One blustery Monday last September, a record was quietly set by the thousands of wind turbines up and down the country. For the first time, wind generated 10% of the electricity powering Britain. Days later, the world's largest offshore wind farm opened off the Kent coast.
The wind behind such clean energy continues to blow in the right direction, in particular for offshore wind, where the UK is believed to have Europe's biggest resource.
In the past month alone, turbines off the Suffolk coast and in the Irish Sea started supplying power to the grid, taking the UK's offshore wind capacity to 1.34GW. This consolidated the UK's position as the world's leader in creating energy from offshore wind; it now generates a third more than the world number two, Denmark, which the UK overtook in 2008. Turbine giant Siemens picked Hull for an offshore turbine plant that will create 700 jobs and Spanish turbine-maker Gamesa announced plans to generate 300 jobs with an offshore wind technology centre in Glasgow. They join GE, Mitsubishi and Clipper, who have all committed in the past year to build offshore wind manufacturing plants in Britain.
It is perhaps unsurprising, then, that a recently published report by Ernst & Young ranked the UK as the country with the most attractive prospects for offshore wind development in the world. The UK was ahead of second-placed China and third-placed Germany, the report said, because of its "large amount of unexploited wind resource, strong offshore regime and attractive tariffs".
Against this sunny backdrop, senior figures from the worlds of energy, politics, finance and activism came together in January at a Guardian-hosted seminar in central London to debate the opportunities for Britain on offshore wind. To encourage open views, the event was held under the Chatham House rule, which allows speakers' comments to be reported, but not their identities.
While many delegates agreed offshore wind presents the UK with a "momentous opportunity", there was also near unequivocal agreement that there are many challenges ahead too.
Competition from other countries attempting to attract manufacturers, developers and investors, in particular from Asia, was clearly on the minds of several participants. "China potentially has 750GW of offshore wind and they are clearing grid connections. If we have years of disputes in the UK about onshore grid connections, vested interests blocking things, and the green investment bank not doing what it should, we could come in at the lowest common denominator," warned one delegate.
China, for example, expects to have 5GW of offshore wind installed by 2015, rising to 30GW by 2020. The UK government's ambition is to expand the current 1.3GW of offshore wind to a total of 33GW by 2020 at a cost of £100bn, enough to power every home in the country.
Level of uncertainty
But it is unclear how much wider political support there is for offshore wind. Last July the coalition cut a capital grants fund for offshore wind, and Ernst & Young's report cautions that despite government backing for green energy, "there is still a significant level of uncertainty about the future of renewable policies, which causes some discomfort for investors."
Perhaps the biggest uncertainty stems from the electricity market reform (EMR), which the government is consulting on until March. Under discussion in the reforms is how to financially incentivise future offshore farms, either through the generous existing renewable obligation (RO) scheme or a new feed-in tariff, or both in parallel. The level of the RO for offshore wind is also currently being reviewed.
There was agreement at the seminar that the EMR brings uncertainty, and a potential "hiatus" as one participant put it. "If we don't get electricity reform right, we can all just go home," said one contributor, with another adding: "Currently we are running into the unknown. We cannot fall into a hole. In order to keep the attractiveness of the UK, we have to keep our momentum."
Last year analysts at energy experts Douglas-Westwood said they expect to see a 93% fall in orders for offshore wind turbines in Britain in 2013 on the year before, as energy companies gear up for "round three" farms, the largest programme of offshore wind in the UK so far, in deeper waters than today's farms. Round three developments are not due to come online until 2014-2015 and onwards.
Such concerns, said one participant, highlight why it is essential to get through the EMR quickly. "Once the EMR is finished, that will be a framework going forward. Industry may say fine, it's not exactly what we wanted, but that will be the structure for the next 25 years. The worst thing for investors would be if we started tweaking it straight afterwards because of criticisms."
Planning, or "consenting" as it is known in industry jargon, was highlighted by several roundtable participants as a key challenge. While offshore's success has been partly down to bypassing the planning battles that have plagued onshore farms – Danish turbine-maker Vestas cited them as a reason for closing the UK's only major wind factory in 2009 and some projects have waited up to five years before getting the go-ahead – offshore farms can still run into planning quagmires when connecting to the national grid.
