Offshore wind results open up energy debate in the UK

Topics
No items found.
Richard Heap
September 15, 2017
This content is from our archive. Some formatting or links may be broken.
This content is from our archive. Some formatting or links may be broken.
Offshore wind results open up energy debate in the UK

What a whirlwind week. From the moment the results of the UK’s second Contracts for Difference auction came in out 7am on Monday, it looked set to be a big one, and so it has proved.

These results showed that the next generation of wind farms in UK waters could be built at strike prices as low as £57.50/MWh. From the Financial Times to Sky News, offshore wind has been everywhere – as has RenewableUK’s Emma Pinchbeck!

Now The Telegraph is also saying that offshore wind must be“assiduously nurtured, and expanded where compatible with marine ecosystems”. This is the closest I have been to my student days writing for the university music ‘paper, when a band I liked for ages suddenly became huge: “Well, of course, I was a fan of offshore wind farms before it went mainstream. Horns Rev 2, Thanet… yeah, the early stuff.” Hell, even the Daily Mail’s headline ‘More monster wind farms are set to set to loom over Britain’s coast but power will cost 40% less than Hinkley’ sounds a bit positive.

Now we must look at the questions that arise from these results, and what they mean for the UK Government’s attitude to offshore wind, onshore wind and nuclear.

First, offshore wind. It is well-known that these strike prices for offshore wind are half the level as in the first CfD auction two years ago (£119/MWh). If UK politicians want to capitalise on this success then they must heed the call of WindEurope to give the sector more certainty over the level of installations that can be expected after 2020. It must do this now if businesses are to plan and make this a Brexit success story.

This need for certainty is not just just a UK issue, of course. Other European nations need to provide it too, if the offshore wind sector is to make good on global ambitions in Europe, the US and Asia.

But we do have some concern about the auction result. Specifically, we are concerned that developers and other firms are expecting manufacturers including MHI Vestas, Siemens Gamesa and Geneal Electric to make most of the running on offshore cost reductions by continually building bigger and more efficient machines. That is vital, but firms must find savings through the project life cycle.

Second, onshore wind. The fact offshore wind now looks cheap should force the UK Government to ask serious questions about whether it should back wind farms on land that are even cheaper. We forecast at the start of the year that the UK would “soften its anti-wind stance” in 2017, and this could be a catalyst for that.

But others aren’t so convinced. I started a discussion on LinkedIn on Monday – if you are on there, get in touch – and the feeling from respondents including Vattenfall’s David Flood, Inflection Point’s Gordon Edge and Mott MacDonald’s Gary Bills is that UK leaders might be reticent about picking a fight with those in the English shires by promoting onshore wind farms. It has a lot of battles underway with Brexit talks, and so might prefer to ‘do’ renewables offshore without incurring the wrath of Nimbys.

And third, nuclear. These auction results have highlighted the folly of Prime Minister Theresa May’s decision last year to approve the Hinkley Point C project, which was always set to produce electricity far more expensively than renewables could.

We forecast a couple of weeks ago that the CfD results would “hammer a nail in the coffin” of this development.

Does that mean a change is imminent? Probably not. As with our argument about onshore wind, we do not think the government will scrap Hinkley right now as it would be one more fight to pick. It would also put the idea in the minds of overseas investors that the UK Government could not be trusted to honour its commitment, which is not the message it wants to promote post-Brexit.

This is all up for debate, though. What is certain is that this week offshore wind has made a strong case that wind, and renewables more widely, can play an important part in the energy mix of the UK and other nations too. There are still questions in areas like storage, but the sector has proved its doubters wrong before.

Our hearty congratulations to everyone, both in the UK and outside it, who has got the sector this far. It is nothing short of inspirational.

What a whirlwind week. From the moment the results of the UK’s second Contracts for Difference auction came in out 7am on Monday, it looked set to be a big one, and so it has proved.

These results showed that the next generation of wind farms in UK waters could be built at strike prices as low as £57.50/MWh. From the Financial Times to Sky News, offshore wind has been everywhere – as has RenewableUK’s Emma Pinchbeck!

Now The Telegraph is also saying that offshore wind must be“assiduously nurtured, and expanded where compatible with marine ecosystems”. This is the closest I have been to my student days writing for the university music ‘paper, when a band I liked for ages suddenly became huge: “Well, of course, I was a fan of offshore wind farms before it went mainstream. Horns Rev 2, Thanet… yeah, the early stuff.” Hell, even the Daily Mail’s headline ‘More monster wind farms are set to set to loom over Britain’s coast but power will cost 40% less than Hinkley’ sounds a bit positive.

