Offshore wind costs predicted to fall; 1 GW of new capacity wins consent The UK ...

Offshore wind costs predicted to fall; 1 GW of new capacity wins consent The UK is on course to reduce the cost of electricity from offshore wind farms substantially over the next seven years, according to a new report from the industry-led Offshore Wind Cost Reduction (OWCR) Task Force. The report, which builds on evidence in a study by The Crown Estate, sets out a series of actions, including following the oil and gas industry’s lead in inter-company cooperation, to drive costs down by over 30%. This huge cut will see the cost of delivering 18 GW of electricity from offshore wind farms (around 20% of the UK’s total electricity demand) fall from £140/MWh today to £100/MWh by 2020, says the report. If this cut is achieved, offshore wind will take a major step towards being competitive with other forms of energy generation in the UK’s energy mix. The OWCR Task Force report lays out 28 recommendations on how the industry can reduce the cost of generation, covering supply chain, innovation, contracting strategies, planning and consenting, finance and grid issues. Within these the Task Force has highlighted that more efficient contracting and the concept of ‘alliancing,’ used successfully by the North Sea oil and gas industry to reduce risk and bring down costs, have the potential to be transformative in lowering cost and improving working practices. In addition, the Task Force has identified increased competition as a key area for focus. The report also calls for industry and government to work more closely together to address barriers as they arise - a new Programme Board is to be established to do this. Andrew Jamieson, Chair of the OWCR Task Force, Renewables Policy and Innovation Director at ScottishPower and Chairman of RenewableUK, said: ‘To ensure that the UK’s world leading offshore wind sector expands rapidly over this decade and fulfils its massive potential, it is vital that costs are reduced. In doing this not only will we reduce risk and drive investment into the sector, we will further protect consumers from increasing energy costs, reduce the industry’s requirement for financial support and deliver jobs and energy security for decades to come.’ Meanwhile, completion of commissioning activities means that the world’s largest wind farm, Walney, with 102 turbines and located off the cost of Cumbria, is now fully operational. The 367 MW wind farm, which combines the Walney 1 and 2 projects, is a joint venture between DONG Energy, SSE and OPW. Walney is ground-breaking in its financing, being the first UK offshore wind farm to receive investment from a pension fund service provider and an equity fund before it had been built. OPW, a consortium of the Dutch pension fund service provider PGGM and the Ampere Equity fund, took a 24.8% stake in the project in December 2010, suggesting that institutional investors are willing to invest in well-structured offshore wind construction projects. Also offshore, consent has been given by the government for the construction of two wind farms off the Norfolk Coast with a combined capacity of over 1 GW. The two wind farms would be located at Race Bank (580 MW) and Dudgeon (560 MW) in the Greater Wash. The projects represent around £3bn of investment. An application for a third project, at Docking Shoal, also off the Norfolk Coast, has been refused due to the potential impact on seabirds (Sandwich terns) in the area. Last, and adding a negative note, the Port of Sheerness and wind turbine manufacturer Vestas have jointly announced that further development of a Vestas facility at the port will not proceed for the moment. Vestas nevertheless insists that it has a strong commitment to the development of both the offshore and onshore wind industries in the UK.