The UK is about to engage in a grand exercise to develop a series of industrial strategies. When it comes to offshore wind, we can expect new aspirations for UK content. Having developed the methodology by which UK content in offshore wind is measured, I take more than a passing interest in the subject.
A big concern of mine is that the current ‘vision’ of 50% UK content for UK offshore wind farms, set in 2012, will be raised to unrealistic levels. When the last offshore wind industrial strategy was published in 2013, the ministerial foreword cited the 70% UK content in oil and gas, so don’t be surprised if this figure gets another airing.
If another sector is genuinely providing more local content than offshore wind then a government has every right to use it as a benchmark. But in this case, it is important to compare like with like. If the government is looking across the electricity generation sector and wants to compare offshore wind with gas or nuclear generation, it needs to use the same measure, which is the UK content of the generating company’s lifetime expenditure. If we assume that the UK content in its offshore gas industry is accurate at 70%, we also have to consider how much of our gas is imported, which according to British Gas, is 55%. With fuel costs about 80% of the lifetime undiscounted expenditure on CCGT generation, 50% UK content could probably only be achieved if the UK content in imported gas was more than 10% (please get in touch to talk through the calculation).
But can the UK do better than 50% for offshore wind? The Offshore Renewable Energy Catapult recently published a study that suggested we could reach 65% in 2030. This figure was based on some work I did in 2014 which considered the practical limits of UK content, recognising that we don’t have much economic capacity to build large vessels, do not mine iron or copper and have little prospect of disrupting the global supply chains for large electrical components such as transformers. The 65% figure supposes that we can reach our full potential, that is with all turbines, cables and substations made in the UK and all components installed by UK contractors. In a rapidly expanding UK market, the new inward investment that could in theory make this happen, but despite the good backing from the government, this is an unlikely scenario.
The UK has some excellent companies in the offshore wind sector and there is room for more, but let’s get real about the opportunity and make sure that all sectors are judged on a level playing field.