UK Takes Energy Leap With Huge Offshore Wind Projects
Dow Jones &
> Company, Inc. - Jan 8
>
> The U.K. took a massive step forward towards boosting its renewable
> energy capacity Friday after announcing plans to develop 32 gigawatts
> of new offshore wind energy--cementing its position as the world
> leader in the sector.
>
> The U.K. government Friday announced the winners of Round 3
> development licenses for nine sites off the U.K. coast which, if fully
> implemented, will put the country well on track to cutting emissions,
> and to meet its 2020 European Union target to increase to 15% the
> share of renewables in the U.K.'s energy mix.
>
> The scale of the task ahead--which will require the installation of
> around 6, 400 turbines over the next 10 years--has been compared to
> the development of North Sea oil and gas in the 1970s.
>
> The cost of developing the new generation capacity, which could
> provide up to a quarter of the country's power, would require
> investment of around GBP100 billion, according to the Crown Estate,
> owner of the U.K.
> seabed.
> Ahead of Friday's announcement, it was expected that 25 gigawatts of
> new offshore wind capacity would be awarded.
>
> Winners of the nine sites --the world's largest offshore wind tender
> to
> date-- included major European utilities such as RWE AG (RWE.XE), E.ON
> AG (EOAN.XE), Centrica PLC (CNA.LN), Scottish and Southern Energy PLC
> (SSE.LN), Iberdrola SA ( IBE.MC), Vattenfall, EDP Renovaveis
> (EDPR.LB), and others such as Statoil ASA ( STO), Siemens AG (SI) and
> Fluor Corp.(FLR).
>
> U.K. Prime Minister Gordon Brown said the announcement would provide a
> substantial new platform for investing in U.K. industrial capacity.
>
> "The offshore wind industry is at the heart of the U.K. economy's
> shift to low carbon and could be worth GBP75 billion and support up to
> 70,000 jobs by 2020," Brown said.
>
> The Crown Estate estimated that around GBP75 billion would be required
> to develop the wind farms, GBP15 billion for transmission
> infrastructure, and
> GBP5 billion to GBP10 billion to expand the offshore wind industry
> supply chain.
>
> Offshore wind power currently costs around GBP3 million a megawatt to
> develop, although that figure is expected to fall as the supply chain
> expands.
>
> Rob Hastings, the Crown Estate's director of marine estate, said that
> having a manufacturing and supply base in the U.K. would make the
> projects cheaper to build. The Crown Estate is holding twelve supply
> chain events across the U.K. to support the sector.
>
> "Once the supply chain and the whole industry is mobilized, it will
> force the pace of development, just like it did in the North Sea oil
> and gas sector," Hastings said.
>
> The largest development will be in the Dogger Bank zone, where up to
> nine gigawatts of capacity are to be installed by a consortium equally
> owned by SSE Renewables, RWE Npower Renewables, Statoil and Statkraft
> (SKT.YY).
>
> However, the scale of the challenge is significant.
>
> Wind farm developers face engineering and technology challenges as
> well as massive costs from an industry still in its infancy,
> developers and analysts have said.
>
> Currently, most of the wind farms being developed under the U.K.'s
> first two offshore tender rounds--totaling 8 gigawatts of
> capacity--are in water less than 20 meters deep. Most of the Round 3
> turbines will be located in water over 30 meters deep, and up to 285
> kilometers offshore.
>
> Mainstream Renewable Power CEO Eddie O'Connor said Friday that a hub
> comprising new harbor and manufacturing facilities, a research and
> development site and financial services facilities would be needed on
> the U.K.'s east coast to support the offshore development.
>
> Managing the intermittency of wind power will also pose a challenge,
> although the U.K.'s electricity network operator National Grid has
> said it is confident it will be able to accommodate the peaks and
> troughs of supply and demand.
>
> O'Connor said a new "super grid"--an offshore transmission grid
> linking Norway, Britain, the U.K. and Denmark--was vital to the
> success of the Round
> 3 projects, which are due to start being constructed in 2014 at the
> earliest.
>
> In December, nine countries including the U.K. gave their political
> support to an integrated offshore electricity grid in the North and
> Irish Seas to aid the development of offshore wind and boost
> flexibility of offshore supplies. But there are no concrete plans or
> investors for the project yet.
>
> "You could bring a few of the first [Round 3] projects ashore and
> connect them radially, but if you wanted to connect 25 to 32
> gigawatts, the first leg of the super grid would have to be
> operational by 2017 to 2018,"
> O'Connor said, adding that such a project cost GBP10 billion to GBP15
> billion.
>
> Mainstream Renewable Power and Siemens Project Ventures, with Hochtief
> Construction, won the Hornsea zone, where up to four gigawatts of
> offshore wind generation capacity is to be developed.
>
> Finance is also an issue. In the previous two tender rounds, smaller
> projects were delayed until the U.K. government raised its financial
> support mechanism.
>
> "These [Round 3] projects are not just hugely expensive and require a
> significant amount of capital but, given their size and the technical
> challenges faced in their construction, these projects are considered
> very risky by the investment community," Andy Cox, energy partner at
> KPMG said.
>
> Sarwjit Sambhi, managing director of gas and electricity supplier
> Centrica, said the sector would need a long-term stable support
> mechanism to make the investments commercially viable.
>
> "Round 3 should send a strong signal to the renewables supply chain in
> the U.K. and a suitable support mechanism would incentivize its
> creation to increase competition, reducing costs and creating
> thousands of new jobs,"
> Sambhi said.
