A bitter wind whipped across the faces of Stephen Timms and Andrew Davies as they posed triumphantly for photographers on a cold November morning in 2003. Dwarfed by an array of 30 2MW turbines towering forty metres above their boat, the UK Energy Minister and Welsh Development Minister soaked in the awe-inspiring sight of the UK's first major offshore wind farm.
As the small vessel made its way from the coast of Prestatyn and into the Irish Sea, it may as well have been etching a blueprint behind it. A blueprint which others would follow when staking their claim in the battle for offshore wind.
The North Hoyle Offshore Wind Farm was on the cusp of starting electricity generation for 50,000 welsh homes. The project was a ground-breaking development in the diversification of the countries energy mix and had therefore gained strong vocal support from a broad coalition of beneficial stakeholders. With the UK Government, Greenpeace and industry leaders throwing their weight behind it, the project had the best possible start in what would prove to be a challenging industry.
Since those initial jubilant scenes at North Hoyle five years ago, the road to meaningful offshore wind powered generation has been rocky to say the least. Only 25% of licenses awarded by the crown estate in 2001 are now operational and none of those awarded in 2003 have made it passed the 3rd planning stage. Hampered by the same bottlenecks that delay so many infrastructure projects in the UK; a lack of money, a lack of skills and too much bureaucracy, it is understandable why many have questioned the future role of offshore wind.
When you consider the obstacles encountered by developers during those early years, many could be forgiven for turning their backs on new projects altogether. Some have chosen to do just that, yet it has failed to unsurp the industry as the leading light in the UK's clean energy policy. Despite opposers continued protestations over its suitability as a reliable generation source, it has managed to graduate from the periphery of the energy sector to the main stage. However, whilst the worse may be behind it, the best years are not yet quite within the reach of the major wind energy players.
If 2003 was the year of breakthrough for the offshore wind industry, 2008 was a year of contradictions. Whilst the government introduced a raft of initiatives designed to attract investment into offshore wind, the increasingly treacherous global economic climate prompted several influential stakeholders to review the industries business case altogether.
In May Royal Dutch Shell caused controversy when it pulled out of the London Array offshore wind farm, stating that the costs had become too high. In November, BP confirmed it would not be investing in the UK's wind energy sector in the foreseeable future, choosing instead to focus all its wind energy investment on a US market that it regards as more " economically viable" and this month, Centrica said that it is to review its projects amid a sharp increase in costs. The pattern is repeated throughout Europe with Eon and Iberdrola, owners of Scottish Power, among those which have said they will be reviewing their rate of spending on renewables.
Compounding the problems caused by the economic slow-down, the UK Government has come under sustained attack for placing too much reliance on wind energy in its plans for reducing greenhouse gases. Critics argue that Britains new-found love of wind will lead to a failure to meet the countries planned 34% cut in carbon emissions by 2020. Sceptics insist that a combination of bureaucracy, technological risk and lack of finance will ultimately result in targets not being met.
Whilst such assertions are not wholly unjustified, they fail to take into account the position that the government now finds itself in. Backed into a corner by agressive European renewables targets, an increasingly unstable energy supply from Russia and a faltering economy, the UK desperately needs a radical reform of its energy industry. However, with a wide-range of energy sources at its disposal, what has forced the Government to throw its weight behind wind?
The answer is time. Or more precisely a distinct lack of it. If the UK is going to have any chance of hitting the ambitions targets set by the EU by 2020, they'll have to ramp-up projects at a lightening speed. Many have expressed doubts over the Governments ability to deliver on its good intentions, but as stated by Mike O’Brien, Minister of State for Energy and Climate Change last october;
"I want to be absolutely clear today that wind will make a crucial contribution to meeting our 2010 target for 10% renewable electricity. And wind will be crucial to meeting our share of the 2020 EU target. It is no secret that we have set ourselves challenging, ambitious targets. But we fully intend to meet them."
With planning and construction times for nuclear power stations currently averaging 10 years and gas powered stations furthering the countries dependence on foreign gas supplies, offshore wind is now seen as the only realistic chance we have of hitting the EU targets on time. However, the question still remains, with so much hesitation still being shown by the major offshore wind farm developers, what regulatory improvements and fiscal incentives are required to ensure that offshore wind projects are delivered on time and within budget?
Firstly, the Government needs to acknowledge the additional costs that offshore wind farm developers face when compared to other, less expensive options. Where a nuclear power station will cost £1.5m per megawatt to build, an offshore wind farm can cost over three times that amount. So why are both subject to the same ROC (Renewable Obligation Certificate) banding, a fiscal incentive which allows operators to sell the 'greeness' of their output (in addition to selling the electricity itself). Determind to help make the economics off offshore wind work, the Department for Energy and Climate Change recently announced that they are;
"...intending to ‘band’ the Renewables Obligation (RO) to provide greater support for emerging technologies such as offshore wind and wave and tidal. Our proposals would increase the number of Renewables Obligations Certificates (ROCs) for offshore wind to 1.5, recognising the special challenges involved in developing offshore projects."
This would mean that for every unit of electricity sold from the wind farm, they would have 1.5 'green certificates' to sell on the open market. Thousands of UK companies are required to own a certain number of these certificates or pay for their carbon output (which is markedly more expensive than the certificates themselves), so the DECCs new stance on ROCs has been generally well-received by the energy sector. However, many insist that the change it is too late and not comprehensive enough.
Whilst the changes to ROC allowance provides the companies with a quicker return-on-investment, developers are also demanding some support in the planning and development stages of their projects. To this end, the Crown Estate (with a little encouragement from the Government?) have agreed to bear the cost of up to half of all pre-construction development costs for projects awarded under the UKs Round 3 licensing process. A move which (according to the British Wind Energy Association);
"...takes away much of the cost and uncertainty with third-round projects"
This incentive from the Crown Estate prompted a surge of interest in Round 3, with almost 100 companies indicating an interest to build wind farms far into the North Sea.
The Governments final initiative has been to tackle maybe the biggest hudle in offshore wind development - the planning process. For years, wind farm developments have been hindered by a lengthy planning process, designed to attract the wrath of NIMBY protestors and believe it or not... environmentalists. At the British Wind Energy Association conference last October, the Prime Minister indicated that no planning bottle-necks would be accepted in the Governments drive to develop its fledgling offshore wind industry. As quoted from Mike O’Brien;
"I know that the planning system is another key barrier to renewables deployment in the UK. And that is why we have proposed radical reforms in the Planning Bill to speed up and streamline the planning system in England and Wales.
As part of these reforms, we are proposing the establishment of an independent Infrastructure Planning Commission (IPC) in England and Wales to take decisions on nationally significant infrastructure projects for energy - including large scale renewables of over 50 megawatts."
Such a move would be a radical reform of the UKs current planning process and a breathe of fresh air for those who have witnessed the continued delays and cancellations of wind farm projects across the country. It is also a clear indication of the Governments intention to promote offshore wind as the energy of the future - at all costs.
The multi-faceted approach in improving the return-on-investment, reducing development costs and reforming planning laws will, over time, reap massive rewards for the country as a whole. Offshore wind will bring employment, energy stability, revenue and reduced carbon emissions just when its needed most.
Through listening to its stakeholders and making the concessions needed to grow offshore wind during these early, tentative years, the Government is sending out a clear message. Offshore wind is here to stay and despite the derision of the doomsayers, the UK won't be taking 'no' for an answer.
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