UK Energy Minister launches offshore transmission review

4C Offshore

UK Energy Minister Kwasi Kwarteng has announced the scope of a review into the existing offshore transmission regime to address the barriers it presents to further significant deployment of offshore wind, with a view to achieving net zero.

The directive is to ensure transmission connections for offshore wind generation are delivered in the most appropriate way, considering the increased ambition for offshore wind to achieve net zero. This will be done with a view to finding the appropriate balance between environmental, social and economic costs.

The Department of Business, Energy and Industrial Strategy (BEIS) stated that the current approach to designing and building offshore transmission was developed when offshore wind was a nascent sector and industry expectations were as low as 10 GW by 2030. It was designed to de-risk the delivery of offshore wind by leaving the project developers in control of building the associated transmission assets to bring the energy onshore.

However, in the context of increasingly ambitious targets for offshore wind, constructing individual point to point connections for each offshore wind farm may not provide the most efficient approach and could become a major barrier to delivery given the considerable environmental and local impacts, particularly from the associated onshore infrastructure required to connect to the national transmission network. Offshore wind is expected to play an important role in delivering net-zero emissions by 2050, and it is right that the framework for delivering offshore transmission connections is reviewed in the context of our increased ambition.

The review, launched by Minister Kwasi Kwarteng at a round-table meeting of MPs and other interested stakeholders, will bring together the key stakeholders involved in the timing, siting, design and delivery of offshore wind to consider all aspects of the existing regime and how this influences the design and delivery of transmission infrastructure. Its terms of reference, as agreed with delivery partners and stakeholders in the sector, focus on identifying tactical near-term actions that can be taken and early opportunities for coordination for projects in the short- to medium-term, plus a longer-term strategic review to develop a new regime that can ensure a more coordinated approach for the future.

The review will be led by BEIS with support from a range of government and Industry bodies and an industry expert group. The review will provide regular updates for external stakeholders and will hold roundtables chaired by Minister Kwarteng to ensure progress of the review is communicated and that there is early and regular opportunity for challenge.

An update will be provided by the end of the year, with a view to providing clarity for an enduring approach in 2021. Policy recommendations and proposed changes to the existing regime will be delivered through the usual consultation process.

The UK is currently leading the world in offshore wind in terms of capacity, with over 9.5 GW commissioned and more than 13 GW past the construction consent milestone. In the last twelve months, a number of developments have seen the cost of offshore wind fall and government support behind the technology increase as its looks to cut carbon emissions. Earlier this year, the UK's target for installed offshore wind was raised to 40 GW by 2030.

Last month, the Crown Estate opened the Invitation to Tender (ITT) Stage 1 for Round 4 of its offshore wind leasing programme. Round 4 is expected to facilitate the installation of at least 7 GW of new offshore wind capacity off the coasts of England and Wales. Round 4 was unveiled after seven extension projects with a combined capacity of 2.85 GW progressed to the award of rights stage.

In September 2019, the cost of offshore wind dropped around 30%, following the result of the UK government's latest Contracts for Difference (CfD) auction, which provides subsidy support for major renewable energy infrastructure projects. Projects are now being delivered for as low as £39.65/MWh. Successful projects included the
Doggerbank Creyke Beck A, Doggerbank Creyke Beck B, Doggerbank Teeside A, Forthwind,  Seagreen Phase 1 and Sofia offshore wind farms. The cumulative capacity of these awarded projects exceeds 5.4 GW.

As part of the sector deal, signed in March 2019, the government will hold another Contracts for Difference allocation round in 2021, with further auctions approximately every two years. Depending on the price achieved, these auctions will deliver between 1 and 2 GW of offshore wind each year in the 2020s.

For more information on the offshore wind industry in the UK and further afield,
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