>
> Company, Inc. - Jan 8
>
> The U.K. took a massive step forward towards boosting its renewable
> energy capacity Friday after announcing plans to develop 32 gigawatts
> of new offshore wind energy--cementing its position as the world
> leader in the sector.
>
> The U.K. government Friday announced the winners of Round 3
> development licenses for nine sites off the U.K. coast which, if fully
> implemented, will put the country well on track to cutting emissions,
> and to meet its 2020 European Union target to increase to 15% the
> share of renewables in the U.K.'s energy mix.
>
> The scale of the task ahead--which will require the installation of
> around 6, 400 turbines over the next 10 years--has been compared to
> the development of North Sea oil and gas in the 1970s.
>
> The cost of developing the new generation capacity, which could
> provide up to a quarter of the country's power, would require
> investment of around GBP100 billion, according to the Crown Estate,
> owner of the U.K.
> seabed.
> Ahead of Friday's announcement, it was expected that 25 gigawatts of
> new offshore wind capacity would be awarded.
>
> Winners of the nine sites --the world's largest offshore wind tender
> to
> date-- included major European utilities such as RWE AG (RWE.XE), E.ON
> AG (EOAN.XE), Centrica PLC (CNA.LN), Scottish and Southern Energy PLC
> (SSE.LN), Iberdrola SA ( IBE.MC), Vattenfall, EDP Renovaveis
> (EDPR.LB), and others such as Statoil ASA ( STO), Siemens AG (SI) and
> Fluor Corp.(FLR).
>
> U.K. Prime Minister Gordon Brown said the announcement would provide a
> substantial new platform for investing in U.K. industrial capacity.
>
> "The offshore wind industry is at the heart of the U.K. economy's
> shift to low carbon and could be worth GBP75 billion and support up to
> 70,000 jobs by 2020," Brown said.
>
> The Crown Estate estimated that around GBP75 billion would be required
> to develop the wind farms, GBP15 billion for transmission
> infrastructure, and
> GBP5 billion to GBP10 billion to expand the offshore wind industry
> supply chain.
>
> Offshore wind power currently costs around GBP3 million a megawatt to
> develop, although that figure is expected to fall as the supply chain
> expands.
>
> Rob Hastings, the Crown Estate's director of marine estate, said that
> having a manufacturing and supply base in the U.K. would make the
> projects cheaper to build. The Crown Estate is holding twelve supply
> chain events across the U.K. to support the sector.
>
> "Once the supply chain and the whole industry is mobilized, it will
> force the pace of development, just like it did in the North Sea oil
> and gas sector," Hastings said.
>
> The largest development will be in the Dogger Bank zone, where up to
> nine gigawatts of capacity are to be installed by a consortium equally
> owned by SSE Renewables, RWE Npower Renewables, Statoil and Statkraft
> (SKT.YY).
>
> However, the scale of the challenge is significant.
>
> Wind farm developers face engineering and technology challenges as
> well as massive costs from an industry still in its infancy,
> developers and analysts have said.
>
> Currently, most of the wind farms being developed under the U.K.'s
> first two offshore tender rounds--totaling 8 gigawatts of
> capacity--are in water less than 20 meters deep. Most of the Round 3
> turbines will be located in water over 30 meters deep, and up to 285
> kilometers offshore.
>
> Mainstream Renewable Power CEO Eddie O'Connor said Friday that a hub
> comprising new harbor and manufacturing facilities, a research and
> development site and financial services facilities would be needed on
> the U.K.'s east coast to support the offshore development.
>
> Managing the intermittency of wind power will also pose a challenge,
> although the U.K.'s electricity network operator National Grid has
> said it is confident it will be able to accommodate the peaks and
> troughs of supply and demand.
>
> O'Connor said a new "super grid"--an offshore transmission grid
> linking Norway, Britain, the U.K. and Denmark--was vital to the
> success of the Round
> 3 projects, which are due to start being constructed in 2014 at the
> earliest.
>
> In December, nine countries including the U.K. gave their political
> support to an integrated offshore electricity grid in the North and
> Irish Seas to aid the development of offshore wind and boost
> flexibility of offshore supplies. But there are no concrete plans or
> investors for the project yet.
>
> "You could bring a few of the first [Round 3] projects ashore and
> connect them radially, but if you wanted to connect 25 to 32
> gigawatts, the first leg of the super grid would have to be
> operational by 2017 to 2018,"
> O'Connor said, adding that such a project cost GBP10 billion to GBP15
> billion.
>
> Mainstream Renewable Power and Siemens Project Ventures, with Hochtief
> Construction, won the Hornsea zone, where up to four gigawatts of
> offshore wind generation capacity is to be developed.
>
> Finance is also an issue. In the previous two tender rounds, smaller
> projects were delayed until the U.K. government raised its financial
> support mechanism.
>
> "These [Round 3] projects are not just hugely expensive and require a
> significant amount of capital but, given their size and the technical
> challenges faced in their construction, these projects are considered
> very risky by the investment community," Andy Cox, energy partner at
> KPMG said.
>
> Sarwjit Sambhi, managing director of gas and electricity supplier
> Centrica, said the sector would need a long-term stable support
> mechanism to make the investments commercially viable.
>
> "Round 3 should send a strong signal to the renewables supply chain in
> the U.K. and a suitable support mechanism would incentivize its
> creation to increase competition, reducing costs and creating
> thousands of new jobs,"
> Sambhi said.
>