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Energy companies need more help if they are to exploit offshore options

February 18, 2009

Wind farms in the North Sea and the Thames Estuary appear to be promising ideas, but they will not fulfil their potential unless obstacles to progress are removed

The future of the energy industry in Britain could be poking out of a sandbank in the Solway Firth near Dumfries. The offshore wind farm’s oddly quaint name is Robin Rigg – taken from the seafloor shelf that supports its 60 wind turbines.

“The Rigg” should start providing the UK with 180 megawatts (MW) of renewable energy this year (enough to power 120,000 homes) and there are hopes to go further, particularly with the 1,000MW London Array proposal that would put 341 turbines in the Thames Estuary.

But the future is getting mired in the sandbanks. Britain is losing its appeal to renewable energy investors, which in turn is putting the growth in alternative energy jobs at risk.

Lord Smith of Finsbury, chairman of the Environment Agency, recently cited Shell’s withdrawal from the London Array last summer as an example of the “green drain” out of Britain. Shell’s rival, BP, also abandoned plans for UK offshore wind farms last year in favour of onshore projects in the United States. Lord Smith said that he wants to take a “long serious look” at why companies are doing this.

Jonathan Smith, of E.ON, one of the companies to stay with the London Array after Shell left, said that the oil company had the “same difficulty everyone always has with offshore”. That difficulty is planning delays and he is calling for government to streamline the process. “Local government delays planning by debating whether there is a benefit in projects. But with cases like renewables, where we’re helping to meet national targets, it’s not clear why there has to be so much debate.”

Mr Smith said that government also needed to improve access to the national grid for offshore wind projects and to update the subsidy scheme to reflect the difficulties of offshore work. “Under the ROCs [renewables obligation certificates] subsidy scheme, offshore gets 1.5 ROCs for generating the same amount of power that gets onshore one. But that increase is only now being brought in, and we think it needs to go to two,” he said.

Mike O’Brien the Minister for Energy and Climate Change, said that the Government had taken action: “The Planning Act 2008, the Energy Act and the Climate Change Act, all brought into law in October, changed planning. For renewable projects over 100MW, we have a new national body – the Independent Infrastructure Planning Commission. For projects under 100MW, we have the new Marine Management Organisation. Both consult with local authorities, but follow objective criteria set out by national government.”

The minister said that the planning process for renewable projects now lasts nine months on average, compared with two years before the legislation. “It can’t be quicker because there are others involved and many interests to balance. But we plan to bring in a policy statement eliminating the requirement to prove offshore wind farms are needed,” he said.

The minister said that he had sympathy with complaints from investors about offshore access to the national grid. The difficulty is finding private sector funding to lay the expensive high-voltage undersea cables. More than 100km could be needed between Scotland and England alone.

Yet Dieter Helm, Professor of Energy Policy at Oxford University, said that there were more fundamental issues to consider: “The claim that a wind farm can power 100,000 homes only applies when the wind is blowing continuously. In the first three weeks of January, there was very little wind generation in the whole of Germany because of high pressure. Offshore is an extremely expensive way of making marginal cuts in carbon emissions. Very few people think wind will work and there is no evidence whatsoever that we’re going to meet our emissions targets. The three climate change Bills are just fiddling – the bigger picture isn’t going well. We need an energy mix that includes more efficient sources, like nuclear and carbon sequestration.”

Professor Helm said that Shell and BP go to America because they know that investment opportunities are better there. “It is a bigger country, so onshore wind, which is cheaper for them, is more plausible. The subsidies and investment in research and development also help.

“The US was more attractive even before Obama. Bush’s spending on R&D made a more significant difference to CO2 reduction than the whole Kyoto agreement. Achieving Kyoto will not make one part per million of difference.”

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