UK: Offshore Wind Connection Coordination Could Save up to GBP 3.5 Billion

Energy regulator Ofgem and the Department of Energy and Climate Change (DECC) have published a report showing how more coordination in the development of offshore links and infrastructure can be achieved. In tandem, Ofgem has launched a consultation on potential changes to the regulatory regime for offshore transmission assets to take some of this work forward.

The Government’s Renewable Energy Roadmap suggests that by 2020, between 11 and 18GW of wind farm capacity could be built off Britain’s coast, compared to 1.6GW now. Future wind farms will be substantially larger and further offshore than existing projects. Instead of building individual connections for each development, they could be interlinked to lower the overall construction and operating costs. This would mean the offshore network could grow incrementally and efficiently.

This coordinated approach could reduce the cost of offshore connections by 8-15% (£0.5-3.5 billion – see notes to editors point 4). This would help meet the Government’s target of reducing the cost of offshore wind to £100 per mega watt hour (MWh) by 2020. It could also pave the way for an offshore network in the North Sea linking wind farms off Britain’s coast to other European countries.

Robert Hull, Managing Director, Commercial, Ofgem E-Serve, said: “Competitive tendering for the ownership of offshore power links is attracting new investment into the GB energy sector and saving customers money. We want to continue making savings, which is why coordinating links, where this can increase efficiency, is so important. We consider we can do this in a way that protects customers while providing stability and certainty for wind farm investors and prospective offshore transmission owners.”

Charles Hendry, Minister of State for Energy, said: “There are a number of ways we can reduce the cost of offshore wind, and this is definitely one of the most exciting.

“Linking up power cables between offshore wind farms could make some serious savings, so we would be crazy not to encourage it. These cables could even be linked up to European projects, increasing opportunities for trading electricity.

“I now look forward to seeing the package of measures announced today implemented, and to  see them build on the cost savings already being made through bringing in competition and new entrants into this sector.”

Guy Nicholson of RenewableUK said: “We welcome DECC and Ofgem’s work on coordination and Ofgem’s consultation. Early investment in planning, developing, permitting and constructing offshore transmission will help to deliver networks in the most cost effective manner. As well as connecting the 18GW of offshore wind generation RenewableUK expects to be operating by 2020, the offshore transmission regime can help reduce timescales and costs for both onshore reinforcements and interconnection with the rest of Europe.”

The measures announced today are intended to clarify how co-ordination can be achieved.

Ofgem would assess whether anticipatory investment is beneficial to the development of an efficient network. Approval would also depend on other factors. For example, developers and the system operator would have to show that there is demand for capacity to be built, and that there is a robust benefits case for customers.

In time, these changes could potentially be adapted to also help the development of a European offshore network if this does materialise.

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Offshore WIND staff, March 05, 2012; Image: britned