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U.K.'s world-leading plans to build out sea-based wind power get a push from Norway

When it comes to offshore wind, the near-term development of this industry depends almost entirely on whether the United Kingdom manages to strike the right balance between reining in subsidies and saving taxpayers money without completely scaring off developers.

Second in a series. Click here for the first part and here for the third part.

LONDON -- When it comes to offshore wind, the near-term development of this industry depends almost entirely on whether the United Kingdom manages to strike the right balance between reining in subsidies and saving taxpayers money without completely scaring off developers.

The United Kingdom already has more installed offshore wind power capacity than the rest of the world put together, with nearly 4,000 megawatts out of 7,000 MW globally. The Department of Energy and Climate Change (DECC) said in 2011 that by 2020 up to 18 gigawatts of offshore wind could be deployed in the country if costs are cut to 118 ($160) per megawatt-hour.

If Dong Energy, the world's largest developer of offshore wind farms, is right in forecasting that the industry can cut the cost to 100 per MWh over the same time frame, the industry should be on a booming path.

Europe has pioneered large-scale offshore wind farms to switch power grids to clean energy, but governments are beginning to cut helpful subsidies.

"There is a huge opportunity," said Huub den Rooijen, head of the offshore wind portfolio at the Crown Estate, which manages the seabed on behalf of the United... more [truncated due to possible copyright]  

Second in a series. Click here for the first part and here for the third part.

LONDON -- When it comes to offshore wind, the near-term development of this industry depends almost entirely on whether the United Kingdom manages to strike the right balance between reining in subsidies and saving taxpayers money without completely scaring off developers.

The United Kingdom already has more installed offshore wind power capacity than the rest of the world put together, with nearly 4,000 megawatts out of 7,000 MW globally. The Department of Energy and Climate Change (DECC) said in 2011 that by 2020 up to 18 gigawatts of offshore wind could be deployed in the country if costs are cut to €118 ($160) per megawatt-hour.

If Dong Energy, the world's largest developer of offshore wind farms, is right in forecasting that the industry can cut the cost to €100 per MWh over the same time frame, the industry should be on a booming path.

Europe has pioneered large-scale offshore wind farms to switch power grids to clean energy, but governments are beginning to cut helpful subsidies.

"There is a huge opportunity," said Huub den Rooijen, head of the offshore wind portfolio at the Crown Estate, which manages the seabed on behalf of the United Kingdom. "The share of the U.K. electricity made from offshore wind is on track to double to 10 percent by 2020."

But last year, the DECC revised its expectations to between 8 and 16 GW by 2020 as the government set a price for offshore wind of €183 per MWh for the next two years, dropping to €169 per MWh in 2018-19. The length of the subsidy has also been cut to 15 years from 20.

The changes resulted in mixed reactions in the market. A few high-profile project cancellations put a temporary question mark over the prospects for offshore wind in the U.K. sector of the North Sea as projects totaling 5,500 MW were scrapped because of high costs.

German utility RWE canceled its 1.2 GW Atlantic Array offshore wind farm, citing project viability concerns. SSE scrapped a plan to invest £20 billion ($34 billion) in four major offshore projects. And Forewind cut its Dogger project to 7.2 GW from 9 GW.

Subsidies under fire

Yet last week, Norwegian oil giant Statoil and its partner Statkraft said they will go ahead and start building the Dudgeon Offshore Wind Farm off the coast of Norfolk, rekindling hopes about the success of offshore wind in the U.K. sector of the North Sea. The 402 MW project will cost £1.5 billion to build and will provide renewable energy for 410,000 households in the United Kingdom after it begins full production in late 2017.

Onshore construction starts now with installation of cables and substations, while offshore construction will begin in 2016. The park will have 67 wind turbines of 6 MW each.

"We are very satisfied to have reached a positive decision for Dudgeon," said Siri Espedal Kindem, Statoil's senior vice president for renewable energy. "This strengthens and confirms Statoil's strategic ambition of gradual and profitable growth as an industrial offshore wind player."

Despite the staggering costs of such projects, they don't typically lead to a lot of full-time jobs, and they can sometimes encounter local opposition.

"We now look forward to a progressive dialogue with key stakeholders such as the Norfolk public community, the local supply chain and the authorities," Kindem said.

The investment will lead to 70 local jobs once the park is operational, in addition to an undisclosed number of temporary jobs during the construction phase. The United Kingdom is looking for a steady stream of investments in renewable electricity, including offshore wind, Energy Minister Michael Fallon said in a statement.

"As the best place in the world to invest in offshore wind, the U.K. is attracting millions of pounds of investment, supporting hundreds of local green jobs and strengthening its energy supply with home-grown sources," he said.

Dudgeon was one of five offshore wind projects in April to win subsidies from the U.K. government, which have been criticized as too generous by the country's National Audit Office and for being awarded without price competition.

A one-stop shop

"By committing so much funding up front, the Department of Energy has limited its options for future investments," said Margaret Hodge, chairwoman of the Committee of Public Accounts. "I am also frustrated that, despite the huge consumer subsidy that has gone into supporting these projects, the department has failed to put in place any arrangements to recoup consumers' money if providers make bigger-than-expected profits from these projects. Private providers must not be allowed to make excessive profits at the expense of consumers and taxpayers."

Because driving down the cost of offshore wind is a priority for the government, the challenge for the industry is clear, den Rooijen said.

"There is greater near-term certainty but lower volumes," he said. "You could get the impression of doom and gloom if you read certain press. But the size of the opportunity in the long term remains high, and it is up to the industry and developers to create irresistible offers for the government."

One company that has taken up the challenge is Siemens. The German industrial conglomerate will spend €190 million to set up wind turbine production and installation facilities in Yorkshire, anticipating a quadrupling of the size of the European offshore wind installation base to 28.3 GW by 2020. The company will create 1,000 jobs at its new factory, which will start manufacturing in 2016 in the hopes of supplying equipment to North Sea wind farms.

"We see the logistics benefit from building everything on the one site," said Clark MacFarlane, managing director for offshore wind in the United Kingdom at Siemens. "It's got blade manufacturing, so you can get everything on a ship nearby. You can do maintenance from there. We are looking into getting the people who make towers to be nearby."

Siemens believes the United Kingdom has several advantages that bode well for the success of the offshore wind industry.

"Here we are close to the sea, we have existing strong skills and industrial heritage, complementary industrial sectors like offshore oil exploration and production," MacFarlane said. "But we have to reduce the cost of energy; that has to be our goal as an industry."

Tomorrow: France and Germany.


Source: http://www.eenews.net/stori...

JUL 7 2014
https://www.windaction.org/posts/40778-u-k-s-world-leading-plans-to-build-out-sea-based-wind-power-get-a-push-from-norway
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