Offshore wind farm plans could bring huge opportunities to Wales

by Chris Kelsey - 11/01/2010

"Yesterday the Government announced the winners of leases to develop nine offshore wind farm sites. Chris Kelsey assesses what the development could mean for Wales."

IT would be difficult to overstate the importance of the Crown Estate’s announcement of the consortia selected to develop the next round of offshore wind sites.

The third round in the process of leasing sites on the seabed around the UK to wind farm development represents a real step change for Britain’s renewable energy sector.

The offshore wind farms already operational in UK waters account for almost half the world’s 1,500 megawatts (MW) of offshore wind capacity (688MW).

The nine zones selected for development under Round 3 will add 25 gigawatts (GW) to that.

Add to that a further 7.2MW under development or in planning, and additional sites projected in Scottish territorial waters, and the UK’s total offshore wind capacity could reach around 40GW.

Compare this to the UK’s current average demand for electricity of 44GW and overall generation capacity of 80GW and you can see how significant a development it is.

Britain’s offshore wind industry is already the largest in the world. This level of growth will ensure that it continues to attract the lion’s share of investment in offshore wind.

The British Wind Energy Association estimates that offshore wind could attract around £120bn of private sector investment. A significant proportion of that must inevitably come Wales’ way.

Two of the development sites to be leased under Round 3 lie off the coast of Wales.

The 1.5GW Bristol Channel site, to be called the Atlantic Array and developed by RWE Npower Renewables, a subsidiary of RWE Inogy, lies about midway between the Welsh and English sides of the channel and stretches from a point south of Swansea Bay to one approximately south of Saddle Head in Pembrokeshire.

The 4.2GW Irish Sea zone, to be developed by a consortium led by Centrica Renewable Energy and involving RES Group, occupies a paintbrush shaped area of seabed halfway between Anglesey and the Isle of Man.

Between them they account for more than a fifth of the 25GW capacity of the nine Round 3 zones.

Because offshore wind currently accounts for just 1% of installed wind farm capacity around the world, there has so far been little incentive for suppliers to invest in offshore manufacturing capacity, according to the BWEA.

But with Round 3 alone representing a 16-fold increase in that capacity, all that is about to change.

That could have a significant benefit for the industry, and for consumers, because a shortage of competition in the supply of turbines – the market is currently dominated by two manufacturers – means the cost of installed capacity has doubled, from £1.5m per MW for the early Round 1 projects at the beginning of the last decade to £3.1m today.

The BWEA expects another four turbine manufacturers to enter the market by 2015, when construction of the Round 3 sites should be under way after planning consents, grid connections and final investment decisions have been completed.

Turbine supply is dominated by continental European manufacturers, but the rapid expansion in demand unleashed by the Round 3 projects could give an opportunity for a British manufacturer to enter the field. Even if the continental firms continue to dominate, they may decide to locate manufacturing plants close to the ports that will service the offshore construction sites.

Besides turbines, there are opportunities for construction of installation and service vessels, cables to link the wind farms to the shore, and components such as gearboxes, bearings, and castings.

The BWEA considers that the creation of coastal manufacturing hubs will be key to attracting investment, much like Aberdeen during the development of the North Sea oil industry.

The Association of British Ports (ABP) greeted the announcement of the Bristol Channel lease eagerly, saying its ports at Swansea and Port Talbot were “ideally situated to support the consortium and offshore wind development in the Bristol Channel zone.”

It said design proposals had already been drawn up for the development of facilities for the construction, operation and maintenance of the wind farm.

Port director Matthew Kennerley said: “ABP’s South Wales ports are in a fantastic position to serve some of the biggest offshore wind developments in the Bristol Channel and ABP is working to make sure the big names base themselves here.”

Milford Haven Port Authority must also be considering the opportunities presented by the Bristol Channel site while Holyhead could be in a similar position in relation to the Irish Sea zone.

Estimates for the number of jobs that could be created by Round 3 projects run as high as 70,000.

In a study commissioned by the BWEA, which envisaged 20GW of offshore wind capacity being constructed by 2020 with 70% of design and manufacturing taking place in the UK, it was estimated that 45,000 jobs would be directly created, with a further 14,000 by onshore wind growth.

This broke down into almost 21,000 design and manufacturing jobs, 10,500 in construction and installation and 6,700 in operations and maintenance.

Engineering, manufacturing and construction businesses across Wales could all potentially benefit from this windfall, assuming they can find and train the skilled workers needed in this new industry.

There are opportunities for Welsh universities too, for example in helping to work out how to integrate offshore electricity generation with large-scale power generation on the grid.

Even Wales’ legal services sector has already benefited from Round 3 business, with Cardiff lawyer Michelle Thomas, a partner at Eversheds, leading the team that advised RWE Npower Renewables on the Bristol Channel tender, as well as the Forewind Consortium developing the 9GW Dogger Bank zone in the North Sea and Eneco on the West Isle of Wight site.

There are of course still possibilities that individual projects will be held up by planning objections. But with most of the sites well out to sea the visual impact arguments that have dogged some earlier offshore developments are less likely.

And green groups on the whole favour wind farm development as necessary to combat the biggest environmental threat, global warming.

Anne Meikle, head of WWF Cymru, said: “Renewable energy has a critical role to play in helping Wales reduce our climate change emissions. With careful planning we can fully tap into offshore wind while also safeguarding the nation’s tremendous marine environment and species.

“The UK’s plans are the most ambitious of its kind in the world and will be a huge boost to the green economy, creating new jobs in the development of clean energy and helping to power millions of homes.”

More Details: http://www.walesonline.co.uk/news/wales-news/2010/01/09/offshore-wind-farm-plans-could-bring-huge-opportunities-to-wales-91466-25558794/