Breaking News:

High Interest Rates Could Slow Down the Energy Transition

Supply Chain Bottlenecks Threaten UK’s Offshore Wind Dreams

Britain risks failing to to meet its offshore wind ambitions, unless over £100bn is invested across the sector by the end of the decade, an industry body has warned.

Renewable UK has urged the government to invest more in manufacturing and help ease supply chain bottlenecks, to unlock vast amounts of private capital at risk of moving to rival markets such as the EU and US - which have more favourable subsidy climates.

It has calculated the country needs to invest £17bn per year in private sector and public investment across the industry every year until the end of the decade to meet the government's 50GW offshore wind target in the energy security strategy.

It has also criticised the size of funding for the latest allocation round for new offshore wind projects, currently set at £205m, and has called for the government to spend £4bn boosting ports for floating offshore wind to revive domestic industry.

Luke Clark, director of industrial development at Renewable UK, told City A.M. that rising demand for wind turbines had to be met with rapid delivery, which required a huge number of new manufacturing facilities.

For some components such as foundations, the group calculated there needed to be four times the number of factories across Europe than there are today to meet demand. Related: Oil Ticks Up After EIA Confirms Huge Crude Draw

He argued the government needed to shift from its emphasis on driving down generation prices, and provide more investment opportunity for renewable infrastructure - such as upgrading ports for floating offshore wind.

"If we want to see new manufacturing investment come forward, we need to create a market with sustainable prices in which supply chain companies can flourish and boards have confidence in future returns. For too long our market has been heavily focused on cutting  prices, rather than supply chain development. We now need to rebalance the equation," Clark said.

ProjectGeneration (MW)
Triton Knoll857
London Array630
Gwynt y Môr576
Greater Gabbard504

RWE's largest UK wind assets (Source Rwe)

German energy giant RWE also told City A.M. that the the global supply chain is "not currently at the scale to meet UK, EU and wider offshore wind demand" over the next ten years.

RWE warned that "scarcity in the current supply chain is creating bottlenecks, delays and large increases in contract prices," with investment costs rising 30-40 per cent for UK and European offshore projects between 2021-2023.

This was putting immense pressure on producers aiming to build new turbines to keep up with growing demand.

"The UK government has ambitions to increase offshore wind by nearly fivefold, to 50 GW by 2030 however we have seen global commodity price shocks, the Ukraine war and trade barriers putting ever-increasing pressure on developers. It needs to make sure the mechanisms are in place to support industry to deliver offshore wind in the most effective way," a spokesperson said.

RWE has invested in multiple wind developments in the UK including the 857MW Triton Knoll farm off the coast of Lincolnshire, and the 576MW Gwynt y Môr farm off the Welsh coast - as part of a 3.9GW portfolio.

It has a pipeline of six new projects, including assets at the upcoming Dogger Bank off the Humberside coastline, which is set to become the world's largest offshore wind farm.

However, it is now calling for a clear strategy for offshore wind growth for projects and supply chain to help meet its investment ambitions.

"RWE believes it's critical that our supply chain is sufficiently profitable to invest in the future infrastructure and jobs required to meet our growth aspirations," the spokesperson added.

A breakdown of the UK's upcoming vast offshore wind pipeline (in MW) which risks supply chain shortages

Concerns over the rollout of offshore wind developments follow escalating issues for Siemens Gamesa, the renewables arm of European giant Siemens Energy.

Its turbines are used more than any other supplier's in Europe, but has warned issues with one of its new models could take years to resolve - following reports of small cracks and component failures.

Siemens Gamesa's wider pipeline has also been severely hampered by higher costs of material, transportation and supply chain issues.

The government has been approached for comment.

By CityAM

More Top Reads From Oilprice.com:

Back to homepage


Loading ...

« Previous: Europe To Face Offshore Wind Tower Deficit By 2028

Next: Wind Lobbyists Push UK Government For More Subsidies »

City A.M

CityAM.com is the online presence of City A.M., London's first free daily business newspaper. Both platforms cover financial and business news as well as sport and… More