The UK’s leading progressive think-tank IPPR (the Institute for Public Policy Research) has labelled the UK’s offshore wind strategy the ‘worst of all worlds’ in a new report published on Tuesday.
‘Pump up the Volume: Bringing down costs and increasing jobs in the offshore wind sector’ was published on Tuesday and authored by Clare McNeil, Mark Rowney, and Will Straw of IPPR, who note that “offshore wind power offers enormous potential, both domestically and as an export sector.”
The report says that the UK government is not only not making use of the ideal building conditions for offshore wind — large areas located near to shore with shallow waters ideal for the construction of wind turbines — but has actively backtracked on ambition to secure 18 GW of offshore wind by 2020. The Department of Energy & Climate Change (DECC) stated in the 2011 UK Renewable Energy Roadmap that “up to 18 GW of offshore wind could be deployed by 2020 … with over 40 GW possible by 2030.’ Impressive talk, sadly let down almost immediately with estimates revised down in June 2011 to just 8 to 16 GW possible by 2020, and again in October of 2012 to a measly 11.5 GW by 2020 and 16 GW by 2030.
While there are obvious benefits for the environment that derive from the growth of offshore wind as a viable renewable technology, there are more benefits which are being overlooked by hamstringing the offshore wind industry. According to the IPPR report there are 15,000 additional jobs in the offing at a level of 18 GW. In fact, IPPR have determined that the number of jobs per MW increases with scale.
“The UK’s current policy trajectory could see it achieving a ‘worst of all worlds’ outcome: low volume, low jobs, and high costs,” said Will Straw, Associate Director at IPPR and third author of the report. “This would fail our climate challenge, our jobs challenge, and our rebalancing challenge. Unless Britain ‘pumps up the volume’ there is little prospect of either bringing down the costs of offshore wind or creating domestic jobs.”
“An alternative pathway is possible, if the government can bring together an industrial strategy for the sector predicated on a combination of ‘carrots and sticks’. The industry should be given the long-term clarity that it needs, and which has been provided in other countries. A 2030 target for the carbon intensity or share of renewables in the power sector is a necessary condition as are long-term 20 year contracts. But developers must be expected to drive down costs with a subsidy regime that reduces the strike price over time. Developers and suppliers should do more to provide apprenticeships and sponsor university and FE courses.”
In fact, the authors outline three opportunities for offshore wind to fulfil, in addition to the obvious help it provides in meeting carbon reduction targets:
- to create a large number of new jobs, in the manufacturing, construction, and maintenance
- to assist with the rebalancing of the economy, both spatially (creating growth in the northern regions) and in terms of balance of trade
- to take advantage of Britain’s natural advantages, as a windy island in shallow waters.
There are, however, two significant challenges:
- First, offshore wind is currently more expensive than other low-carbon technologies such as onshore wind and nuclear.
- Second, British workers only produce around a third of the components in the supply chain, reducing significantly the ‘local value’ of the sector. Crucially, there are no turbine manufacturers in the UK, and turbines make up around 50 per cent of the capital costs of a new wind farm.
Subsequently, the report argues for a three-point strategy to build a strong domestic offshore wind supply chain:
- The UK government needs to attract at least two turbine manufacturers, preferably more. While failure to do so would not be fatal to the prospect of a strong domestic supply chain, success would be a major boost, as these companies are able to attract a cluster of other companies further down the supply chain (as is the case in Denmark).
- The UK government must continue to support and build upon its existing strengths in the supply chain, as the UK also has expertise and manufacturing capability in both the onshore wind and the North Sea oil and gas industry which can be built upon.
- The UK government should support export opportunities for British firms as they build up their expertise in the supply chain and related services. A new EU renewables target would help create export markets to 2030.
Britain need not be striding out alone, if they are to take IPPR’s advice. As Will Straw notes:
“Denmark is an “early adopter” which enjoys a strong manufacturing base in offshore wind, having supported the wind industry since the late 1970s – ironically, using British technology. Germany, already Europe’s leading market for onshore wind, has thrown its full political weight behind the offshore wind industry as a means of plugging the gap left by its decision to abandon nuclear energy. France has grabbed the economic opportunity this new industry presents to create domestic jobs, long before the foundations for a single offshore turbine have been laid.”
One can be sure that over the next three years we will see a continuing revolution of interest across all renewables — wind, solar, hydro — with their respective industries benefiting from the spotlight. Governments must pay attention to expert opinion and market insiders if renewables are to fulfil the necessary workload many 2020 and 2050 goals require of them. The inherent nature and relative predictability of offshore wind is too tantalising to ignore, and one hopes that the UK government agrees.