Offshore wind expansion in UK under threat, says key player

http://www.theguardian.com/environment/2013/oct/18/offshore-wind-expansion-under-threat

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A major offshore wind developer has thrown into doubt the huge expansion of sea-based turbines, which the government is relying on to keep the lights on for the rest of the decade.

Paul Coffey, chief operating officer at RWE's renewable energy division Innogy, said: "Offshore wind is the only technology that can be developed at scale, with gas, to address the looming capacity need. But we are not in a place to see large-scale deployment of offshore wind. It would be very difficult to move ahead with the terms on the table.

"We can't invest on promises and a lack of clarity and we are running out of time for offshore wind."

He blamed changes to the subsidies for offshore turbines and uncertainties caused by the fierce political row over energy policy. The controversy over rising energy bills intensified on Thursday as British Gas hiked its prices by 9.2% and chancellor George Osborne announced that Chinese state companies will be able to run nuclear reactors in the UK. So-called green taxes, which support renewable energy and tackle fuel poverty through efficiency measures, have been at the heart of the argument, with some calling for them to be slashed.

"The next six months are critical," said Coffey, "but politicians are treating the issue as a political football to beat up the utility companies."

Energy ninister Michael Fallon said: "The UK is recognised as one of the most attractive locations in the world for offshore wind investment. The UK is committed to developing more offshore wind now and in the future as it's a major energy resource on our doorstep. The reforms we're making are designed to bring forward technologies such as offshore wind, where the costs are front loaded." He added that the more costs fall, the more offshore wind will be deployed.

Any new nuclear reactors built will not deliver electricity before 2023, meaning offshore windfarms will be essential to powering the UK, as many old coal and nuclear stations close. The Royal Academy of Engineers warned on Thursday that the narrowing margin between generating capacity and electricity demand has increased the risk of blackouts over the next two years.

Coffey was speaking at an event at the windswept Port of Mostyn in north Wales, from where RWE Innogy has erected half the 160 turbines of its €2bn Gwynt y Môr windfarm. The project, which began construction in 2012, will deliver 576MW of electricity capacity in 2014, enough to power 400,000 homes.

The 150 metre turbines, aligned in the neat rows planning authorities like, will sit eight miles from shore in Liverpool Bay and comprise the second biggest offshore windfarm in the world. The UK currently has roughly 1,300 offshore turbines and, due to Gwynt y Môr and other projects, should double that number in the next few years.

But Nick Medic of lobby group RenewableUK said the government's ambitions for how much electricity would be generated by the sector by 2020 had waned worringly, going from 40GW in 2010, to 18GW, to just 8-10GW in summer 2013. The last figure, from National Grid, who will deliver the new subsidy contracts, "really sent shivers down the spine of the industry", Medic said.

RWE Innogy's next project, the 500MW Galloper project off Essex, will be a test case, according to Coffey, who says he will need to make the final investment decision in the first half of 2014. "I have to be absolutely clear when I invest another £1bn that we will not come unstuck. At the moment I can't tell you if Galloper will work or not."

Toby Edmonds, project director at Gwynt y Môr, is one of the thousands of people now employed in the offshore wind industry. While 80% of the staff on his project are UK nationals, Edmonds acknowledged that just 17% of the €2bn cost is being spent in the UK. "That does not sound like a lot but you can't buy the turbines in the UK and that is 50% of the cost already," he said. "We have done as much as we can."

"We have the opportunity of such a fantastic market in UK offshore wind," said Coffey, who acknowledged that the technology is currently expensive. But he said the costs would fall by a third by 2020 and noted that nuclear stations will be given 35 years of subsidy compared with 15 years for wind power.

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