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Putting wind in the sails of offshore sector

Monday 26 November 2012 5:00

Energy bill will inject confidence into offshore wind industry, writes Alex Dawson, chairman of Energi Coast.

Ahead of the publishing of the energy bill, the government has revealed it will provide £7.6bn towards low carbon electricity infrastructure by 2020, including offshore wind.

In addition, the bill will confirm the government’s commitment to achieving a balanced energy future utilising a mix of hydrocarbon and renewable resources.

The North East is already a key location for offshore renewables activities with companies successfully serving early projects in the sector.

Following the publishing of the bill, momentum will build in the market and the next stage of projects will begin to come online with support from our supply chain, which is poised and ready to go.

Already companies that make up Energi Coast have invested, between them, £400m in offshore wind activities and employ around 6,000.

We predict that a further 2,000 jobs could be created in the region if the required stability and clarity can be achieved in the industry.

This news will be welcomed by investors that have delayed decisions about investing in offshore wind projects as well as the supply chain, which has been poised to support the next stage of Round 2, Round 2.5 and early Round 3 UK wind farms.

However, there is a concern that investment decisions post-2020 will be affected by the delaying of the setting of decarbonisation targets, which will impact on the large Round 3 projects, many of which will still be under construction in eight years’ time.

The bill will not include a limit for the amount of carbon dioxide that can be emitted per megawatt hour of power from the electricity sector by 2030, which may lead to developers of Round 3 wind farms facing decarbonisation target issues if the next government uses the powers placed in the bill to set a target in 2016 after the next election.

While the arrival of the bill is welcomed, the political infighting that has led to compromises being made in its content are concerning.  Eight years is not long enough to introduce an effective energy infrastructure.

The government has created a cliff edge as debates over decarbonisation will continue, which will become a future election issue and potentially disrupt the confidence of investors and operators.

Alex Dawson is chairman of Energi Coast, which was formed by a steering group of leading energy sector companies in North East to promote the region’s offshore renewables sector. He is also chief executive of TAG Energy Solutions.