Offshore and Onshore Wind UK Market Outlook Rebecca
Offshore and Onshore Wind UK Market Outlook Rebecca Williams, Offshore and Onshore Lead
About Renewable. UK was formed from the British Wind Energy Association (est. 1978 – 40 years ago). Over time we evolved from a group of engineers, academics and enthusiasts to a professional association with staff and a dedicated Westminster office and staff in London, Wales and Northern Ireland. Our aim is to ensure increasing amounts of renewable electricity is deployed sustainably across the UK, and to support our members to win business in renewable markets around the world. We have two, equally important, purposes which flow from this aim: • To make sure that renewable energy plays a leading role in powering the UK, with Renewable. UK members at the heart of this delivery, whether as developers, as members of the supply chain, or in any other capacity. • To bring demonstrable benefits to our members from their membership of Renewable. UK. This means providing them with the highest possible quality services and information, supporting them in any way we can to do more, and better business.
What is happening in the energy market?
The UK Market Installed wind capacity UK over time MW Renewable. UK Project Intelligence - installed wind capacity • Installed offshore and onshore capacity now 18. 4 GW • Powering over 12 million homes • World leading offshore wind sector • Exporting to every continent apart from Antarctica • Largest single renewable source in UK mix
The 3 Ds • Decarbonisation • Decentralisation • Digitalisation
UK Market Scenarios: Capacity vs RES Deployment in the 2020 s Generation from our new RES deployed High Scenario Forecasts vs. Generation Gap (FES Data) • Generation Gap from decommissioning Coal, Gas and Nuclear plants reaches almost 120 TWh by 2030 • Total power demand is expected to grow by + 30 TWh from current levels in the next 12 years • High RES deployment will be able to fill the energy gap, but falls short when we include demand growth forecasts 160 140 120 TWh 100 Including Demand Growth Estimates (TWh) Gap TWh 80 Marine (FES 2 Degrees) (TWh) Offshore Wind (TWh) 60 Onshore Wind (TWh) 40 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Renewable. UK analysis of FES data and RUK Project Intelligence. Includes new nuclear, with Hinkley Point C from 2026. Offshore and Onshore generation based on our High Capacity Deployment scenarios and National Grid’s empirical load factor estimates per year for these technologies
UK Market Forecast: Renewables Incumbency in the 2030 s Chart Title 2032 Electricity Mix scenarios 160 000 • In every major scenario to 2032, renewable generation will be the major source of electricity generation. • To meet the fifth carbon budget, electricity is expected to be at a grid intensity of 50 -100 g. CO 2 e by 2032 • The main scenarios have modelled this with combinations of nuclear and renewables 140 000 120 000 100 000 80 000 60 000 40 000 20 000 - 2016/17 FES 2 D FES CP Other Thermal CCC High nuclear (MW) RES Renewable. UK analysis comparing FES, CCC scenarios CCC High renewables (MW)
Some see much greater decentralisation “The idea of large power stations for baseload is outdated” Steve Holliday, ex-CEO National Grid: 5, 0 4, 0 3, 0 2, 0 1, 0 2017 2016 2015 2014 2013 2012 2011 0, 0 Micro CHP Hydro AD Wind PV Total installations • • Thousands 6, 0 Installed Capacity (GW) Total EV demand 1 000 900 800 700 600 500 400 300 200 100 0 Pre 2010 Thousands Number of installations Feed-in Tariff Deployment: Fewer EVs than in Two Degrees but larger and more energy demanding 50 45 40 35 30 25 All cars sold are PEVs post 2040 20 15 10 5 0 2015 2020 2025 Two Degrees 2030 2035 2040 2045 2050 Slow Progression There are nearly 1, 000 Fi. T deployed units, >99% under 100 k. W Increasing EV demand will be matched by household generation (solar) and storage – e. g. vehicle to grid or Tesla Power wall – as battery costs fall
Wind – the Cheapest Renewable Power • Baringa report estimates £ 49. 40 (2017) for onshore • Most recent German auction 38 EUR (onshore) • Cf. D AR 2 £ 57. 50 (offshore)
Focus on Onshore Wind
Record 2017 Onshore Deployment but Facing a Cliff Edge RUK Project Intelligence
All scenarios suggest more renewables, just a question of scale - Onshore Market Size: RUK scenarios including decomissioning capacity • According to the onshore Project Intelligence, repowering projects listed resulted in a 36% increase in the original capacity. • We assume that 1/3 of projects reaching 20 years of age is respectively repowered, extended or decommissioned • Figures up to 2020 are based on real RUK data, the rest is forecasted • However, these scenarios do not meet the FES Two Degrees scenario. 20, 00 18, 00 Capacity (GW) 16, 00 14, 00 12, 00 10, 00 8, 00 6, 00 2017 2018 2019 2020 2021 FES 2 Degrees Total Capacity (Medium) 2022 2023 2024 2025 2026 2027 2028 2029 Total Capacity (High) Total Capcity (Extreme Low) RUK scenarios: • High: New auctions every 3 years between 2018 and 2030 • Medium: No auctions. Independent developers build consented projects over 50 MW subsidy free + current projects under planning and development • Extreme: No auctions. Only the projects currently under development are built. Nothing after 2020. 2030
UK Capability
Onshore Investment The new onshore wind capacity installed in 2017 represents an overall investment value of £ 7. 69 billion across the projects’ lifetimes. • £ 5. 3 billion, of the investment value is retained in the UK. • £ 3. 7 billion is spent either in the region or devolved nation – £ 2. 07 billion is retained within local authority.