Now we must look at the questions that arise from these results, and what they mean for the UK Government’s attitude to offshore wind, onshore wind and nuclear.

First, offshore wind. It is well-known that these strike prices for offshore wind are half the level as in the first CfD auction two years ago (£119/MWh). If UK politicians want to capitalise on this success then they must heed the call of WindEurope to give the sector more certainty over the level of installations that can be expected after 2020. It must do this now if businesses are to plan and make this a Brexit success story.

This need for certainty is not just just a UK issue, of course. Other European nations need to provide it too, if the offshore wind sector is to make good on global ambitions in Europe, the US and Asia.

But we do have some concern about the auction result. Specifically, we are concerned that developers and other firms are expecting manufacturers including MHI Vestas, Siemens Gamesa and Geneal Electric to make most of the running on offshore cost reductions by continually building bigger and more efficient machines. That is vital, but firms must find savings through the project life cycle.

Second, onshore wind. The fact offshore wind now looks cheap should force the UK Government to ask serious questions about whether it should back wind farms on land that are even cheaper. We forecast at the start of the year that the UK would “soften its anti-wind stance” in 2017, and this could be a catalyst for that.

But others aren’t so convinced. I started a discussion on LinkedIn on Monday – if you are on there, get in touch – and the feeling from respondents including Vattenfall’s David Flood, Inflection Point’s Gordon Edge and Mott MacDonald’s Gary Bills is that UK leaders might be reticent about picking a fight with those in the English shires by promoting onshore wind farms. It has a lot of battles underway with Brexit talks, and so might prefer to ‘do’ renewables offshore without incurring the wrath of Nimbys.

And third, nuclear. These auction results have highlighted the folly of Prime Minister Theresa May’s decision last year to approve the Hinkley Point C project, which was always set to produce electricity far more expensively than renewables could.

We forecast a couple of weeks ago that the CfD results would “hammer a nail in the coffin” of this development.

Does that mean a change is imminent? Probably not. As with our argument about onshore wind, we do not think the government will scrap Hinkley right now as it would be one more fight to pick. It would also put the idea in the minds of overseas investors that the UK Government could not be trusted to honour its commitment, which is not the message it wants to promote post-Brexit.

This is all up for debate, though. What is certain is that this week offshore wind has made a strong case that wind, and renewables more widely, can play an important part in the energy mix of the UK and other nations too. There are still questions in areas like storage, but the sector has proved its doubters wrong before.

Our hearty congratulations to everyone, both in the UK and outside it, who has got the sector this far. It is nothing short of inspirational.

What a whirlwind week. From the moment the results of the UK’s second Contracts for Difference auction came in out 7am on Monday, it looked set to be a big one, and so it has proved.

These results showed that the next generation of wind farms in UK waters could be built at strike prices as low as £57.50/MWh. From the Financial Times to Sky News, offshore wind has been everywhere – as has RenewableUK’s Emma Pinchbeck!

Now The Telegraph is also saying that offshore wind must be“assiduously nurtured, and expanded where compatible with marine ecosystems”. This is the closest I have been to my student days writing for the university music ‘paper, when a band I liked for ages suddenly became huge: “Well, of course, I was a fan of offshore wind farms before it went mainstream. Horns Rev 2, Thanet… yeah, the early stuff.” Hell, even the Daily Mail’s headline ‘More monster wind farms are set to set to loom over Britain’s coast but power will cost 40% less than Hinkley’ sounds a bit positive.

Now we must look at the questions that arise from these results, and what they mean for the UK Government’s attitude to offshore wind, onshore wind and nuclear.

First, offshore wind. It is well-known that these strike prices for offshore wind are half the level as in the first CfD auction two years ago (£119/MWh). If UK politicians want to capitalise on this success then they must heed the call of WindEurope to give the sector more certainty over the level of installations that can be expected after 2020. It must do this now if businesses are to plan and make this a Brexit success story.

This need for certainty is not just just a UK issue, of course. Other European nations need to provide it too, if the offshore wind sector is to make good on global ambitions in Europe, the US and Asia.

