UK consumers are subsidising Danish and German wind energy companies, according to a report by the UK Energy Research Centre.
The study states that while the UK has ambitions to maintain its position as a world-leading player in offshore wind, it is importing 80% of equipment and services from abroad.
The report’s chief author, Dr Robert Gross, said: “The UK is not yet fully benefitting from being a world-leader in the field; in effect UK consumers are subsidising Danish and German wind energy companies.”
When offshore wind technology was first deployed in UK waters a decade ago, it was thought that capital and generation costs would fall substantially over time. This has not proved to so. Producing electricity has become more expensive, and offshore wind costs have risen dramatically.
The UKERC states that costs went up, in part, because of currency and commodity price movements, but also because of supply chain shortages and bottlenecks. Planning delays also added to developers’ budgets and undermined supply chain confidence.
However, the UKERC points out that UK offshore wind is still in its infancy and emphasises that many developing technologies go through a period where costs rise before they begin to decrease.
And it goes on to state that a plateau in costs may now have been reached.
The report concludes that government policies could do more to support technological innovation and to bring more of the supply chain to the UK. This, said Dr Gross, would offer “benefits in terms of reduced exposure to currency movements as well as building a ‘green’ manufacturing economy”.
But UKERC emphasises that if more of the industry is to locate to the UK, the government needs to provide continued and targeted support for docks and other facilities to bring infrastructure and services to the standard where they can handle large components made in the UK.
Dr Gross said: “At the moment, the UK’s support system offers a generous subsidy but may not do enough to build confidence in the companies making components, providing vessels or delivering support services. We could do more to support innovation and the smaller players lower in the supply chain.”