Viewpoint
The Offshore Valuation report puts forward some exciting development scenarios. Tim Helweg-Larsen, director of Public Interest Research Centre and chair of the Offshore Valuation Group, takes a look
The 25GW of offshore wind deployment that was announced through Round 3 in January this year was a landmark event. Yet, as the Carbon Trust has shown, installation of 25GW requires less than 0.5 percent of the UK seabed. What is the size of the UK’s total offshore renewable resource? And what might its value be to the British Isles?
It was with these questions in mind that, a year ago, Public Interest Research Centre - a not-for-profit think tank that researches energy and climate change - drew up the terms of reference for a study, and began forming a consortium to search for answers. The Offshore Valuation Group, as it is now known, is a group of organisations drawn from across Government and industry - with representation from major utilities, developers and the renewables supply chain as well as the Crown Estate, DECC and Energy Technologies Institute.
Earlier this year, the group commissioned a study from Boston Consulting Group - The Offshore Valuation - to explore what an optimum scale of offshore deployment would be in order to maximise value to the UK. The scope of the study was defined as taking in five technology types - floating wind, fixed wind, tidal stream, tidal range and wave - and to look at value in the long term, out to 2050. Data was provided by the Crown Estate on 78 different site types within UK waters, and a thorough literature review conducted to build assumptions about anticipated growth in demand for zero-carbon electricity in UK and EU over the next four decades. A series of cost curves were modelled, applying data on technology learning rates, and government forecasts of electricity prices in 2050.
The study’s findings have been startling. Using just a third of the UK’s full practical offshore renewable resource, by 2050 the electricity equivalent of 1billion barrels of oil could be generated annually - matching current levels of North Sea oil and gas production and making Britain a net electricity exporter. 145,000 new British jobs could be created by this industry, and £62billion raised in annual revenues, the majority of these from exporting electricity to Europe via new grid interconnections. Cumulative CO2 reductions of 1.1billion tonnes would be achieved by the UK under this level of deployment over the next 40 years. And using DECC central electricity price forecasts, the Net Present Value of the infrastructure created by 2050 would be £36billion.
The Offshore Valuation is meant to be neither predictive nor prescriptive, but simply illustrative. It contains three scenarios for potential deployment by 2050: one in which variable renewables comprise 50 percent of the UK grid mix (78GW of installed capacity); the second, central scenario, profiled above, in which the UK generates sufficient power from offshore sources to become a net electricity exporter (169GW); and the third, in which the UK becomes a net energy producer (406GW). All of these scenarios anticipate deployment beyond what has currently been planned, but less than the full practical resource - which if exploited, would satisfy current UK electricity demand six times over.
None of these scenarios will become reality without intervention. The report identifies a range of key enabling steps needed should the UK decide to adopt any of the pathways. These include ensuring that current R3 interconnections are made super-grid compliant, to anticipate the construction of a larger North Sea grid; that both government and industry continue to support the development of a UK supply chain; and that the UK sets an ambition to become a net electricity exporter.
We have been encouraged by the reception the Offshore Valuation has so far received. The new Secretary of State for Energy and Climate Change, Chris Huhne, spoke supportively of the report in a recent debate in the House of Commons, stating: “I was excited... by the report on the potential for renewable energy around our shores. It is right to point out, as that report did, that in due course we might once again be a net energy exporter, as we were at the peak of oil and gas production in the North sea. That is a very exciting prospect.” We hope that the Offshore Valuation’s findings will continue to generate excitement, discussion and debate over the months to come.
Copies of the Offshore Valuation can be downloaded from
www.offshorevaluation.org
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