Pump up the volume: Bringing down costs and increasing jobs in the offshore wind sector

Article

Given Britain's geographical position and industrial traditions, offshore wind power offers enormous potential, both domestically and as an export sector. However, weak and unclear signals from government on the long-term future of renewable energy mean the UK is at risk of a worst-of-all-worlds outcome: high costs combined with low pay-offs in the form of jobs and trade.

The current and previous governments have both set out a role for offshore wind in the UK's energy mix. In addition to its potential contribution to meeting carbon reduction targets, it presents three important opportunities:

  • to create a large number of new jobs, in the manufacturing, construction and maintenance
  • to assist with the rebalancing of the economy, both spatially (creating growth in the northern regions) and in terms of balance of trade
  • to take advantage of Britain's natural advantages, as a windy island in shallow waters.

There are, however, two significant challenges:

  • First, offshore wind is currently more expensive than other low-carbon technologies such as onshore wind and nuclear.
  • Second, British workers only produce around a third of the components in the supply chain, reducing significantly the 'local value' of the sector. Crucially, there are no turbine manufacturers in the UK, and turbines make up around 50 per cent of the capital costs of a new wind farm.

So, developing a strong supply chain that includes all major aspects of the manufacturing and construction process is crucial to maximising the local value of the offshore wind sector, while achieving scale is crucial to bringing down the long-term costs of the energy it produces. Both forms of investment are being hampered by a lack of clarity and certainty around the government's long-term commitment to wind power as a key part of the energy mix.

Towards the overall objective of creating a 'virtuous circle' for the offshore wind sector in the UK, to promote growth, reduce costs and maximise the benefits in jobs, regional rebalancing and trade, the report highlights six priority areas of action:

  1. clear ambition and policy certainty
  2. 'procurement' policy
  3. ministerial activism
  4. critical infrastructure: ports and the grid
  5. innovation
  6. skills

This report also presents case studies of three countries who have built or are building strong offshore wind sectors: Denmark (the 'early adopter'), Germany (rapid expansion) and France (pro-growth ministerial activism).

Related items

  1. View of Bank of England, Royal Exchange, and Duke of Wellington equestrian statue (1844) with skyscrapers and construction in background.

    Navigating in the fog: Why the OBR should hold its nerve on the productivity forecast

    The fiscal watchdog is under pressure to downgrade its forecast, costing the chancellor billions – but this would be premature.
  2. A busy bus full of people of all ages. An older couple smile at a younger woman with a baby in a pushchair

    Everyday concerns: What people want from transport

    Transport has a key role to play in achieving the UK government's missions and improving lives. 
  3. An unrecognisable woman playing a slot machine in a social club

    Reforming gambling taxation: How to lift half a million children out of poverty

    A key priority for the government’s upcoming child poverty strategy should be to remove the two-child limit and scrap the household benefit cap.