June 12, 2013 / 1:00 PM / 4 years ago

COLUMN-UK shows offshore wind can flourish at a price: Gerard Wynn

By Gerard Wynn

LONDON, June 12 (Reuters) - The majority of British offshore winds farms are winning planning permission and proceeding to construction, suggesting that a large portion of those with outstanding applications will be built.

Britain is the world leader in a technology that is expected to account for a rapidly rising share of global wind turbine demand.

The country has embraced the offshore technology both because of its strong wind resources and a desire to avoid the planning objections that plague onshore wind projects on the crowded island.

British planning data shows developers are securing permission at far higher rates than for onshore wind, then proceeding to construction and operation at a similar or faster speed.

The data shows that offshore projects are successfully navigating the planning system; that subsidies are providing adequate support; and that the supply chain, workforce skills and finance are sufficiently developed.

This suggests that, if anything, the subsidy scheme can be scaled back faster than planned (a 5 percent cut in green certificates awarded per unit of power from 2015/16).

The evidence is positive for the global industry, so long as countries provide similarly high levels of subsidy support.

It remains to be seen whether the technology is cost-competitive, however.

At present Britain is paying a large premium for more planning approvals, given that offshore wind receives more subsidy than low-carbon alternatives including onshore wind, biomass and energy from waste.

That is before accounting for the extremely high sub-sea cable connection costs.

PLANNING PROCESS

The British planning process involves a series of hurdles, starting with an application and subsequent approval or refusal.

Refused applications have the option of going to appeal for a second opinion by an independent inspector.

Developers may withdraw their application before a decision if local objections appear overwhelming.

If a scheme is approved, developers will assess the cost of any attached conditions and whether it is affordable.

They will also assess the cost and availability of finance, meaning schemes may be abandoned at this stage.

Alternatively, the project will proceed to construction and finally operation, when it begins to generate power.

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Chart 1:

Chart 2:

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PERMISSION

So far, some 73 percent (by size, in megawatts) of offshore wind farm planning applications have been approved, where a decision has been made, with 6 percent rejected, and the rest either withdrawn or taking an alternative planning route.

Data for the outcome of refusal appeals is incomplete and so these rejections are assumed to stand.

By comparison, some 50 percent of onshore wind farms have been approved and 25 percent refused permission. (see Chart 1)

Offshore wind farms have had to wait slightly longer for a planning decision, with an average 664 days between planning application and decision, compared with an average 424 days for onshore projects, the data shows.

Once approved, offshore projects proceed to construction and commissioning at a similar rate to onshore wind. (Chart 2)

So far, two thirds of approved offshore wind projects are already operational or under construction, compared with a slightly smaller proportion for onshore schemes, with the rest awaiting construction and a very small minority abandoned.

The data shows that these large, challenging projects do not seem to be struggling technically or financially to achieve completion.

ON TARGET

At present approval rates, some 12,272 megawatts of all proposed British offshore wind projects (16,907 MW) would get planning permission.

And applying experience to date, the vast majority (98 percent) of approved projects would proceed to construction, rather than be abandoned, or some 12,027 MW.

That is close to the amount of offshore wind projected by Britain by 2020, at 12,990 MW, under a renewable energy plan that it had to prepare under a European Union renewable energy directive.

It should be noted, however, that offshore wind is presently generating less power than the government anticipated three years ago, from a higher than expected capacity.

WORLD GROWTH

The offshore wind industry is expected to be the main source of global growth in turbine demand in the coming years.

Spanish turbine maker Gamesa in February projected sluggish growth in annual installed wind power capacity.

Within that picture of anaemic growth, however, offshore wind would account for a rapidly rising share, at 18.9 percent of the annual market by 2015, up from an estimated 11 percent last year, and a near doubling in annual installed megawatts.

The onshore wind market, by contrast, would shrink through 2015, Gamesa projected.

In the EU alone, member states project some 44,077 MW of offshore wind by 2020 (in their renewable energy action plans), compared with just 5,326 MW installed by the end of last year.

Outside Europe, strong growth is expected in China which has a target for 20,000 MW of offshore wind by 2020, according to leading turbine maker Vestas.

Britain's experience so far shows that if enough money is thrown at the sector then it will deliver. Quite rightly, the country is also spending on technology development, aiming for rapid cost reductions.

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