Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 284
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United Kingdom
1.3 Current risks faced by the Offshore
Wind sector
(a) Planning process
The UK Government’s complex planning
and permission process for big infrastructure offshore wind farms is currently
prolonging the UK economy’s shift to
renewable energy.
The National Audit Office has warned
that the newly formed Department of
Energy Security and Net Zero is behind
schedule in mapping out how to achieve
a rapid expansion of offshore wind and
nuclear power. The department and
its predecessors has been too focused
on mitigating the short-term pain of
rocketing energy bills to the detriment of
its long-term strategy, the National Audit
Office said.
The Chief Executive of Scottish Power
has highlighted that it would only take
two years to physically build an offshore
wind farm but the planning process is
fundamentally flawed, prolonging the
process to nearly 10 years. 26
In order to ensure that wind power is
able to rapidly replace gas in the system,
the UK Government recognises the need
to hasten the permitting process. 27
(b) Increased costs of production
Whilst offshore wind is one of the cheapest forms of new electricity capacity
for the UK, the cost of developing wind
farms had risen between 20 – 30 per
cent as the price of commodities such
as steel and copper has increased. This
will affect new-build gas stations, carbon
capture or nuclear too.
Wind farm developers in the UK such as
Sweden’s Vattenfall, Denmark’s Orsted
are demanding tax breaks from the UK
Government to offset rising costs or requesting enhanced subsidies as a sharp
rise in costs puts British projects at risk.
Since 2022, supply chain inflation has led
to a significant increase in wind turbine
prices, while rising interest rates have
pushed up financing costs.
Several companies that won contracts in
a large UK government auction in 2022
to build new renewable power generating capacity from 2024 have warned
that projects will be difficult to deliver at
the prices agreed.
Any delays or cancellations to projects
that were procured through the auction
would represent a big setback to the UK
government’s efforts to meet climate
targets and improve security of supply
by increasing domestic energy sources
following Russia’s invasion of Ukraine. 28
26 UK risks wasting huge wind power opportunity, energy boss warns | Financial Times (ft.com)
27 https://www.gov.uk/government/publications/british-energy-security-strategy/british-energy-security-strategy
28 Wind farm developers demand UK tax breaks to offset rising costs | Financial Times (ft.com)
