Offshore wind is one of the UK success stories of the past 10 years. Enabled by a combination of some coordinated government policy, from the carbon budgets in the Climate Change Act to Contracts for Difference and the formation of the Green Investment Bank, and strong collaboration, including excellent initiatives such as the Carbon Trust’s Offshore Wind Accelerator and the formation of the Offshore Renewable Energy Catapult.
We now have the largest installed base in the world, 45 per cent of European capacity and 33 per cent globally, delivering clean energy, and new jobs, stimulating the economy around Britain’s coast – in some of the areas where we need it most. The Committee on Climate Change’s latest scenarios – for the lowest cost paths to decarbonise our power system – indicate a rapidly growing role for offshore wind, from around 8GW today to at least 30GW by 2030. With the recent report from the IPCC on the benefits of keeping to a 1.5° target for warming by 2100, and the unprecedented rate of change this implies for the way we generate electricity around the world, the outlook for the offshore wind sector looks stronger than ever.
Over the last ten years offshore wind has moved from being perceived as a risky investment to a favourite for pension funds and other investors who need to be assured of long term sustainability and returns. The UK’s offshore wind portfolio was recently rated AA on the new Green Ratings from the Macquarie Bank Green Investment Group.
Driving this fast growing role for offshore wind in our energy system has been the rapid reduction in the cost of electricity it generates - from around £120/MWh in CfD auctions in 2015 to an average of £62/MWh in 2017, for capacity coming on line in the early 2020s. This makes offshore wind cost competitive with gas CCGT with a carbon price, and significantly cheaper than nuclear at £95/MWh.
This dramatic reduction in cost comes from a combination of confidence – leading to lower cost of capital - and innovation informed by experience. Developments including larger turbines, improved cables, higher voltages, reduced Operation and Maintenance costs – for example from new vessels and floating LIDAR – have been assisted by effective industry collaboration through the Offshore Wind Accelerator.
It is extraordinary to reflect on an order of magnitude increase in the power generated by a single turbine between the 1990s and those being built today – but more is coming, with more opportunities for innovation and cost reduction from Artificial Intelligence, combined with autonomous robotic maintenance and other developing technologies.