The UK Offshore Wind Industry

By Paul Homewood

 

http://www.renewableuk.com/en/utilities/document-summary.cfm?docid=63B303B4-425D-4CD3-B032A0A4F109E42C

 

The UK currently has 8.2GW of offshore wind capacity, either already in operation, under construction or with planning consent. ( This is a more up to date figure than the above chart, as 1.2GW of capacity at Triton Knoll has now received planning approval since the chart was published in May).

Most of the under construction/consented capacity is due to come on stream by 2017, though four projects have no definite date yet. All these projects are included in what is known as Rounds 1 and 2. The next batch, all awaiting approval, are in Round 3, and it seems unlikely any of these will come on stream before 2020.

Let’s see then what impact all this will have on the UK energy scene.

 

Capacity & Output

In theory, when operating at full capacity, 8.2GW of offshore could supply about 11% of the UK’s peak demand. However, this is a fairly meaningless concept.

Assuming a, probably generous, utilisation of 40%, when all the above capacity is on stream, offshore would produce about 28.7TWh a year. This is 8% of the total UK generation of 363TWh.

Over the last 12 months, offshore has contributed just under 3%.

 

Subsidy

All wind farms, which become operational in 2014 and after, are subject to the new system of Contracts for Difference, and receive guaranteed prices, as below:

 

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/209360/Strike_prices_with_Over_1_Gigawatt_of_Potential_Deployment.pdf

 

Existing sites and projects due on stream before April 2014 will remain on the existing system of support under the Renewables Obligation. According to DECC,

These prices [CfD’s] are broadly comparable to the support levels available under the Renewables Obligation, with a number of adjustments to account for the benefits of CfDs.

Basically, the existing subsidies are expected to be slightly higher than the new ones. Also, the strike price for offshore begins to taper off for wind farms starting up in 2016 and after.

To get a reasonable estimate of the subsidy, therefore, it seems reasonable to work on an average of £155/MWh.

The wholesale market price for electricity in the UK is just over £50/MWh currently, so, bearing in mind the Strike Prices, which are increased in line with CPI, are based on 2012 prices, the current subsidy would work out at about £105/MWh.

 

Based on 28.7TWh pa, the annual subsidy would therefore be £3.0bn, about £115 per household.

 

Ownership

The list of offshore wind farms,which have become operational since 2010 or that have planning consent, is in the Appendix. The table below summarises ownership of these. This table excludes about a gigawatt of older sites, set up prior to 2010.

Where there is joint ownership, I have assumed equal splits.

 

Company	Country	MW	%
EDF	France	62	1
Centrica	UK	270	4
EoN	Germany	599	8
Scottish Power	Spain (Iberdrola)	194	3
Vattenfall	Sweden	450	6
DONG	Denmark	1524	21
SSE	UK	688	9
RWE	Germany	2280	32
Statoil	Norway	877	12
MASDAR	Abu Dhabi	290	4
TOTAL		7234

 

So, altogether, 87% will come under foreign ownership, and consequently, assuming an even allocation, 87% of the subsidies will go abroad.

Bear in mind that, as well as the subsidy of £105/MWh, the wind farms also receive the market price of £50/MWh.

 

Manufacture

According to Wikipedia, wind turbine manufacture is dominated by Siemens and Vestas, from Germany and Denmark respectively.

Siemens, for example, have made the turbines for the biggest installations, London Array, Greater Gabbard, Walney and Sheringham.

 

There will, of course, be many jobs created in construction and ongoing support, but it looks as if most of the benefit of the offshore bonanza is going abroad.

£3bn a year seems a high price to pay for the small benefits that will accrue to the UK economy.

 

 

 

References

Full list of offshore wind farms

http://www.thecrownestate.co.uk/energy-infrastructure/offshore-wind-energy/our-portfolio/project-details/

 

 

 

APPENDIX A – Offshore Wind Farms Built 2010 Onwards

 

OPERATIONAL
	SITE	OWNER	MW
2010	ROBIN RIGG	EON	90
	THANET	VATTENFALL	300
2011	WALNEY I	DONG/SSE	184
2012	ORMONDE	VATTENFALL	150
	WALNEY II	DONG/SSE	184
	GABBARD	SSE/RWE	504
	SHERINGHAM	STATOIL	317
2013	LONDON ARRAY	DONG/EON/MASDAR	630
	GUNFLEET II	DONG	65
	LINCS	CENTRICA	270
	TEESIDE	EDF	62
			2756
CONSENT
	GWYNT	RWE	576
	HUMBER	EON	219
	LONDON ARRAY II	DONG/EON/MASDAR	240
	RACE BANK	DONG	580
	TRITON	RWE	1200
	DUDDON SANDS	SCOT POWER/DONG	389
	WESTERMOST	DONG	210
	DUDGEON	STATOIL	560
	GALLOPER II	SSE/RWE	504
			4478