Will the UK government meet its own 50 GW by 2030 target?
It was a mild sunny day in mid-November 2019 when Boris Johnson was campaigning to be re-elected as UK Prime Minister for the Conservative party. As part of his press tour, he promised to increase the Offshore Wind Sector Deal, published in March 2019, from 30 GW by 2030 to an ambitious 40 GW. Fast forward to April this year, where the government has once again raised the target to 50 GW in response to the energy crisis brought about by the war in Ukraine, with an additional 5 GW of floating wind.
Offshore wind has become a real success story for the UK energy sector, enabled by a government keen to meet its legally binding target of becoming carbon neutral by 2050. The continued support for and innovation within the industry has helped it to significantly drive down costs while decarbonizing the economy. It has also generated thousands of jobs throughout the entire supply chain and rejuvenated some local communities and economies, including Great Yarmouth.
The UK now possess around 12.7 GW of connected offshore wind energy across 44 wind farms totaling over 2,500 turbines. It installed over 2.3 GW of new installations in 2021 alone which made up 70% of total installations in Europe that year. Only Germany has a comparable figure of installed offshore wind capacity of around 7.7 GW with 1,500 turbines. The total installed capacity for Europe is around 28 GW. The UK also boasts Hornsea One, which with a capacity of 1,218 MW, is currently the world’s largest offshore wind farm. It is clear that the UK is leading the drive to make the technology productive and cost competitive. But how realistic is it that the industry can achieve its ambitious 50 GW target within the next eight years?
It is anticipated that the UK offshore wind industry will have around 19.5 GW installed by the mid-2020s. But that leaves only another five years to more than double that capacity. I did say this was an ambitious target. Maybe I should have said it’s a formidable target!
The target has also added further strain to a number of areas, one of which is the development timescales. Historically, it has taken at least a decade to get an offshore wind farm to commercial operation. In response, the UK government has recently committed to reducing consent time from up to four years, down to one year (Development Consent Order or DCO process) and has vowed to take a more strategic approach to environmental considerations. This is a positive shift and could help to remove barriers to getting projects in the sea quicker. It’s been suggested that the UK will have to build around another 2,600 wind turbines costing £48bn by 2030 to meet this target. It’s also advised that 260 new wind turbines would have to be built every year in the run up to 2030.
However, timescales and consenting are not an isolated challenge. The tight timescales intersect with other challenges around the supply chain and grid connection. Similarly, the ports in the U.K. will need reinforcement and significant investment to adequately service the volume (and size) of equipment which will be going through them. One of the strains felt across all organizations in the industry at the moment is around skills and workforce. We have never needed more people working in offshore wind in the U.K. and this has caused strain on all stakeholders across the value chain. There is no doubt that these challenges will require bullish investment and commitments from both the government and private sector.
The UK is surrounded by seas which boast some of the best wind conditions in the world, with much of the resource located in relatively accessible, shallow waters. But as the seabed leasing presses on, the availability of those ideal locations become fewer, necessitating that development take place further out at sea, requiring longer transit times and in deeper waters. As we have seen with ScotWind, floating offshore wind is well-suited for these challenges.
Could floating offshore wind provide an opportunity to fill any gap in generation? The UK government has set targets to deliver 5 GW of floating wind by 2030. Again, this is another ambitious but achievable target. Floating wind turbines could be manufactured and constructed at onshore hubs and be towed by boat to installation locations. Constructing floating wind turbines by mass production could potentially be quicker than installing thousands of fixed bottom turbines. Our 2021 Energy Transition Outlook projects that the levelized cost of energy (LCOE) for floating wind will reduce by 80% in the next 30 years – with 74% of the cost reduction occurring before 2030. So, wind farm and turbine scale, and risk reduction will play an important role in major cost reductions.
Fixed bottom mega projects have already achieved a new UK record low of £39.65 per MWh during the third Contracts for Difference (CfD) auction round – a 30% price drop on 2017 prices seen in the second CfD round auction of £57.50 per MWh. It’s likely that we’ll see further price reductions during the fourth CfD auction, particularly with at least 12 GW of new seabed rights for offshore wind developments in the waters around England and Wales.
It is clear from this target and the action to date that offshore wind is and will continue to play very important role in the UK’s energy mix. Will offshore wind form the backbone of UK energy generation, and will the UK government meet its own 50 GW by 2030 target? It looks like 30 GW will likely be generating, whilst another 10 GW will still be under construction. But only time will tell. However, with the Crown Estate awarding 3 GW annually from 2022, we could be well on our way to achieving 50 GW by 2030.