The role of offshore wind in a green recovery

There has been much talk about what a green recovery from the Covid-19 pandemic might look like and how it could be achieved. It has been encouraging to hear the determination from governments in the UK and across the world to maintain their climate ambitions and the understanding that accelerating the transition to a low-carbon economy can both drive our economic recovery and build resilience for the future.

It is vital the government and renewables sector grasp this opportunity to take transformative action, and Global Wind Day provides a timely opportunity to reflect on how far we have come, contemplate offshore wind’s future and consider the sector’s role in a green recovery.

It has been a promising few years for offshore wind. The 2019 sector deal cemented the joint government and industry commitment to deliver 30GW of offshore wind by 2030. By the end of 2019, falling costs led to the government amending its target to an even bolder 40GW. The UN Environment Programme’s recent report, Global Trends in Renewable Energy Investment 2020, reveals the levelized cost of electricity has continued to fall. For offshore wind globally, the cost of electricity in the second half of 2019 was some 51 per cent lower than a decade earlier.

The next stage in decarbonising the UK economy will involve moving beyond the power sector. It will require action on the decarbonisation of transport, industry and heat, and decisive improvements in energy efficiency. Orsted is a business that has committed itself to helping the world run entirely on green energy and in the week when we are celebrating the installation of our 1,500th offshore turbine worldwide, we’re interested in how the UK can grasp this opportunity to take transformative, bold decisions about future energy usage in the UK and how offshore wind can help deliver this vision.

First, we must make sure the sector delivers on its 40GW target for offshore wind by 2030. This is an ambitious target, to put it in context we expect to reach 10GW of operating offshore wind capacity this year. This means to reach 40GW by 2030 we have to get three times as much capacity installed in the next decade as we have done over the last 20 years – a sizeable but achievable challenge.

Driving towards this target is not just about helping mitigate climate change. It will also bring around £50 billion of investment and could equate to nearly 27,000 jobs in the top tier supply chain alone, so the economic potential is self-evident. To achieve this we need constant focus and support from the government. Primarily we need continued collaboration across departments to help remove regulatory and technical barriers and provide ongoing support for the UK supply chain. We would also encourage focused investment in infrastructure – if we are to deliver projects at the scale we need, investment will be necessary in UK ports to support offshore wind facilities and hubs.

Second, the government must provide confidence to those considering making investments in UK industry and businesses. This also includes making sure business has access to low-cost and low-carbon energy.  Carbon taxes are likely to keep rising, and being competitive in international trade is going to mean being able to manufacture and provide services that are less carbon intensive. We must push on with the low-carbon hubs in the UK, and the investment that this requires – including hydrogen and carbon capture and storage.

We have an opportunity to send a signal that the UK is a place for long-term investment by industry and business.  Committing to ensuring that industry has access to low-cost, low-carbon energy in areas such as the Humber will help companies have the confidence to invest in the UK, knowing that their investments won’t be stranded.

Finally, we can ensure that offshore winds’s next major contribution is to renewable hydrogen and enabling large scale industrial decarbonisation. Other countries are pushing ahead with renewable hydrogen projects, getting in place the required policy frameworks and investment, and the UK must make sure it does not get left behind. The Netherlands, Germany, Denmark – our economic allies and competitors around the North Sea – are making investments. Offshore wind provides enormous potential for renewable hydrogen and with the installed capacity we already have in the UK, there is the potential to be at the global forefront of the development and deployment of this technology.  Our involvement in the Gigastack project demonstrates our willingess to invest in projects as early as 2021 if the government creates the policy framework.

There is a huge desire in UK to find green solutions for industrial decarbonisation and Orsted’s involvement in the Gigastack project and the world’s largest hydrogen project in Denmark, set to create emission-free fuels suitable for ships, trucks, aircraft and heavy industry, will provide valuable insight as we develop this technology. However, to maintain the UK’s lead in offshore renewable energy production, the support for early-scale deployment is needed now. Enormous investments in renewable hydrogen are not needed today to unleash large scale investment in the next few years. But we do need to make sure the UK has the right policy framework to attract investment and ensure we are not playing catch up.

The good news is that there are exciting opportunities to realise this potential almost immediately through the forthcoming  Offshore Wind Leasing Round 4 and the ScotWind leasing round. The Covid-19 pandemic has given us an opportunity to refocus and, if we make the right choices now, potentially accelerate our progress to a more sustainable, low-carbon future. The offshore wind sector will play a prominent role in this  future and I am confident that through continued collaboration between government, the industry and business we can deliver environmental and economic benefits for generations to come.