CfD success is to be celebrated, but business as usual won’t achieve the UK’s offshore wind ambitions
For a government still counting its tenure in weeks, it will have been a welcome outcome to see significant numbers of renewable energy projects awarded Contracts for Difference (CfD) in the sixth allocation round, with an overall 10 gigawatts (GW) boost to UK renewable energy capacity.
Given the failure of allocation round five to secure any bids for offshore wind at all, an unprecedented outcome in the history of the scheme, securing a further 5GW of offshore wind is a strong signal that industry has responded positively to a new government and significant uplift in CfD budget and administrative strike price that better reflects the realities of real-world inflation and supply chain pressure.
This success notwithstanding, enhanced government targets for offshore wind deployment require ever greater outputs from CfD allocations. Had this round produced 8GW of offshore wind, we would have required a further 8GW over the successive annual rounds to get close to the 60GW by 2030 target. As things stand, that figure is now more than 10GW per round.
In order to accelerate development and put us in touching distance of government targets there are a multitude of areas to address, including several areas that ORE Catapult can provide potential solutions.
Firstly, we need to speed up the consenting process. ORE Catapult research shows that there is potential to reduce consenting times by 40 per cent, with a cost reduction of up to 50 per cent, by utilising innovation and new technology. By sending drones out to sea or using satellites instead of people, we can collate more accurate data that will not only speed up the consenting process but also provide better environmental outcomes through enhanced impact assessments, not to mention increased safety for those tasked with collecting data. This, however, also requires systemic change. We need people within the regulatory bodies and the Crown Estate to have the skill sets and capabilities to interpret this data, as well as frameworks to codify and regulate procedures. This approach neatly correlates with the government agenda to reduce planning red tape and get Britain building, so pilots should be initiated immediately to get a new intelligent data-driven process up and running as soon as possible.
Second, we need to maximise efficiency in our existing fleet. Capabilities in smart Operations and Maintenance have been improving year-on-year, but turbine shutdowns for maintenance of failure still cost operators millions of pounds. ORE Catapult have now developed advanced AI technology that can predict individual turbine failures on average a month in advance with 90 per cent accuracy. This allows operators to attend to ailing turbines before a failure hits, limiting damage to hardware and significantly reducing the shutdown time required. By adopting this technology we can maximise outputs from our existing wind turbines, providing more energy to the grid and freeing up capital for further investment into new wind farms.
Finally, we need an innovative approach to procurement. Whilst the drumbeat of CfDs has provided a steady rate of deployment of the past decade (AR5 a blip in an otherwise upwards trajectory) its main function has been to drive reduction in the cost of energy produced. Having hit a point that offshore wind is competitive with, or cheaper than, equivalent forms of energy production, there’s little room for further downward price movement, and the focus on cost has squeezed domestic supply chains rather than nurturing them. One solution to this is Mega Projects to complement existing CfD procurement. By establishing standalone large-scale procurements of 15GW, the government could boost investor confidence for domestic manufacturing, develop and expand supply chains, and turbocharge deployment towards the 2030 target in one fell swoop. Extending this over a longer timespan would put us well on the way to the more than 120GW that it is estimated our energy system will require from offshore wind by 2050.
These approaches are of course not without challenges; they verge on a level of radical policy action that may be uncomfortable for a government which was elected on the premise of stability and return to business as usual politics. A sensible and consistent approach to industrial strategy will set us in good stead to restore investor confidence and begin to address these challenges, but combined with an innovative approach to policy action this government has the opportunity to grasp the mantle for the UK of truly becoming a clean energy superpower; the jobs created, emissions eliminated and economic growth stimulated will be welcome by-products of daring to do things differently.
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