But we do have some concern about the auction result. Specifically, we are concerned that developers and other firms are expecting manufacturers including MHI Vestas, Siemens Gamesa and Geneal Electric to make most of the running on offshore cost reductions by continually building bigger and more efficient machines. That is vital, but firms must find savings through the project life cycle.

Second, onshore wind. The fact offshore wind now looks cheap should force the UK Government to ask serious questions about whether it should back wind farms on land that are even cheaper. We forecast at the start of the year that the UK would “soften its anti-wind stance” in 2017, and this could be a catalyst for that.

But others aren’t so convinced. I started a discussion on LinkedIn on Monday – if you are on there, get in touch – and the feeling from respondents including Vattenfall’s David Flood, Inflection Point’s Gordon Edge and Mott MacDonald’s Gary Bills is that UK leaders might be reticent about picking a fight with those in the English shires by promoting onshore wind farms. It has a lot of battles underway with Brexit talks, and so might prefer to ‘do’ renewables offshore without incurring the wrath of Nimbys.

And third, nuclear. These auction results have highlighted the folly of Prime Minister Theresa May’s decision last year to approve the Hinkley Point C project, which was always set to produce electricity far more expensively than renewables could.

We forecast a couple of weeks ago that the CfD results would “hammer a nail in the coffin” of this development.

Does that mean a change is imminent? Probably not. As with our argument about onshore wind, we do not think the government will scrap Hinkley right now as it would be one more fight to pick. It would also put the idea in the minds of overseas investors that the UK Government could not be trusted to honour its commitment, which is not the message it wants to promote post-Brexit.

This is all up for debate, though. What is certain is that this week offshore wind has made a strong case that wind, and renewables more widely, can play an important part in the energy mix of the UK and other nations too. There are still questions in areas like storage, but the sector has proved its doubters wrong before.

Our hearty congratulations to everyone, both in the UK and outside it, who has got the sector this far. It is nothing short of inspirational.

What a whirlwind week. From the moment the results of the UK’s second Contracts for Difference auction came in out 7am on Monday, it looked set to be a big one, and so it has proved.

These results showed that the next generation of wind farms in UK waters could be built at strike prices as low as £57.50/MWh. From the Financial Times to Sky News, offshore wind has been everywhere – as has RenewableUK’s Emma Pinchbeck!

Now The Telegraph is also saying that offshore wind must be“assiduously nurtured, and expanded where compatible with marine ecosystems”. This is the closest I have been to my student days writing for the university music ‘paper, when a band I liked for ages suddenly became huge: “Well, of course, I was a fan of offshore wind farms before it went mainstream. Horns Rev 2, Thanet… yeah, the early stuff.” Hell, even the Daily Mail’s headline ‘More monster wind farms are set to set to loom over Britain’s coast but power will cost 40% less than Hinkley’ sounds a bit positive.

Now we must look at the questions that arise from these results, and what they mean for the UK Government’s attitude to offshore wind, onshore wind and nuclear.

First, offshore wind. It is well-known that these strike prices for offshore wind are half the level as in the first CfD auction two years ago (£119/MWh). If UK politicians want to capitalise on this success then they must heed the call of WindEurope to give the sector more certainty over the level of installations that can be expected after 2020. It must do this now if businesses are to plan and make this a Brexit success story.

This need for certainty is not just just a UK issue, of course. Other European nations need to provide it too, if the offshore wind sector is to make good on global ambitions in Europe, the US and Asia.

But we do have some concern about the auction result. Specifically, we are concerned that developers and other firms are expecting manufacturers including MHI Vestas, Siemens Gamesa and Geneal Electric to make most of the running on offshore cost reductions by continually building bigger and more efficient machines. That is vital, but firms must find savings through the project life cycle.

Second, onshore wind. The fact offshore wind now looks cheap should force the UK Government to ask serious questions about whether it should back wind farms on land that are even cheaper. We forecast at the start of the year that the UK would “soften its anti-wind stance” in 2017, and this could be a catalyst for that.

But others aren’t so convinced. I started a discussion on LinkedIn on Monday – if you are on there, get in touch – and the feeling from respondents including Vattenfall’s David Flood, Inflection Point’s Gordon Edge and Mott MacDonald’s Gary Bills is that UK leaders might be reticent about picking a fight with those in the English shires by promoting onshore wind farms. It has a lot of battles underway with Brexit talks, and so might prefer to ‘do’ renewables offshore without incurring the wrath of Nimbys.

