Guest post by Scott McCallum, a partner in Shepherd and Wedderburn’s Clean Energy team.
The announcement of a new Offshore Wind Sector Deal on 7 March – putting the sector centre stage in the UK Government’s wider Industrial Strategy – is a huge boost for developers, their existing and prospective supply chain and for the UK economy at large.
The Offshore Wind Sector Deal sets out ambitious targets to generate more than 30% of Britain’s electricity from offshore wind by 2030, treble the number of UK jobs across the sector and its supply chains, and boost sector-related exports five-fold to circa £2.6 billion.
In return for a previously announced UK Government commitment to run regular Contract for Difference auctions (the government’s support mechanism for low carbon electricity generation) in May of this year and every two years thereafter, the sector has committed to invest up to £250 million building a stronger UK supply chain and increasing UK content.
This new deal is a welcome good news story, and is likely to be a major discussion topic at the 2019 All-Energy Exhibition and Conference, which is being held in Glasgow in May.
The UK Government now recognises offshore wind as a key driver of the wider industrial strategy, with the broader ambition to make the UK a global leader in the development of renewable energy technologies. We now have the bones of a credible and exciting plan for the creation of a significant number of highly skilled jobs and to export our expertise and technologies around the world.
The deal includes a commitment from the offshore wind sector to establish the Offshore Wind Growth Partnership (OWGP) with the aim of boosting productivity and the sector’s competitiveness. There is also an objective to increase the number of women in the offshore wind workforce to “at least a third” by 2030, up from 16% in 2018, and a longer-term ambition to increase that number to 40%.
The industry has met the challenge of making offshore wind generation cost competitive, with support costs having fallen by 50% between 2015 and 2017. Offshore wind projects are now projected to be cheaper to build than fossil fuel-fired power plants by 2020. Building on these successes, development globally is expected to grow at a rapid rate – 17% per annum between now and 2030 – from 22 gigawatts (GW) to 154GW of total installed power.
For the UK market, that potentially equates to more than £40 billion of additional infrastructure spend, with 30GW of deployed capacity by 2030.
The growth of the UK offshore wind sector over the past 15 to 20 years has been remarkable; as has the tumbling cost of developments, driven by sensible government support and ambitious and innovative developer commitment. As a result, we currently sit as a world leader in offshore wind generation.
While international competition is mounting, it now feels like we have all of the components necessary to build out a successful, sustainable sector that will continue to grow its UK market share and international reach for years to come.
Shepherd and Wedderburn is headline sponsor of the 2019 All-Energy Exhibition and Conference – the UK’s largest renewable and low carbon energy exhibition and conference, which takes place at Glasgow’s SEC on Wednesday 15 and Thursday 16 May 2019.