Life after Brexit: wind starts to gain clarity

“This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Topics
Richard Heap
February 6, 2020
Life after Brexit: wind starts to gain clarity

“This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Supporters of the UK’s exit from the European Union enjoy quoting Winston Churchill and, to us, this one is most apt. The UK officially left the EU at 11pm on 31st January and is now in a transition period until the end of 2020 as the UK and EU negotiate new rules, including on trade. Now the hard work starts.

For companies in the wind industry investing between the UK and the EU, this isn’t the end of the uncertainty. Far from it.

Yes, there’s no doubt that the UK has left, but there is still a risk that it will do so without a trade deal. Prime Minister Boris Johnson has said this week there is “no need” for the UK to follow trade rules set in Brussels, whereas the EU’s Michel Barnier said an "ambitious" trade deal needed a “level playing field”.

The arguments are far from over, and it cannot be taken for granted that the main players will start work from a starting point of regulatory convergence. But the fact the UK has now left should remove some vitriol from the debate.

Brexit’s impact on wind

Our view is that Brexit has had a limited impact on UK wind so far.

For onshore wind, the big hit came before the referendum when, in 2015, the Cameron government ended financial support for new onshore wind farms.

This has contributed to a decline in wind farms commissioned onshore in the UK from 343 in 2017 to 23 in 2019, according to RenewableUK.

In addition, construction started on only one new wind farm in 2019.

This is in contrast to offshore wind, which has gone from strength to strength, with over 8.5GW installed and a goal to hit 40GW by 2040 – despite concerns from Ofgem that the offshore transmission grid won’t be able to cope.

The main risk is Brexit will make it harder for investors in both sectors due to the additional barriers that could be erected. Any new trade deal could result in extra custom requirements and tariffs from January 2021.

WindEurope has said in a briefing to members that tariffs on components in a UK-EU trade deal were “extremely unlikely”, and tariffs on raw materials were also unlikely but possible.

Another potential barrier is to the movement of personnel, including German engineers, to work on UK offshore wind farms even if the UK and the EU can agree a trade deal. Post-Brexit Britain will likely include tougher visa rules.

And the note added that non-replication of EU trade defence measures could boost the relative competitiveness of wind industry manufacturing in the UK. This will depend on whether the UK chooses to follow EU rules in this area, so isn’t guaranteed. There's still a huge amount to be decided.

In our view, there are reasons to be positive.

The first is that three murky years are at an end. Yes, uncertainty will continue for now, but companies can at least be clear that Brexit is happening and the form that it is likely to take. They can now take key investment decisions.

The second is support for offshore wind remains, and the UK has expertise that can be exported to new markets in North America and Asia. In addition, we will see more pressure on government to include onshore wind in its net zero planning – despite the claim from ex-minister Claire O'Neill that Johnson “doesn’t get” climate change.

And third, we see plenty of evidence in this industry that professionals in the UK are committed to keep working closely with their cousins in continental Europe to ensure the low carbon energy transition happens. The joint venture revealed by Denmark’s Procon Wind and UK-based CPower earlier this week to overcome Brexit challenges is one example.

Perhaps we are naïve. If Brexit has taught us anything it is that public debate can always sink lower. But for now let’s be positive because, well, why not?

NEWS IN BRIEF

SIEMENS PAYS €1.1BN FOR SIEMENS GAMESA STAKE...

Siemens is set to pay €1.1bn for Iberdrola's 8.1% stake in Siemens Gamesa. Siemens plans to integrate the SGRE stake into its new Siemens Energy business, which will hold about 67% of voting rights in SGRE. Read more

... AS SIEMENS GAMESA REPORTS €174M Q1 LOSS

Siemens Gamesa has reported a net loss of €174m in the three months ending in December, which is Q1 of its 2020 financial year, on €2bn sales. Read more

VESTAS REPORTS €1BN PROFIT ON €12.1BN SALES

Vestas has reported revenues of €12.1bn in 2019, which is up 20% year-on-year, with an operating profit of €1bn. The company has also reported that orders rose 26% year-on-year to 17.9GW. Read more

OFGEM STARTS TRANSMISSION REVIEW FOR 40GW

UK energy regulator Ofgem has launched a review of the offshore transmission system, which it has said is not fit for purpose to hit the UK government's goal of 40GW installed offshore wind capacity by 2030. Read more

