‘Little evidence’ hub port would cut offshore wind costs

There is “little evidence” to suggest the development of a single large hub port on Britain’s east coast would cut the cost of offshore wind projects, a report from the Offshore Wind Industry Council has found.

Barriers to the adoption of a “large cluster approach” include the current subsidy regime, which discourages cooperation and makes it harder to plan ahead.

There has been an “ongoing debate” over how to bring down costs in the industry, the study noted. This included whether the UK should develop “a single port facility” with enough land to accommodate “the majority of east coast staging activity and most new UK industrialisation”. 

The report is the outcome of a strategic review of east coast port facilities announced former energy minister Andrea Leadsom in February. The review received “mixed industry feedback about the potential positive impact of this ‘large cluster’ approach”. “Little positive evidence” was presented to support it, although the report said this could be due to the “industry focus on individual projects”.

Benefits highlighted by proponents included synergies between tenants and the avoidance of the ‘double-handling’ costs of transporting units from a separate manufacturing facility to a staging port. They said there was the potential for the site develop a “gravity”, whereby companies are drawn to the port by the prospect of being around other industry players.

Critics said the current subsidy regime would make it “extremely difficult” for a single developer to create a hub port because the contracts for difference mechanism encourages a project-by-project approach, giving no certainty beyond the contracts which have already been awarded. They said the auction discourages co-operation between developers by pitting them against each other.

They also said no single staging location would be able to efficiently service all – or even a majority – of offshore UK wind farm sites. Accordingly, there was “clear industry feedback” that for staging developers prefer using ports which are local to the site they are developing because of reduced transit times between the port and the site, and a lower risk of delays due to weather.

The report found that the offshore wind sector has already stimulated large scale investment in east coast ports. More than £400 million has been spent on associated port infrastructure over the last five years. It said the UK has the capability to meet the turbine staging needs for all known future east coast projects and that the investment which has taken place up to now is likely to bring down costs.  

The review was led by the UK country manager for Dong Energy Wind Power Benj Sykes, who said: “This review brought together a jointly-led industry and government team to look at some of the fundamental issues which need to be addressed if we are to maximise the benefits of offshore wind development on the east coast of Britain.
 
“It will provide a springboard for further work to achieve a more coordinated approach as we seek to anticipate future demand, promote economic activity at existing ports and continue to build the supply chain.”

Earlier this week Dong Energy reported rising profits due increased earnings from the construction of offshore wind farms, including in the UK.