Scott McCallum, a partner in the Clean Energy Group at Shepherd and
Wedderburn LLP, looks at the opportunities ahead for offshore wind
A combination of innovation, vision and dogged determination, particularly
in the past decade, has driven what can only be described as seismic growth
in renewable energy projects across the UK, notably in offshore wind.
Over the course of three decades advising the UK energy sector, Shepherd
and Wedderburn has seen (and helped implement) many changes – but who could
have guessed that come 2018 our small island would be sitting at the
forefront of the global offshore wind market?
In 2008 Shepherd and Wedderburn embarked on what was, at the time, its
biggest foray into the offshore renewables market acting for a new joint
venture – energy giant Siemens and independent developer Mainstream –
bidding into the Crown Estate’s third, and biggest, offshore wind leasing
round, securing a zone off the Yorkshire coast. Since then we have worked
with some of the world’s largest developers, including Ørsted (formally
DONG Energy) and EDPR – helping to deliver more than 4GW of new offshore
wind capacity in UK waters.
The UK was early to the party in offshore wind but other countries will
happily entice developers to their shores given the time and space to do
so. For that reason, it is critical the UK and its stakeholders maintain a
viable project pipeline to exploit the remaining opportunities on our
shores, which, in turn, would boost developer and supply chain confidence
and investment.
In the past five years we have seen developers and their supply chain slash
costs to levels no one thought possible. Offshore wind can now hold its
head high against more traditional energy technologies such as coal and
nuclear – claiming the moral high ground on its green credentials without
having the cost to consumers thrown back at it.
Some level of continuing government support remains absolutely necessary
(as it does for all forms of energy generation). The current Contracts for
Difference (CfD) support mechanism, which can give a generator some
protection against electricity price fluctuation, is stretching much
further than anticipated, allowing lots of clean energy to be deployed in
UK waters in a cost-effective way for consumers.
But how much further can this go, and just how big a share of UK
electricity demand could offshore wind satisfy?
The Crown Estate and The Crown Estate Scotland, in their capacity as
‘landlords’ of the seabed across UK waters, recently opened discussions on
new offshore wind development rounds.
The Crown Estate published an update on its plans in February 2018, which
include engagement over summer with the potential for a formal leasing
round either in late 2018 or into 2019.
In its update, the Crown Estate points out a number of challenges and
opportunities:
An approach of allowing developers to identify projects within pre-defined
(but wide) regions of seabed appears currently to be preferred.
This differs from the last leasing round (which defined specific zones) and
is more akin to the earlier rounds.
At first blush the proposed approach seems sensible – granting developers
greater flexibility to design around existing barriers and sensitivities.
It does, however, increase the risk that proposals could conflict with one
another – and so developers will have to work together to identify, and if
possible overcome, potentially problematic interactions.
The Crown Estate has also identified a number of factors which will need to
be balanced and will ultimately dictate how ambitious total capacity for
this new round will be.
Key amongst these will be market demand and environmental impacts.
On the latter, we seem to have conspired over the past decade to ‘predict’
a level of cumulative ecological effects (including, for example, collision
risk for birds) that is far too pessimistic.
Unless we find ways to correct what is widely acknowledged to be an
artificial picture, we run the risk of seriously curtailing the potential
of this opportunity.
As lawyers we don’t create markets but we can play a role in supporting
those that do. With a concerted effort the UK could, over the next decade,
realise massive environmental and economic gains through the development of
Offshore Wind.
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