After less than 20 years, the UK’s offshore wind industry is generating more electricity, at a lower price, than many thought possible.

Offshore wind has been a great UK success story,” said energy and industry minister Jesse Norman in January this year.

That story began in 2000, and it had ‘Humber’ beginnings. The Blyth Offshore project, with its two 2MWh turbines just a kilometre off the coast, became the first farm, providing enough electricity to power 2,800 homes for a year.

That first development was to stand as a test case, to prove the technology. Today, less than 20 years on, it appears to have succeeded.

In the Thames Estuary, the London Array’s 175  turbines are spread across an area of 122km2, generating enough electricity for 446,201 homes.

Look a little further down the line and even that will be outdone. If completed as proposed, Hornsea Project Two in the North Sea will have an array of 300 turbines pumping out 1.8GW for an estimated overall investment of £6 billion.

And all the while, the cost of the energy generated has been falling. Roll back to 2011 and the average levelised cost of energy for offshore wind was sitting at £140/MW. Today, four years ahead of schedule, it has broken the £100 floor and sits at £97.

That fall in the cost is in large the result of the increasing the size of the projects, but there are a number of other factors. Government has offered subsidies, eased the regulatory burden on developments and opposed onshore expansion.

And industrial development has played a part. From the Siemens factory in Hull and its 1,000 direct jobs to the mammoth MHI Vestas facilities on the Isle of Wight, the biggest turbines in the world are being built in the UK, supporting a growing supply chain.

The sector also appears to find itself well positioned in the current policy climate to play a major role in the government’s efforts to decarbonise.

But there are still challenges. Policymakers must continue to provide industry and investors with sufficient guidance and forward planning to ensure confidence. On the technology front, though offshore wind can generate significant amounts of power, it is still restricted by its intermittency, so advances elsewhere must be made to enable it to fulfil its potential.

But just what might that potential be?

To download a pdf of full article as if appeared in Utility Week, click here:

https://s3-eu-west-1.amazonaws.com/utilityweekcouk/Downloads+for+UW/Generation+review.pdf

Points of view

“Understanding what the world looks like for the 2020s will be very important both for the developer community and the supply chain.”

“Getting much, much larger volumes of offshore wind into the system will be driven by the success of ­storage”

Benj Sykes, UK country manager, Dong Energy

“If I wouldn’t be surprised if it cleared Hinkley prices.”

Hugh McNeal, chief executive, Renewable UK

Technology

 Big turbines cut costs

In January, The Offshore Wind Programme Board revealed that a £100/MWh average levelised cost of electricity had been achieved four years early. From 2010/11 to 2015/16, it fell from £142/MWh to £97/MWh.

The primary factor was advances in technology, most clearly in turbines. In that five-year period, the ratings of the most commonly used models have progressed from 2MW to 3.6MW to 6MW in a single turbine. Those scheduled to come online in the near future, such as Dong Energy’s Burbo Bank Extension, will utilise 8MW turbines.

At the same time, new cable and substation technology maximised transmission efficiency and increased competition has driven down the costs of materials and maintenance.

This, combined with a number of other factors, enabled the sector to spread further and wider out across the country’s coastlines to today’s 27 operations and a combined output of 38.7GWh, with a number of new developments in the pipeline.

The workforce

A job-creation network

Offshore wind supports not only large manufacturing plants but a growing network of smaller suppliers

As the contribution from offshore wind to the UK’s energy needs has increased, so has the industry’s contribution to government coffers, with major manufacturers establishing a presence and then supporting a growing network of companies across the supply chain.

The UK is now home to two of the sector’s biggest equipment manufacturers. MHI Vestas expanded its plant on the Isle of Wight to manufacture its 70m-long V164-8.0MW blade, and Siemens’ new facility at Greenport in Hull has recently completed the first batch of B75 blades – which at 75m are the longest in the world.

Siemens is expected to create up to 1,000 jobs through its investment and MHI has boosted its workforce by more than 250 in the past two years. The offshore wind workforce in the UK is expanding, and today includes more than 200 manufacturers and 15,500 jobs.

This increasing profile in the UK, combined with continued growth across the European market, has been critical in bringing costs down and also in ensuring further savings.

With great strides already made on the technology front, much of the potential for further savings will come in areas such as maintenance, servicing and transport, all of which will best be delivered through increased competition and further industrial growth across the supply chain.

The growing profile of the industry has not escaped the attention of the UK government, which appears to see an opportunity to capitalise.

Government support

Well placed for new industrial policy

Full details on the government’s industrial strategy are not expected until later this year, but the offshore wind sector has already received encouraging  signs.

The Green Paper, published in January, gave an indication of the focus of the strategy and alongside battery storage and low-carbon transport, offshore wind was highlighted, with the department pledging resources to enable further cost reductions in the sector.

That pledge of support was then reinforced by prime minister Theresa May, who used a visit to Humber to highlight the successes of the offshore wind sector in providing renewable energy while also creating jobs across the supply chain. This, she explained, is “exactly what the industrial strategy is about”, indicating that the strong track record of the sector in creating jobs and economic activity could stand it in good stead when the full policy is revealed.

This voicing of support for the sector from the government, coupled with its success in lowering the LCOE, mean the sector is in a good position to capitalise on the upcoming Contracts for Difference auction. With £290 million in contracts to supply electricity to the grid on offer for the periods 2020/21 to 2021/22, success for large scale developments will offer financial security to advance the sector.

“Understanding what the world looks like for the 2020s will be very important both for the developer community and the supply chain,” explains Benj Sykes, UK country manager at Dong Energy and co-chair of the Offshore Wind Industry Council.

The environment

Large-scale decarbonisation

It is the sheer scale of offshore wind that makes it of value to decarbonisation. While both solar and onshore wind are less costly and complex to roll out, neither can offer anything like the scale of generation that offshore wind can.

Provided it is completed as planned, Dong Energy’s Hornsea Project Two will take it into the realms of gigawatts, with up to 300 turbines generating 1.8GW.

Already contributing 5 per cent of the country’s electricity demand and on course to rise to 10 per cent by 2020, the day when offshore wind will permanently overtake coal’s contributions to the grid is fast approaching. Hornsea Project Two is expected to eliminate more than 2.5 million tonnes of CO2 emissions.

And it may soon be competing with even bigger sources of generation. With last year’s average of £97/MW and the expectation of continued declining prices as bigger developments come online, the day when the offshore wind sector can compete with Hinkley Point C’s agreed strike price of £92.50 is coming ever closer.

Speaking earlier this year, Hugh McNeal, chief executive of Renewable UK, said: “I wouldn’t be surprised if it cleared Hinkley prices.”

Energy storage could help offshore wind realise its potential

Offshore wind is to generate power cheaper than the Hinkley Point C nuclear plant, some technological advances will have to take place the electricity grid.

As is true for many low-carbon technologies, the reliability of offshore wind to meet demand lies not in the hands of industry and policymakers, but in the wind itself.

If it is to fulfil its potential, the sector must hope for advances in energy storage so excess energy can be stored for when it is needed.

Furthermore, wider adoption of smart technology and a wave of new connections to the grid will have to be completed.

If those challenges can be overcome, the prospects for the sector will be drastically improved. “Getting much, much larger volumes of offshore wind into the system will be driven by the success of storage,” says Sykes.

Offshore wind has indeed come a long way, but its best days likely lie ahead.

To download a pdf of full article as if appeared in Utility Week, click here:

https://s3-eu-west-1.amazonaws.com/utilityweekcouk/Downloads+for+UW/Generation+review.pdf