The Blog - Wind energy market analysis

Posted 26/07/2018

Frances Salter

    

Great news for UK offshore wind: but where's the support for onshore?

This week has seen positive news for UK offshore wind, reassuring those who have questioned whether the UK government appreciates wind’s economic potential. So how long will it be before the government acknowledges the potential for onshore wind too?

Onshore wind blog for LinkedIn

 

New support for offshore

This week, the Department for Business, Energy and Industrial Strategy announced that the government has plans to more than double the UK’s offshore wind capacity through further rounds of Contracts for Difference auctions. These auctions will take place every 2 years throughout the 2020s, with the first taking place in May 2019. The UK already has over 7.7GW of installed offshore wind capacity, and a further 7GW in development or being built. The new plan could support the construction of up to 16GW of new offshore wind farms, generating approximately 20% of UK power. Clearly, this is excellent news for UK offshore. 

Renewable UK welcomed the news, with Chief Executive Hugh McNeal commenting that it represents:

‘a ringing endorsement by the government of our world-leading offshore wind industry and its ability to deliver for UK businesses and British industry. Boosting our ambitions for offshore wind is a win for consumers, as offshore wind is now one of the cheapest options for new power in the UK.’

 We’re pleased to see that this government is willing to make major investments in offshore wind, having seen its economic and environmental potential.

So where's the support for onshore?

However, this is still a mixed result for onshore. The government has now given its backing to onshore wind on remote islands, but onshore wind on the mainland is still ineligible for subsidies. This is despite warnings from figures such as Conservative peer Lord Deben, and Keith Anderson, the chief executive of Scottish Power, who recently described the government’s stance as ‘completely bonkers’, adding that “2018 has to be the year we secure the future of onshore wind.”

What’s more, the government’s latest annual energy statistics, published July 2018, show that wind power currently delivers half of the UK’s renewable energy output: 14.8%. Of this, 8.6% came from onshore and 6.2% from offshore. Given this significant contribution of onshore to the power mix, it makes even less sense to exclude new onshore wind projects from the market. 

Back in 2014, Renewable UK warned of the need for politicians to realise the economic significance of wind, through publishing a report by BIGGAR Economics about the contribution of onshore wind to the UK economy. The 2014 election created uncertainty for the wind sector as, whilst some of the parties may not be fans of wind power, they would be foolish to ignore its economic potential.

The ‘Onshore Wind: Economic Impacts In 2014’ report said 69% of total spending on onshore wind farms in the UK stays in the nation, including 98% of spending on developing a project and 87% of spending on operations and maintenance. Of construction spending, only 48% remains in the UK because most developers have to get their turbines from suppliers based in mainland Europe.

However, even in that case, not all of that remaining 52% of construction spending is lost from the UK, as those turbine manufacturers will often use parts from UK companies. Renewable UK said this is a success story that is often ignored by parties including the Conservatives and UKIP.

Maria McCaffrey, of RenewableUK, said the contribution of onshore wind to the UK economy has grown by two-thirds over the last two years, which is a rise of £358m.

“Despite these facts, onshore wind projects are under threat from misguided Tory and UKIP policies aimed at stifling their development, blatantly disregarding rational economic evidence and consistently high levels of public support,” she said.

Even after this warning, the government ended subsidies to onshore wind in 2015 – so we’re pleased to see at least a small measure of support return in 2018, by allowing onshore on remote islands. But until the government supports mainland onshore wind, how much economic and environmental potential is being lost?

 Download the report: 18 Predictions for Wind Investors in Europe

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