"Consenting is going to continue to be a problem, and we need to streamline that. Individual sites that go through local planning won't always be welcomed," said one participant. In Scotland, for example, the government is looking at having a "one-stop shop" in the shape of management authority Marine Scotland, to make "quicker and clearer decisions" on licensing. Better co-ordination over grid connections and use of hubs, several participants said, could help avoid past problems.
At the heart of attempts to meet the UK's offshore ambitions is the question of whether there is enough financing for the £100bn of new developments by 2020. Spending by utilities accounts for much offshore backing now, but many participants were in agreement that new forms of finance are needed.
"I would like to see more of what's happening in Denmark, with pensions funds investing in offshore wind," said one. "We need to open up debt capital markets to this sector," said another. The green investment bank was cited by several participants as having a key role to play, though the bank's final form is still being fought over between departments in Whitehall. Offshore wind is expected to be one of three key areas that the bank will support.
But despite the challenges to offshore wind, participants said it was important to recognise the achievements of the past and the opportunities for the future. As one contributor said: "There is a massive amount of progress and a huge amount happening in UK offshore. We need to stop obsessing about targets. It's the biggest industrial opportunity for decades. We need to move on and capture it. We need to stop worrying about making it perfect. We need to not worry about perfect consenting systems and subsidies. Do Germany and China do that? No. We need to keep pushing industry on."
Obstacles such as connecting to the grid, financing and government support could be overcome, several participants said, to secure the "huge opportunity" of creating thousands of jobs in the UK. Many participants focused on the importance of bringing the supply chain, including turbine-makers – the highest value part of an offshore farm – to the UK. England has put forward £60m to upgrade ports to handle the giant offshore turbines to be made in the UK, while Scotland has pledged £70m for a similar ports fund.
The UK's carbon emissions and renewable energy targets for 2020 were helpful in attracting a supply chain, participants agreed, even if they were based on an arbitrary date. "The targets are great. Half our business is in the US. The difference between the two is we have strong targets here, and legislation in parliament [the 2008 Climate Change Act]. It gives comfort to investors that this is a steady course," said one participant. "Targets are very useful globally," added another.
British efforts to drive down cost would make the UK more attractive too, said several delegates. "Purpose-built vessels are coming into the market for the first time. Purpose-built foundations designed for offshore are coming online," pointed out one participant, noting both would reduce cost. After a decade of rising costs, the price of offshore wind turbines is likely to drop 25% by 2025, a recent report by the UK Energy Research Centre predicted. "But we must look at reducing operating costs too," said one participant. "We only talk about capital costs now."
Backing for plans to connect UK offshore wind to a European "supergrid" was expressed by many participants, after David Cameron endorsed the idea last month. The concept would see countries across Europe balancing one another's intermittent supplies of green energy, with wind playing a key role in the north and solar in the south. It would also bring down costs and help meet green energy targets, said one participant. But another expressed scepticism at development on the ground after years of hearing the concept promoted in the industry. One participant said: "It's down here [at the bottom] on a list this long. I want the UK grid fixed first."
All the participants agreed a long-term vision would, ultimately, be crucial to offshore wind's success in the UK. "We need vision for 2040 and 2050 [not just 2020]," said one contributor. The scene will soon be set not just for one gusty day but, if the rhetoric is to be believed, for the next 25 years.
At the roundtable:
Head of environment, Guardian, (Chair)
Senior policy offshore wind, Scottish government
Transmission executive director, National Grid
Chief executive, National Renewable Energy Centre
Managing director, Siemens Renewables
Director of offshore, Scottish and Southern Energy
David William Nunn,
Head of statergy and business development, Statoil
Director of renewables, Scottish Power
Country president and head of power, Alstom
Partner, Ernst & Young
Director of policy, Renewable UK
Managing director, Climate Change Capital
Minister of state for the Department of Energy and Climate Change
Senior vice president and head of strategy, Statkraft
Visiting senior fellow, London School of Economics
Director of innovations, Carbon Trust
Executive director, Greenpeace
Managing director, Statkraft
Director of marine estate, The Crown Estate
Director, Sustainable Energy and Industry, Wales Welsh Assembly
The roundtable was sponsored by The Crown Estate