At the moment, the UK offshore wind industry imports 80% of equipment and services from abroad, something which has added to the cost of offshore wind, according to the UKERC report Great Expectations: The cost of offshore wind in UK waters.
Chief author and Head of Technology and Policy Assessment at UKERC, Dr Robert Gross, says: “The UK is not yet fully benefitting from being a world-leader in the field; in effect UK consumers are subsidising Danish and German wind energy companies. This report suggests that policies could do more both to bear down on costs and support a UK based industry.”
The cost increases over the last five years or so, have been due to currency and commodity prices movements, but also supply chain shortages and bottlenecks have impacted offshore wind costs. Furthermore, planning delays have added to developers’ budgets and undermined supply chain confidence, UKERC says.
Optimistic about future
UKERC is nonetheless optimistic about the future, saying that a plateau in costs for offshore wind may have been reached.
Although costs are likely to decrease slowly at first, material reductions are possible if the right incentives are put in place for offshore wind.
UKERC says one way could be for the Government to revise the system of premium payments currently delivered through the Renewables Obligation, so that they send a long-term signal that support levels will gradually reduce over time.
Dr Gross concludes: “At the moment the UK’s support system offers a generous subsidy but may not do enough to build confidence in the companies making components, providing vessels or delivering support services. We could do more to support innovation and the smaller players lower in the supply chain.”