LUXCARA PICKS VESTAS FOR 160MW FINNISH TRIO

Luxcara has picked Vestas to supply 38 of its 4.2MW turbines for three wind projects - Välikangas, Pihtipudas and Sievi - with total capacity of 160MW in Finland. All three are due to be commissioned by the end of 2021. Read more

MARUBENI-LED GROUP CLOSES ON 140MW IN JAPAN

Marubeni Corporation, Obayashi Corporation, and a group of other Japanese investors have reached financial close on a 140MW offshore wind farm off the coast of Japan's Akita prefecture that is due to complete in 2022. Read more

VATTENFALL WINS 605MW KRIEGERS FLAK BACKING

Vattenfall has won approval from the Danish Energy Agency to build the 605MW Kriegers Flak offshore wind farm off the coast of Denmark. The scheme is set to be commissioned by the end of 2021.

COLBUN PLANS 980MW IN ATACAMA DESERT

Chilean power company Colbun plans to build a wind farm of up to 980MW in the Atacama desert. The company has submitted its plan for the 140-turbine Horizon wind project for an environmental impact assessment. Read more

NTR SIGNS 69MW POWER DEAL IN SWEDEN

Top of Form

NTR has signed a power purchase agreement with a European utility for 70% of the electricity generated by its 69MW Trattberget wind project. This is part of its financing deal for 94MW of projects in Sweden and Finland. Read more

Bottom of Form

“This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Supporters of the UK’s exit from the European Union enjoy quoting Winston Churchill and, to us, this one is most apt. The UK officially left the EU at 11pm on 31st January and is now in a transition period until the end of 2020 as the UK and EU negotiate new rules, including on trade. Now the hard work starts.

For companies in the wind industry investing between the UK and the EU, this isn’t the end of the uncertainty. Far from it.

Yes, there’s no doubt that the UK has left, but there is still a risk that it will do so without a trade deal. Prime Minister Boris Johnson has said this week there is “no need” for the UK to follow trade rules set in Brussels, whereas the EU’s Michel Barnier said an "ambitious" trade deal needed a “level playing field”.

The arguments are far from over, and it cannot be taken for granted that the main players will start work from a starting point of regulatory convergence. But the fact the UK has now left should remove some vitriol from the debate.

Brexit’s impact on wind

Our view is that Brexit has had a limited impact on UK wind so far.

For onshore wind, the big hit came before the referendum when, in 2015, the Cameron government ended financial support for new onshore wind farms.

This has contributed to a decline in wind farms commissioned onshore in the UK from 343 in 2017 to 23 in 2019, according to RenewableUK.

In addition, construction started on only one new wind farm in 2019.

This is in contrast to offshore wind, which has gone from strength to strength, with over 8.5GW installed and a goal to hit 40GW by 2040 – despite concerns from Ofgem that the offshore transmission grid won’t be able to cope.

The main risk is Brexit will make it harder for investors in both sectors due to the additional barriers that could be erected. Any new trade deal could result in extra custom requirements and tariffs from January 2021.

WindEurope has said in a briefing to members that tariffs on components in a UK-EU trade deal were “extremely unlikely”, and tariffs on raw materials were also unlikely but possible.

Another potential barrier is to the movement of personnel, including German engineers, to work on UK offshore wind farms even if the UK and the EU can agree a trade deal. Post-Brexit Britain will likely include tougher visa rules.

And the note added that non-replication of EU trade defence measures could boost the relative competitiveness of wind industry manufacturing in the UK. This will depend on whether the UK chooses to follow EU rules in this area, so isn’t guaranteed. There's still a huge amount to be decided.

In our view, there are reasons to be positive.

The first is that three murky years are at an end. Yes, uncertainty will continue for now, but companies can at least be clear that Brexit is happening and the form that it is likely to take. They can now take key investment decisions.

The second is support for offshore wind remains, and the UK has expertise that can be exported to new markets in North America and Asia. In addition, we will see more pressure on government to include onshore wind in its net zero planning – despite the claim from ex-minister Claire O'Neill that Johnson “doesn’t get” climate change.

