On October 25 2010, David Cameron confirmed that the Government would honour its commitment to invest £60m in port infrastructure to improve facilities to enable the construction of offshore wind farms. The money will be available from next April, sooner than previously planned.
Although it is a relatively modest amount, this is a very positive announcement in light of the uncertainty that the Comprehensive Spending Review has generated. It appears to have had the desired effect. This week, three major turbine manufacturers, Siemens, Gamesa and GE have all announced or reaffirmed plans to invest in offshore wind manufacturing facilities in the UK, with likely investment of at least £300m in the next five years and the creation of several thousand jobs.
Offshore wind is critical to the Government’s very ambitious but legally binding target of deriving 15% of the UK’s energy from renewables by 2020. With the opening of Vattenfall’s Thanet wind farm in September 2010, the UK’s total offshore wind capacity increased to 1,341 MW. Impressively, this figure is greater than the installed capacity of 1,110 MW in the rest of the world combined. However, according to UK Renewable Energy Strategy published by DECC last year, this capacity still needs to increase ten-fold by 2020 if the UK is to have a chance of meeting its target.
Globally, the offshore wind market is expected to grow by a compound annual growth rate (CAGR) of 43 percent between 2010 and 2015, according to recent forecasts from MAKE Consulting, a Danish firm of wind power specialists. Given these strong global prospects, the investment commitments by the turbine manufacturers is very encouraging for UK industry. The development of manufacturing in the UK will also please developers who have long complained of a lack of a local supply chain.
It is now crucial for the Government to fulfil its goals stated in this week’s National Infrastructure Plan to encourage private investment through establishing a progressive, long-term carbon price and revenue support mechanisms. In addition to pricing signals, significant investment is urgently needed in the National Grid to enable transmission. Delays in grid access were cited as one of the major barriers to progress by developers of Round 2 wind farms and delays to renewable projects are one thing the UK certainly does not need.