Policy and Politics
Policy and Politics • Research finds that onshore wind is the cheapest form of new generation – £ 46. 1/MWh (Baringa) • But UK Government’s 2015 changes mean that onshore not able to access large scale renewables funding mechanism, Cf. D, and faces restrictive planning regime. • Change in attitude? Claire Perry, House Magazine
Feed in Tariff • Where is the conusultation? • Clarity of policy is vital for business investment – no visibility post 2019 for small scale/community energy. • Potential sector deal?
Offshore Wind
Total Portfolio - UK The UK portfolio currently has the potential to deliver 34. 5 GW of offshore wind if fully constructed UK Portfolio by Owner Share (%)* * does not include capacity that is ‘On hold’ Other SDIC Power 15% UK Portfolio by Status (MW) Fully Commissioned; 5 788; 17% Orsted 23% 3% Development; 12 490; 36% EDPR 4% Under construction; 2 615; 8% Fluor 5% Pre. Construction; 3 389; 10% Approved at JR; 2 282; 7% Vattenfall 13% Statoil 6% Innogy 8% Iberdrola 11% SSE 12% Cf. D Eligible; 6 060; 17% UK Commissioning Activity & Forecast by Status (MW p. a. ) 16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Fully Commissioned Under construction Pre-construction RO feasible Cf. D eligible Support Secured Development Cumulative Support Secured; 1 810; 5% Hornsea Project One Project Spotlight 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 RO Feasible; 62; 0% Status: Pre-construction Owner(s): Ørsted (100%) Country: UK Location: North Sea (England) Capacity: 1, 197 MW #Turbines: 174 Turbine model: SWT-7. 0 -154 Turbine manufacturer: Siemens Gamesa Distance to shore: 103 -130 km Water depth: 20 -36 m 20
Recent UK Policy Developments – Offshore Wind Dramatic cost reductions Cost of offshore wind dropped 50% since 2015 in last Cf. D allocation round – with prices as low as £ 57. 50/MWh for Hornsea 2 and Moray East The Government’s Industrial Strategy featured offshore wind as a UK success story and mentioned the dramatic reduction in the cost of offshore wind as “an example of how business innovation can be supported through effective market design” Third Contracts for Difference auction Next Cf. D round scheduled for spring 2019, with £ 557 million available for allocation New Control for Low Carbon Levies policy replaces the Levy Control Framework – guarding against boom-and-bust policy uncertainty Future developments Crown Estate Scotland working with Government and industry to consider new leasing round for fixed and floating offshore wind projects in 2018 Subsidy-free offshore wind? Floating offshore
UK Offshore Wind Scenarios: subsidy free in the 2020 s? Offshore Market Size: RUK Scenarios • Offshore market will continue to grow into the 2020 s • There are enough projects in the pipeline to deliver National Grid’s most ambitious scenario • However, the extent of future growth depends on further auction rounds, followed by a clear framework to deliver long-term deployment 23 000 Capacity (MW) 18 000 High Medium 13 000 Low FES 2 Degrees 8 000 3 000 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 RUK Scenarios: • High: Based on RUK PI model • Medium: This scenario assumes that there will be a 3 rd Cf. D round occurring in 2020 with the results being announced in 2021. Projects will be built subsidy free from 2025 onwards • Low: This scenario assumes that there will be no further Cf. D auctions after the one in Sep. Projects will be built subsidy free from 2025
Offshore Wind Forecasts: O&M Spending in the 2020 s O&M vs. Construction Spending in the Offshore sector 5 000 000 • O&M spend per year in the UK has steadily increased over the past decade and can be expected to continue to increase into the 2020 s • CAPEX spend for the offshore sector is influenced by the frequency and predictability of the UK auction rounds • Auction results in September 2017 returned 3 successful projects with the lowest strike price at £ 57. 50. Further auction rounds, with £ 557 m allocated, are expected before 2020 but not yet timetabled 1 200 000 3 500 000 800 000 3 000 000 2 500 000 600 000 2 000 000 400 000 1 500 000 1 000 000 200 000 500 000 0 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 20 23 20 24 20 25 20 26 20 27 20 28 0 CAPEX O&M Spend Per Year £ CAPEX (£) 1 000 000 4 000 000 20 O&M Spend Per Year (£) 4 500 000
Wave and Tidal
Wave and Tidal • Priority for wave and tidal is enabling deployment to get costs down • OREC report due out shortly, shows that costs will become competitive with other generation [1 GW deployment <£ 90/MWh] • Access to Cf. D funding is one option for larger projects [e. g. Atlantis] • Innovation PPA, to enable route to market for smaller deployment and development projects
More Information Policy Analytics Project Intelligence: Bahzad. Ayoub@renewableuk. com RUK Policy Analytics: Marina. Valls@renewableuk. com
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