Market News

 December 10, 2007
U.K. aims for 33GW of wind

 (By David Ehrlich) - The U.K.'s energy secretary said all of the country's homes could be powered by offshore wind by 2020. The U.K. announced plans today to go big with offshore wind to the tune of 33 gigawatts by 2020.

The draft plan would allow companies to develop up to 25 GW of offshore wind, in addition to the 8 GW already planned.

U.K. energy secretary John Hutton said "if we could manage to achieve this, by 2020 enough electricity could be generated off our shores to power the equivalent of all of the U.K.'s homes.

That would require approximately 7,000 turbines. Hutton made the announcement at a European energy conference in Berlin.

"This could be a major contribution towards meeting the EU's target of 20 percent of energy from renewable sources by 2020."

The EU's target includes fuel for electricity, heat and transport. The European Commission is due to propose how that target should be apportioned between member states in January.

The U.K. had a first round of proposals for offshore wind farms in 2001, which comprised a number of small demonstration projects, with a second round in 2003 including larger scale projects in the Thames Estuary, the Greater Wash and the North West.

A total of 8 GW of capacity could be operational by around 2014, including the 1 GW London Array, the largest planned offshore wind farm in the world.

Today's announcement calls for a possible third round, and further regular rounds, that would open up most of the U.K.'s continental shelf to large scale development.

"The U.K. is now the number one location for investment in offshore wind in the world and next year we will overtake Denmark as the country with the most offshore wind capacity," said Hutton.

"I want to ensure the U.K. remains one of the best places for renewable business."

The draft plan covers the territorial waters and adjacent areas where the water depth is 60 meters or less but excludes Scottish and Northern Irish territorial waters, where there is limited scope for development.

Hutton said the proposed expansion would be subject to the outcome of a Strategic Environmental Assessment.

The government's Department for Business, Enterprise and Regulatory Reform said the amount of electricity from renewable sources in the country has doubled to almost 5 percent since the introduction of the Renewables Obligation in 2002.

The BERR, which will handle the environmental assessment of the offshore wind plan, said current forecasts see a further tripling of renewable energy in the U.K. to around 15 percent by 2015.

"Our trajectory on renewables is beyond question. They are as central to our future low carbon economy as chimneys were to the industrial revolution and road building following the invention of the mass produced car," said Hutton.

The BERR said the government is also working on a regulatory framework to ensure that all offshore projects can connect to onshore electricity transmission and distribution networks quickly, securely and as cheaply as possible.

"We welcome the Government's effort to place wind energy on a sound footing and promote Britain into a leader in this sector," said Maria McCaffery, CEO of the British Wind Energy Association.

"This expansion will mean that by 2015 the U.K.'s offshore market will be twice the size of any other national offshore wind market."

In round 1 of the government's call for offshore wind proposals, the U.K. allocated 14 lease options totalling just over 1 GW. Five round 1 projects --- Scroby Sands, North Hoyle, Kentish Flats, Barrow, and Burbo Bank --- as well as demonstration turbines at Beatrice Oil Platform and Blyth, are now operational, totaling 404 megawatts.

Six more round 1 projects are under construction, accounting for an additional 583 MW.

Round 1 full term leases are for 22 years, plus 1 year for removal and decommissioning.

In round 2, leases were handed out to 15 commercial scale projects totaling 7.2 GW. For the largest round 2 projects, the full term lease is for 50 years including decommissioning.

The government expects to announce the competitive process and commercial terms for round 3 of its offshore wind farm lease options in early 2008.

The offshore energy plan also includes consideration of offshore oil and gas licensing and hydrocarbon gas storage licensing in U.K. waters.