And third, we see plenty of evidence in this industry that professionals in the UK are committed to keep working closely with their cousins in continental Europe to ensure the low carbon energy transition happens. The joint venture revealed by Denmark’s Procon Wind and UK-based CPower earlier this week to overcome Brexit challenges is one example.

Perhaps we are naïve. If Brexit has taught us anything it is that public debate can always sink lower. But for now let’s be positive because, well, why not?

NEWS IN BRIEF

SIEMENS PAYS €1.1BN FOR SIEMENS GAMESA STAKE...

Siemens is set to pay €1.1bn for Iberdrola's 8.1% stake in Siemens Gamesa. Siemens plans to integrate the SGRE stake into its new Siemens Energy business, which will hold about 67% of voting rights in SGRE. Read more

... AS SIEMENS GAMESA REPORTS €174M Q1 LOSS

Siemens Gamesa has reported a net loss of €174m in the three months ending in December, which is Q1 of its 2020 financial year, on €2bn sales. Read more

VESTAS REPORTS €1BN PROFIT ON €12.1BN SALES

Vestas has reported revenues of €12.1bn in 2019, which is up 20% year-on-year, with an operating profit of €1bn. The company has also reported that orders rose 26% year-on-year to 17.9GW. Read more

OFGEM STARTS TRANSMISSION REVIEW FOR 40GW

UK energy regulator Ofgem has launched a review of the offshore transmission system, which it has said is not fit for purpose to hit the UK government's goal of 40GW installed offshore wind capacity by 2030. Read more

LUXCARA PICKS VESTAS FOR 160MW FINNISH TRIO

Luxcara has picked Vestas to supply 38 of its 4.2MW turbines for three wind projects - Välikangas, Pihtipudas and Sievi - with total capacity of 160MW in Finland. All three are due to be commissioned by the end of 2021. Read more

MARUBENI-LED GROUP CLOSES ON 140MW IN JAPAN

Marubeni Corporation, Obayashi Corporation, and a group of other Japanese investors have reached financial close on a 140MW offshore wind farm off the coast of Japan's Akita prefecture that is due to complete in 2022. Read more

VATTENFALL WINS 605MW KRIEGERS FLAK BACKING

Vattenfall has won approval from the Danish Energy Agency to build the 605MW Kriegers Flak offshore wind farm off the coast of Denmark. The scheme is set to be commissioned by the end of 2021.

COLBUN PLANS 980MW IN ATACAMA DESERT

Chilean power company Colbun plans to build a wind farm of up to 980MW in the Atacama desert. The company has submitted its plan for the 140-turbine Horizon wind project for an environmental impact assessment. Read more

NTR SIGNS 69MW POWER DEAL IN SWEDEN

Top of Form

NTR has signed a power purchase agreement with a European utility for 70% of the electricity generated by its 69MW Trattberget wind project. This is part of its financing deal for 94MW of projects in Sweden and Finland. Read more

Bottom of Form

“This is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Supporters of the UK’s exit from the European Union enjoy quoting Winston Churchill and, to us, this one is most apt. The UK officially left the EU at 11pm on 31st January and is now in a transition period until the end of 2020 as the UK and EU negotiate new rules, including on trade. Now the hard work starts.

For companies in the wind industry investing between the UK and the EU, this isn’t the end of the uncertainty. Far from it.

Yes, there’s no doubt that the UK has left, but there is still a risk that it will do so without a trade deal. Prime Minister Boris Johnson has said this week there is “no need” for the UK to follow trade rules set in Brussels, whereas the EU’s Michel Barnier said an "ambitious" trade deal needed a “level playing field”.

The arguments are far from over, and it cannot be taken for granted that the main players will start work from a starting point of regulatory convergence. But the fact the UK has now left should remove some vitriol from the debate.

Brexit’s impact on wind

Our view is that Brexit has had a limited impact on UK wind so far.

For onshore wind, the big hit came before the referendum when, in 2015, the Cameron government ended financial support for new onshore wind farms.

This has contributed to a decline in wind farms commissioned onshore in the UK from 343 in 2017 to 23 in 2019, according to RenewableUK.

In addition, construction started on only one new wind farm in 2019.

This is in contrast to offshore wind, which has gone from strength to strength, with over 8.5GW installed and a goal to hit 40GW by 2040 – despite concerns from Ofgem that the offshore transmission grid won’t be able to cope.

