The UK is the world leader for offshore wind: we have more wind turbines in the sea, generating more electricity than any country in the world and the biggest pipeline to 2020. Offshore wind currently makes up around 3% of the UK’s total generating capacity and it is already an essential part of our energy mix alongside other technologies, renewable and otherwise. And that’s not just because it helps reduce carbon emissions; we also know that offshore wind has huge potential as a scaleable renewable technology, with scope for significant deployment as well as cost reductions and benefits for businesses and UK PLC.
We’re at a really exciting time. We’ve set out a world-leading package of support for offshore wind and a funding package for renewables, including offshore wind, under Electricity Market Reform. The work we did for the EMR Delivery Plan – published in December shows that 10GW of offshore wind by 2020 is clearly achievable, which would almost treble current UK installed capacity. Our policy on phasing, which supports projects building over a number of years, and ongoing industry work on cost reduction could mean we see even more. This should give developers and the supply chain the confidence to invest and lay the foundations for more, cheaper deployment in the 2020s and beyond.
These policies are already seeing a real return.
We’re attracting investment, driving competition, investing in our future wind supply and supporting the economic recovery. DONG Energy, the world’s biggest offshore wind developer, has already committed to invest £4bn in the UK’s offshore wind market with four new projects by the end of the decade. Only this month a Canadian pension fund invested £644million in the London Array – the world’s largest wind farm.
We’re seeing a strong pipeline of projects move through the investment process. Four offshore wind projects (Gwynt Y Mor, Westermost Rough, Humber Gateway and West of Duddon Sands making up 1.4GW) are under construction with the total investment running into billions of pounds. A further four offshore wind projects are provisionally in line to be among the first wave of renewables projects to receive funding under our new renewables support regime, where we’ve taken action to ensure that reform doesn’t cause delay.
We’re seeing real action to drive cost reduction: today the industry-led Offshore Wind Programme Board is publishing its annual report, setting out the work that’s being done to drive down costs to help reduce pressure on bills in the future. Government, industry and other stakeholders are coming together to address these challenges.
And the UK is at the cutting edge of innovation: the next generation of 6MW turbines will be deployed in the UK at Westermost Rough – the first such commercial deployment anywhere in the world.
This demonstrates that companies consider the UK an attractive investment destination and are confident that offshore wind will provide predictable and stable returns. These billion pound developments that will help power tens of thousands of homes for years to come, help the UK reduce its carbon emissions and help keep the lights on.
Some offshore wind sites have reduced the size of their project as developers optimise sites ahead of construction. Others have looked at their portfolios and said that certain sites will not be developed as they concentrate on their best sites – helping to maximise value for consumers. It makes sense for developers to build their best sites first and, if they can’t develop every single site themselves, to give the seabed rights back. This is a reflection of the huge offshore wind pipeline, and looking at the bigger picture, it is a sign of the industry maturing. It means that others can get the opportunity to pick take sites on, or that the seabed can be used by other industries, or developed for offshore wind later. It’s also right that developers make sure their development is in the right place and sensitive to local concerns and that sites are designed as efficiently as possible.
Our ambition for offshore wind remains high given its vital role, alongside other a range of other technologies, in delivering secure, low-carbon energy. Our Electricity Market Reforms will encourage investment in cleaner electricity generation and they mean the UK will remain the right place to invest.