Companies Converge in Battle for Offshore Wind

With the success of the Scottish offshore wind licensing awards still buzzing around the industry, the winners have shifted their sights to a new prize, the UKs 3rd offshore wind licensing round.

In a similar scenario to that of the Scottish round, the UKs 3rd licensing round has proved extremely popular with a plethora of companies seeking to get involved in the burgeoning offshore wind industry. Whilst this licensing round is designed to secure developers, the associated seminars held by the Crown Estate in Edinburgh and London have attracted many participants from a wide-range of possible support services.

The licensing round, which is offering some prime sites beyond the UKs 12 mile territorial limit, has been designed to encourage larger developments, set in deeper water. Whilst such developments will go a long way to pacifying energy firms, environmentalists and politicians alike, the required capital investment will be huge, posing too much of a risk for one company alone.

So, with only ten developments up for grabs and with each one estimated to cost in excess of £1bn, a number of energy companies have this week joined forces and submitted joint bids to the Crown Estate. Whilst it is still early days and many companies have not shown their full hand, the consortiums currently look like this...

Group 1

• E.ON UK
• Dong Energy
• Fred Olsen Renewables
  

Group 2

• RWE
• Scottish and Southern Energy
• StatoilHydro
• Statkraft

Group 3

• WPD
• Clipper Windpower

Whilst only 3 consortiums have publicly announced their joint ventures, rumour has it that at least one additional consortium will comprise of Aberdeen-based Seaenergy Renewables (giant-killers in the Scottish licensing round) together with 'a major European-based wind energy producer' (source: Ramco Energy, Ambrian broker note).

This recent spate of co-operation between Europes wind energy majors is a major indication that the UK is the newest battleground in the fight for offshore wind. Favourable regulation, together with an attractive fiscal package, the UK is now considered one of the hottest properties in Europe to build wind farms. Whilst Denmark has had a head start, the UK has the advantage of being in the right place at the right time.

So what is the benefit for the UK economy?

With the wind farms planned in the 3rd round being bigger than ever before, major utility companies are signalling their intention to pour billions of pounds into the country to develop their projects as quickly as possible. This will provide a massive boost our energy industry and the related support-services sector.

Whilst the UK economy will benefit from its domestic growth of wind power, its biggest opportunity lies in the development of a specialised skills base. This has already been recognised by the European energy companies who have been attracted to the UK both by the quality of its offshore wind and its offshore skills base from the oil and gas industry.

Recruiting staff with the right skills set is a recognised challenge in the offshore wind sector. However, skills from the O&G industry could be easily adapted to accomodate offshore wind and with low oil prices affecting the commercialisation of fields in the north sea, wind energy companies would be welcomed employers.

The result of this would be one of the largest offshore wind energy workforces in the world, which in turn could be exported abroad. It has unrivalled potential and is undoubtedly one of the reasons why the Government has demonstrated such commitment to the industry. Other, high-carbon generators such as China, Thailand and the USA are now chasing offshore wind, but have neither the experience or expertise needed to succeed. Whilst the UK has only taken its first, tentative steps towards offshore wind, it has made significantly more progress than many others and for the UK economy, this could be where the real value lies.