The Development of Offshore Wind in UK Waters

16th September 2009Alastair Dutton

The Crown Estate

Is a landownerIs not a regulatorIs a public body – Crown Estate Act 1961Is not part of Government – but works closely

with Government, statutory bodies etc

Approx. 17,250km of foreshore (55%)

Rights to explore & utilise the natural resources of the continental shelf out to 200nm (excluding hydrocarbons)

Rights to lease areas for the generation of renewable energy within the UK’s Renewable Energy Zone & rights to lease areas for CCS/gas storage

The Marine Estate

The Territorial Seabed (out to 12 nautical miles)

Round 1 and 2 SitesUK is the world

leader in offshore wind

Total 8GW

>1GW operational by the end of 2009

Additional 1GW under construction by 2010

8 projects online

6 projects now under construction

Scottish Territorial Waters

•10 Sites awarded exclusivity agreements

• Total 6.5GW

• Scottish Government currently carrying out an SEA

Round 3: Why?The UK's 15% target is a share of the total EU target of gaining 20% of energy from renewable sources by 2020 - Climate change mitigation - Security of supply

In response, The Crown Estate launched Round 3

25GW by 2020

The Approach to Round 3Round 3 is designed to improve on some of the aspects that have hampered previous development rounds.

•Development in partnership with The Crown Estate to consentShared development risk. £70m co-funding.

•A zonal approach (zone is awarded to one development partner)Assess cumulative impact, engage holistically with stakeholders, supply chain confidence, purchasing power etc

•The use of the Marine Resource System (MaRS) tool to identify sites Robust, transparent and rational approach to site selection

•Early engagement with stakeholders over national and zonal issuesHighlight issues early, build long-term relationships

Round 3: ProgrammeDATE PROGRAMME

Mar 09 Bids received

July 09 Shortlisted bidders interviewed

End 2009 Preferred bidder for each zone identified and negotiation of zone development agreements

2010 onwards

Site selection within Zones and submission of planning applications for sites

2014-16 Construction begins

2020 25GW installed

Round 3 Key Challenges• Health and safety

– Rapid sector growth, further from shore• Consenting

– Zone assessment and planning, new IPC approach• Grid

– Onshore reinforcement, new OFTO regime• Supply chain

– Competing markets, investor confidence• Economics

– Marginal returns, technology risk

Round 3 Enabling Actions

The Crown Estate is taking action to promote Round 3:•Purchase of Clipper 7.5MW prototype turbine•Aerial bird surveys of zones•Development of the consents framework•Funding for key agency caseworkers•Marine mammal survey and research strategy•Funding to support the industry Aviation Plan•Engagement with relevant bodies to undertake strategic planning for offshore grid

Round 1&2 Extensions• Aim is to:

– Bring forward additional offshore wind capacity on an accelerated timescale– Fill the potential supply chain shortfall the tail end of Round 2 construction– Realise supply chain benefits of extending the construction programmes for the original sites, possibly sharing O&M and grid connections

• Projects will be eligible provided they have applied for statutory consents• The original project tenant or a new party can apply (either partnering the original tenant or with their consent)• Extensions appropriate for the scale of the original site• Leases (incl. rental and option fees) on same basis as Round 2• Subject to normal consenting process and environmental work (EIA / SEA)

Closing Remarks

UK offshore wind shows strong growth out to 2020

UK offshore wind shows strong growth out to 2020

The Crown Estate has made 40GW available to developers

The Crown Estate has made 40GW available to developers

There is a notable increase in market confidence

There is a notable increase in market confidence

Thank you Alastair Dutton, Round 3 Programme Manager

Alastair.Dutton@thecrownestate.co.uk

Ensuring Wind makes a full contribution to renewable

energy targets

Allan Taylor, Office for Renewables Energy Deployment, DECC

September 2009

Introduction

• The move to a low carbon UK:– The Transition Plan – delivering 18% emissions cuts to

2020

• A seven-fold increase in renewables:– The Renewable Energy Strategy – 15% by 2020– Wind’s contribution

• An Action Plan for delivery:– The Strategic role of Government– Financial support, Enabling deployment, Innovation and

Engagement

• Maximising benefits, Minimising costs

7x increase in renewables by 2020

Why are we trying to do it?

• Climate change:– Part of long-term low carbon energy mix– Technology support complementary to carbon price

and behaviour change

• Security of supply: – Diversity of fuel sources and reduction in dependence

on fossil fuel imports

• Business and employment benefits:– Up to half a million jobs generated in the UK

renewables sector and its supply chains, £100bn investment opportunities

• Legal obligation

How will we do it?

Action Plan to:• Finance deployment

• Enable deployment:

– Planning – Grid – Supply chain

• Innovate

• Engage

Co-ordinated and delivered by:• Office for Renewable Energy Deployment (ORED)

Renewables Financial Incentives

• Government decided on:– Renewables Obligation for large scale

electricity– FIT for electricity up to 5MW– Renewable Heat Incentive at all scales

• Energy Act 2008: powers on RO Banding, FITs and RHI

• RO banding from 1 April 2009• Announced RO extension to at least 2037

Planning for deployment

The key issues are…• Delays and inconsistencies in determining applications• Lack of evidence based understanding of opportunities

We are…• Making reforms to the National Planning Process• Making improvements to the local development control

process• Taking a strategic approach to regional planning• Supporting swifter delivery

National Planning Reforms

At a national level…

• Setting up the Infrastructure Planning Commission (April 2010)

• Designating National Policy Statements (including on renewables)

• Updating and combining Planning Policy Statements on renewable energy and climate change (CLG to consult in 2009)

Offshore Energy SEA

• EA Plan for some 25GW additional offshore wind generating capacity adopted

• This decision enabled The Crown Estate to proceed with Round 3 leasing process

• Publication of policy document: A Prevailing Wind - sets out key areas of planned and ongoing work such as on environmental impacts

Government Decision (Key points from announcement on 24 June):

New offshore transmission regime launched June 09

• Launched new regulatory regime for £15 billion of lines needed to connect 33 GW offshore wind.

• Competitive approach using tenders to appoint companies to build offshore grid in UK waters.

• Long term – 20 years rate of return – low risk assets.

• First tenders lunched in June are for £1.2 billion of existing assets. From 10/11 tenders will be for new build of offshore lines.

• Substantial interest from financiers and new companies to bid despite difficult capital markets.

Supplying for deployment

Supply chain development

– Creating market: RES policies: vision, finance, enabling

– Attracting business: MAS, UKTI, RDAs

– Strategic investment – e.g. ports, testing facilities: £405 million, including £120 million offshore wind

– working with the Sector Skills Council Energy and Utility Skills, and employers, to assist in preparations for launching National Skills Academy for Power in early 2010

– Office for Renewable Energy Deployment (ORED)

Innovation and Future Capacity

• Strategic approach– 2050 vision & technology families– Co-ordination of support bodies & unified ‘front-door’– Action plans for technology areas

• Incentives– Capital funding – ETF, ETI et al– Market pull – RO, RHI, FIT, RTFO– Marine, offshore wind, smart grids, - RES Funding

Offshore Wind – In Summary

• Offshore wind key engine for growth: targets & economic benefit

• UK No. 1 for installed capacity (598MW)

• >1GW by end of 2009

• £4b additional funding committed this year

• Construction on world’s largest OWF started (Greater Gabbard)

• UK has put in place:

– Long term policy and framework

– Financial incentives

– Long terms market for growth

• And… UK is not about targets, it’s about economic benefit ie. jobs

Thank you for your attention

Allan Taylor allan.taylor@decc.gsi.gov.uk

+44 (0)1224 254128