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UK likely to miss offshore wind target

THERE ARE doubts whether the £100bn ($164bn) required by the UK offshore wind sector by 2020 can be found and if the industry has the ability to deliver the planned capacity in such a short timescale. Under the third round of the UK's offshore wind programme, the country wants to expand its offshore wind capacity from around 1 gigawatt (GW) to 33-40 GW by 2020. That means a further 25 GW would need to be added on top the 8 GW of capacity already under construction.

The Crown Estate, which owns the UK's territorial seabed and is responsible for the programme, says the required investment includes £60bn-70bn for wind turbines, £10bn-20bn for power-transmission networks and another £10bn-20bn for other parts of the supply chain.

Consortia are being asked to bid to build projects in nine offshore zones, with the winners to be announced before the end of this year and the first turbines being erected offshore by 2014, according to the Crown Estate's director, Rob Hastings.

But such a large capacity boost may not by feasible within the time-scale. "In the short-to-medium-term, financing is the main bottleneck," says Charlie Hodges, an offshore wind analyst at New Energy Finance, a consultancy.

At present, virtually all investment in offshore wind is financed from the balance sheets of the utilities building the capacity, largely because commercial banks are reluctant to invest in a sector that is unlikely to make money for several years. However, the utilities will not be able to drum up the funds needed to finance the envisaged expansion by themselves, so the banks will need to be enticed to invest if the programme is to succeed.

"The government has reformed the renewables obligation [the UK's main renewables incentive] to improve subsidies for offshore wind and we have seen several projects committed to on that basis," Hodges says. For example, the world's largest offshore project, the 1 GW London Array, finally got off the ground partly because of this more attractive investment framework (PE 6/09 p17).

However, it seems virtually impossible that 33 GW of offshore wind capacity could be in place by 2020. The 25 GW of round-three capacity to be built in the five or six years after 2014 would require not only the £100bn of investment to be mobilised, but also for the equipment, expertise and logistical processes to do it to be available.

Given that some of the round-three projects would be built up to 150 miles offshore, in waters deeper than turbines have been erected in before, a lot of work must still be done on the technical side. Meanwhile, as with the oil industry, the equipment needed to erect turbines would need to be shared around various projects, also creating hold ups.

NEF's Hodges takes a pessimistic view of the UK's chances of hitting its 2020 target. "Realistically, less than 5 GW of round-three capacity will probably be built by 2020," he claims.

Together with the capacity being built in the first two rounds and several gigawatts of capacity being developed in Scottish inshore waters outside of the three rounds, total UK offshore wind capacity could reach 15-19 GW by 2020. That may be well shy of the country's ambitious target, but it may well be reached or surpassed in the following decade, as financing and technical capacity improves.

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