Today’s announcement of a £300 million injection into the UK offshore wind supply chain by Great British Energy is obviously welcome and very much needed.
To start with, it sends a very clear message to industry that the UK government really wants offshore wind. In these turbulent economic times where some governments have turned an ideological gun on renewables, this political demand is vital and gives good cause to be optimistic about CfD AR7 budgets and beyond.
The investment also demonstrates the importance that sustained support for the industry is linked to the economic benefits it creates. It is needed, not because the UK is an inherently more expensive place to do business than most European countries but because to create a step change in the UK supply chain requires major capital investment. Such investment carries a risk that the private sector cannot bear alone. New UK investments have foundered in the past because, saddled with greenfield investment costs, they carried a major risk of being uncompetitive in the market. While the globalisation of offshore wind inevitably brings competition from all over the world., there is still a value in high quality domestically produced goods and services. A world where tariffs rise and fall with political whim, the risk profile of producing in the world’s largest offshore wind market outside China has obvious attractions.
While the money is welcome, there are issues that must be addressed. One such issue is that administering a major grant programme is not a simple task and certainly one that an embryonic organisation such as Great British Energy will need to develop into, learning lessons from other organisations. An option to bypass this risk is to use an existing structure to run the programme. DESNZ has experience of running the OWMIS and FLOWMIS schemes. Independent options are The Carbon Trust and the Offshore Wind Growth Partnership.
We look forward to seeing how the investments will be directed, and to the UK supply chain developing as a result.