The main risk is Brexit will make it harder for investors in both sectors due to the additional barriers that could be erected. Any new trade deal could result in extra custom requirements and tariffs from January 2021.

WindEurope has said in a briefing to members that tariffs on components in a UK-EU trade deal were “extremely unlikely”, and tariffs on raw materials were also unlikely but possible.

Another potential barrier is to the movement of personnel, including German engineers, to work on UK offshore wind farms even if the UK and the EU can agree a trade deal. Post-Brexit Britain will likely include tougher visa rules.

And the note added that non-replication of EU trade defence measures could boost the relative competitiveness of wind industry manufacturing in the UK. This will depend on whether the UK chooses to follow EU rules in this area, so isn’t guaranteed. There's still a huge amount to be decided.

In our view, there are reasons to be positive.

The first is that three murky years are at an end. Yes, uncertainty will continue for now, but companies can at least be clear that Brexit is happening and the form that it is likely to take. They can now take key investment decisions.

The second is support for offshore wind remains, and the UK has expertise that can be exported to new markets in North America and Asia. In addition, we will see more pressure on government to include onshore wind in its net zero planning – despite the claim from ex-minister Claire O'Neill that Johnson “doesn’t get” climate change.

And third, we see plenty of evidence in this industry that professionals in the UK are committed to keep working closely with their cousins in continental Europe to ensure the low carbon energy transition happens. The joint venture revealed by Denmark’s Procon Wind and UK-based CPower earlier this week to overcome Brexit challenges is one example.

Perhaps we are naïve. If Brexit has taught us anything it is that public debate can always sink lower. But for now let’s be positive because, well, why not?

NEWS IN BRIEF

SIEMENS PAYS €1.1BN FOR SIEMENS GAMESA STAKE...

Siemens is set to pay €1.1bn for Iberdrola's 8.1% stake in Siemens Gamesa. Siemens plans to integrate the SGRE stake into its new Siemens Energy business, which will hold about 67% of voting rights in SGRE. Read more

... AS SIEMENS GAMESA REPORTS €174M Q1 LOSS

Siemens Gamesa has reported a net loss of €174m in the three months ending in December, which is Q1 of its 2020 financial year, on €2bn sales. Read more

VESTAS REPORTS €1BN PROFIT ON €12.1BN SALES

Vestas has reported revenues of €12.1bn in 2019, which is up 20% year-on-year, with an operating profit of €1bn. The company has also reported that orders rose 26% year-on-year to 17.9GW. Read more

OFGEM STARTS TRANSMISSION REVIEW FOR 40GW

UK energy regulator Ofgem has launched a review of the offshore transmission system, which it has said is not fit for purpose to hit the UK government's goal of 40GW installed offshore wind capacity by 2030. Read more

LUXCARA PICKS VESTAS FOR 160MW FINNISH TRIO

Luxcara has picked Vestas to supply 38 of its 4.2MW turbines for three wind projects - Välikangas, Pihtipudas and Sievi - with total capacity of 160MW in Finland. All three are due to be commissioned by the end of 2021. Read more

MARUBENI-LED GROUP CLOSES ON 140MW IN JAPAN

Marubeni Corporation, Obayashi Corporation, and a group of other Japanese investors have reached financial close on a 140MW offshore wind farm off the coast of Japan's Akita prefecture that is due to complete in 2022. Read more

VATTENFALL WINS 605MW KRIEGERS FLAK BACKING

Vattenfall has won approval from the Danish Energy Agency to build the 605MW Kriegers Flak offshore wind farm off the coast of Denmark. The scheme is set to be commissioned by the end of 2021.

COLBUN PLANS 980MW IN ATACAMA DESERT

Chilean power company Colbun plans to build a wind farm of up to 980MW in the Atacama desert. The company has submitted its plan for the 140-turbine Horizon wind project for an environmental impact assessment. Read more

NTR SIGNS 69MW POWER DEAL IN SWEDEN

Top of Form

NTR has signed a power purchase agreement with a European utility for 70% of the electricity generated by its 69MW Trattberget wind project. This is part of its financing deal for 94MW of projects in Sweden and Finland. Read more

Bottom of Form

Full archive access is available to members only

Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.