This year has been a difficult one for the offshore wind sector globally. The delivery of projects has been hampered by supply chain issues and the use of the words “impairment of assets” has become an increasing part of the terminology. In addition, in a number of countries there has been a reduction or cancelling of offshore auction rounds. This reflects the binary political decisions in respect of the response to climate change. There are still many countries pursuing material reductions in carbon emissions year on year, while others are now run by those that wish to defer investment. It is still the case, however, that offshore wind represents one of the largest technology opportunities to supply renewable electricity at scale and thereby effect system change.
In the UK, there has been consistent support for the further deployment of offshore wind. The Conservative administration placed offshore wind at the heart of its response to climate change with significant targets set to be achieved by 2030. The new Labour Government, which came into power last summer, has doubled down on the importance of the delivery of offshore wind. Ed Miliband is a passionate advocate for the sector and has come into power with a focus and zeal to support climate change initiatives. The new ambition is to achieve installation off at least 43GW by 2030.
The UK’s Auction Round 6 was not a great success for offshore wind with just over 3GW of new offshore capacity being supported. This was equivalent in scale to the number of successful bids for solar technology. This clearly does not reflect either the former or current ambition of the UK Government. The offshore sector offers significant opportunity to develop UK supply chains both in the delivery of the offshore wind farms themselves, but also in relation to the associated grid infrastructure. The auction round occurred at a time when the incoming Labour Government was just trying to get its feet under the table. It was a disappointment in terms of scale.
The new UK Government has provided a new impetus in seeking to deploy as much new offshore wind capacity by 2030. The government has looked to reform the auction rules to see whether they can relax certain rules to allow more projects in to bid. It is anticipated that this would considerably increase the pool of eligible projects and thus allow the Government to set more meaningful objectives regarding the scale of ambition. There have been a number of key reforms to the regulation of grid, including the formation of the National Energy System Operator (NESO). It has been seeking to flex its forward thinking but appears to be heavily influenced by establishing zonal structures. This on the one hand, could genuinely seek to ensure that appropriate investment was targeted at the right time. There are however concerns that it is potentially the slippery slope to zonal pricing and all the consequences that may have for developing new projects in different parts of the UK. It is also evident that grid remains one of the key constraints to the decarbonisation of our energy system. Grid connection dates for major offshore projects continue to be pushed back. The “Strategic planning” post awards such as ScotWind have not resulted in reductions in grid connection times.
It is however clear that grid remains a focus of both the government and Ofgem and there are genuine attempts to seek to accelerate the establishment of a grid system that can manage low carbon generation sources. In addition, the Scottish Government is looking to speed up decision making in relation to grid infrastructure and has recently set out a 12 month time period for decision making in respect of key grid projects. This emphasises the particular drive and ambition that all parties seem to have in delivering an enhanced grid.
It is against that background that the further deployment of offshore wind in the UK faces significant challenges. As identified earlier, there have been a number of international challenges to the deployment of offshore wind and there continue to be concerns regarding the ability on the supply chain to deliver at the scale of the ambition. In addition, given the international concerns regarding offshore wind, it is now even more imperative that the government does not introduce measures which create a greater risk going forward. A live example of this is zonal pricing. These would give rise to very significant concern on behalf of the development community.
On a bright note, Flotation Energy received both consent and achieved a CfD for its innovative Green Volt floating project off the east coast of Scotland. This is a major milestone for floating wind and will further help to develop this critical sector. It is clear that, without the development of floating technologies, there will be a constraint to the overall UK ambition. Increasingly shallower waters are facing cumulative challenges and the ability to locate development within deeper waters will be important to meet future scales of ambition.
The next year is going to be a very important one for the offshore wind sector and it is clear that what developers want is as much certainty and stability as possible. This in turn allows developers to properly plan and engage with the supply chains to ensure that viable projects continue to be brought forward in UK waters. The opportunities are significant, but meaningful delivery is now the key objective of the government. It is also of note that we now have Scottish, Welsh and UK Governments which are very broadly aligned in relation to offshore wind. It is likely to be the critical technology in achieving 2030 ambitions and it is now up to the government to ensure that a proper framework is provided and that this provides the stability for the forward investment required to make this investment happen.
Shepherd and Wedderburn is headline sponsor of All-Energy, the UK’s largest renewable and low-carbon energy exhibition and conference, taking place in Glasgow on 14–15 May 2025. Visit the All-Energy hub to find out more: shepwedd-allenergy.com.