spree amid F&I consolidation - Automotive News - December 5th, 2021 [December 5th, 2021]
- A decade of marketisation has left lecturers with no choice but to strike - The Guardian - December 5th, 2021 [December 5th, 2021]
- A New Vanguard Is Reshaping the Art World - HarpersBAZAAR.com - December 5th, 2021 [December 5th, 2021]
- Opinion | The Trump Conspiracy Is Hiding in Plain Sight - The New York Times - December 5th, 2021 [December 5th, 2021]
- The forgotten importance of the War of Jenkins' Ear - The Economist - December 5th, 2021 [December 5th, 2021]
- What Conservative Critics of Higher Education Share - The Atlantic - December 5th, 2021 [December 5th, 2021]
- The Unite the Right trial is exposing the chasm between who plans White nationalism's battles and who does the fighting - ABC17News.com - November 19th, 2021 [November 19th, 2021]
- Tordue Salem: Journalists ask National Assembly to order independent inquiry into death of missing reporter - Premium Times - November 19th, 2021 [November 19th, 2021]
- Abu Dhabi to Welcome Two New Museums in Addition to Guggenheim and Zayed - Artforum - November 19th, 2021 [November 19th, 2021]
- Gauteng government at the vanguard of SAs green economy plans - Business Day - November 17th, 2021 [November 17th, 2021]
- 25 years of school and family connections | Hub - The Hub at Johns Hopkins - November 17th, 2021 [November 17th, 2021]
- Opinion: Organized crime is a top driver of global deforestation and climate change - Houston Chronicle - November 17th, 2021 [November 17th, 2021]
- Letters to the editor: Lend a hand to these family caregivers - Austin American-Statesman - November 15th, 2021 [November 15th, 2021]
- University of Chicago to award four honorary degrees at 2022 Convocation - UChicago News - November 9th, 2021 [November 9th, 2021]