The UK offshore wind sector could grow to 30GW by the 2030s up from about 6GW currently, according to a new report by Aurora Energy Research. The report highlights two policy mechanisms that would be needed to stimulate the five-fold growth to reach 30GW.
First, the UK government would need to continue its current policy of providing revenue stabilisation through the Contracts for Difference (CfD) regime.
However, by 2025 Aurora said offshore costs could have fallen sufficiently to be effectively zero-subsidy. Therefore, “bids will be cost-neutral and set at the level of the offshore wind ‘capture price’ in the wholesale electricity market”, the report said.
Aurora senior project leader and report author Hugo Batten said: “Stabilising future market revenues via CfDs significantly reduces risks for investors and is critical in attracting financing and supporting further offshore wind build-out.”
Second, the report calls for a level playing field through regulatory adjustments that allows offshore wind to access additional revenue streams, such as balancing and ancillary markets similar to dispatchable generation or storage.
“This would allow offshore wind assets to ‘revenue stack’. Offshore wind has the technical capabilities to provide a range of balancing and ancillary services to the grid – in particular, the ability to ramp up and down generation rapidly to help balance demand and supply,” Aurora said.It added that leveraging the “full technical capabilities of all technologies on the system and creating a level playing field would result in significant reductions in the cost of providing these services, while also increasing revenues for offshore wind asset owners”.
The Offshore Wind Industry Council has welcomed the publication. "Their report again illustrates that the unprecedented reduction in costs that the industry has achieved offers a huge opportunity for reducing the country’s carbon emissions, whilst helping to reduce bills for consumers and create opportunities for UK businesses of all sizes," the council said.