And third, nuclear. These auction results have highlighted the folly of Prime Minister Theresa May’s decision last year to approve the Hinkley Point C project, which was always set to produce electricity far more expensively than renewables could.

We forecast a couple of weeks ago that the CfD results would “hammer a nail in the coffin” of this development.

Does that mean a change is imminent? Probably not. As with our argument about onshore wind, we do not think the government will scrap Hinkley right now as it would be one more fight to pick. It would also put the idea in the minds of overseas investors that the UK Government could not be trusted to honour its commitment, which is not the message it wants to promote post-Brexit.

This is all up for debate, though. What is certain is that this week offshore wind has made a strong case that wind, and renewables more widely, can play an important part in the energy mix of the UK and other nations too. There are still questions in areas like storage, but the sector has proved its doubters wrong before.

Our hearty congratulations to everyone, both in the UK and outside it, who has got the sector this far. It is nothing short of inspirational.

What a whirlwind week. From the moment the results of the UK’s second Contracts for Difference auction came in out 7am on Monday, it looked set to be a big one, and so it has proved.

These results showed that the next generation of wind farms in UK waters could be built at strike prices as low as £57.50/MWh. From the Financial Times to Sky News, offshore wind has been everywhere – as has RenewableUK’s Emma Pinchbeck!

Now The Telegraph is also saying that offshore wind must be“assiduously nurtured, and expanded where compatible with marine ecosystems”. This is the closest I have been to my student days writing for the university music ‘paper, when a band I liked for ages suddenly became huge: “Well, of course, I was a fan of offshore wind farms before it went mainstream. Horns Rev 2, Thanet… yeah, the early stuff.” Hell, even the Daily Mail’s headline ‘More monster wind farms are set to set to loom over Britain’s coast but power will cost 40% less than Hinkley’ sounds a bit positive.

Now we must look at the questions that arise from these results, and what they mean for the UK Government’s attitude to offshore wind, onshore wind and nuclear.

First, offshore wind. It is well-known that these strike prices for offshore wind are half the level as in the first CfD auction two years ago (£119/MWh). If UK politicians want to capitalise on this success then they must heed the call of WindEurope to give the sector more certainty over the level of installations that can be expected after 2020. It must do this now if businesses are to plan and make this a Brexit success story.

This need for certainty is not just just a UK issue, of course. Other European nations need to provide it too, if the offshore wind sector is to make good on global ambitions in Europe, the US and Asia.

But we do have some concern about the auction result. Specifically, we are concerned that developers and other firms are expecting manufacturers including MHI Vestas, Siemens Gamesa and Geneal Electric to make most of the running on offshore cost reductions by continually building bigger and more efficient machines. That is vital, but firms must find savings through the project life cycle.

Second, onshore wind. The fact offshore wind now looks cheap should force the UK Government to ask serious questions about whether it should back wind farms on land that are even cheaper. We forecast at the start of the year that the UK would “soften its anti-wind stance” in 2017, and this could be a catalyst for that.

But others aren’t so convinced. I started a discussion on LinkedIn on Monday – if you are on there, get in touch – and the feeling from respondents including Vattenfall’s David Flood, Inflection Point’s Gordon Edge and Mott MacDonald’s Gary Bills is that UK leaders might be reticent about picking a fight with those in the English shires by promoting onshore wind farms. It has a lot of battles underway with Brexit talks, and so might prefer to ‘do’ renewables offshore without incurring the wrath of Nimbys.

And third, nuclear. These auction results have highlighted the folly of Prime Minister Theresa May’s decision last year to approve the Hinkley Point C project, which was always set to produce electricity far more expensively than renewables could.

We forecast a couple of weeks ago that the CfD results would “hammer a nail in the coffin” of this development.

Does that mean a change is imminent? Probably not. As with our argument about onshore wind, we do not think the government will scrap Hinkley right now as it would be one more fight to pick. It would also put the idea in the minds of overseas investors that the UK Government could not be trusted to honour its commitment, which is not the message it wants to promote post-Brexit.

This is all up for debate, though. What is certain is that this week offshore wind has made a strong case that wind, and renewables more widely, can play an important part in the energy mix of the UK and other nations too. There are still questions in areas like storage, but the sector has proved its doubters wrong before.

Our hearty congratulations to everyone, both in the UK and outside it, who has got the sector this far. It is nothing short of inspirational.

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.

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.