RenewableUK, Britain's largest wind and marine energy trade association, has published an independent report showing that the overall cost of generating energy from offshore wind is set to fall significantly over the next ten years.
The new study, "Offshore Wind – Forecasts of Future Costs and Benefits", compiled by independent technical consultants BVG Associates for RenewableUK, examines the most important measure for the offshore wind industry - the whole-life costs of projects - due to be built from 2011 to 2022. The whole-life cost includes capital expenditure, operational costs and the energy yield from offshore wind farms.
The whole-life cost of energy from UK offshore wind projects is expected to be driven down by more than 15% in real terms between 2011 and 2022, under normal market conditions. Under favourable conditions, such as increased competition, lower exchange rates and stable commodity prices, the decrease in costs would be as much as 33%.
Costs to fall by up to a third
"We know the costs of offshore wind are too high. The industry is committed to driving down the cost of offshore wind energy. We can reduce costs by as much as a third over the next decade. But this will need a large enough market to promote competition and drive innovation. Working with the government we can deliver 20GW by 2020 if costs fall," explains Maria McCaffery, Chief Executive of RenewableUK.
With a cumulative installation of more than 20GW by the end of 2020, the report shows that UK offshore wind capital expenditure (CAPEX) per MW of installed capacity will continue to increase in the next few years as projects are located further offshore and in deeper water. However, technological developments will offset the costs incurred by these conditions, so that costs will improve in the decade ahead.
Meanwhile, operational expenditure (OPEX) per MW installed will decrease significantly over the lifetime of wind farms installed in the next decade, primarily due to the use of a smaller number of larger and more reliable turbines.
The move to sites further offshore will give access to improved wind resources. This will increase the energy yield per MW installed by more than a fifth between 2011 and 2022.
However, the report warns that reduction in costs could be lost if a lack of Government ambition fails to stimulate competition and innovation.
The report concludes that the installation of offshore wind farms between 2011 and 2022 will support more than 45,000 long-term jobs, and add approximately £60 billion to the UK economy through development, manufacture and installation activities. It will save 800 million tonnes of carbon dioxide emissions.
Boost to jobs
Over 88,000 jobs in wind and marine energy industries by 2021. This is the headline conclusion of another report released last week by RenewableUK in conjunction with Energy & Utility Skills (the Sector Skills Council) and written by Cambridge Econometrics.
The report shows massive employment growth in wind, wave and tidal sector in next ten years – if the right policies are in place.
The study, "Working for a Green Britain Vol 2", outlines three possible market development scenarios (high growth, medium and low) in the wind, wave and tidal energy industries – if sufficient skilled recruits are available to employers.
Under the medium growth scenario, 67,200 new jobs will be created in the sector and its supply chain as wind and marine capacity reaches 41.5 gigawatts (GW) – up from 21,100 jobs in 2010.
The high growth scenario (51.8GW) would require 115,000 full-time employees working directly in the sector or supporting it by providing raw materials, manufacturing or supplying business support services.
Under the low growth scenario, with just 25.7GW of installed capacity, just 44,000 jobs would be supported. The report notes that this would represent a failure of the UK to harness both the economic and socio-political benefits offered by the renewables sector.
Skills gap must be plugged
The study suggests that the UK skills system is currently failing to ensure that an adequate supply of qualified new recruits is entering the labour market. It warns that a failure to address this issue could result in jobs going abroad, or being carried out in Britain by non-UK companies and workers.
The message for employers is clear – invest in your workforce, both current and future, and work with the providers of skills to ensure that they are meeting your requirements. The message for Government and skills providers is equally stark – the supply of appropriate skills to the labour market needs to ramp up rapidly over the coming years to meet rising demand. This applies both to young people entering the labour market and those looking for a career change.
To achieve this growth, the UK needs an effective and stable policy and legislative framework for renewables, which provides clear incentives for private sector investment, and which encourages a willingness among all parties to invest in the people and skills required to underpin expansion.
"This report shows the enormous potential that exists within the renewable energy industries to provide tens of thousands of permanent, well-paid jobs for the engineers, scientists, technicians and economists of the future - building on the enormous successes we have achieved already. However, we must ensure that the right training is available to ensure that the workforce has the appropriate skills to serve this dynamic sector, as it continues to expand at an extraordinary rate," commented Maria McCaffery.
"This research provides clear and compelling evidence of the need for government, employers, and the providers of skills to work in collaboration to meet the skills needs of this rapidly growing sector of the UK economy. No one organisation or company can achieve this on their own. Both EU Skills and the National Skills Academy for Power are working hard to make sure that the UK skills system is aware of the scale of the challenges ahead and are capable of meeting employers' needs going forward," ended Tim Balcon, Chief Executive of Energy & Utility Skills.
The UK's offshore sector currently has an installed capacity of 1.3GW, providing electricity for more than a million households.
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