25 June 2009: UK offshore wind progress

On 24 June 2009, the UK government announced that the UK aims to have installed 33Gw of offshore wind by 2020, generating a quarter of the UK electricity needs (see Department of Energy and Climate Change: 24 June 09 – Press Release Offshor wind has potential to meet more than a quarter of the UK’s electricity needs). The UK is already the world leader in installed offshore wind capacity – having overtaken Denmark last December – but nevertheless produces less than 1Gw. Expanding this by 33 times in 11 years is possible and would create new UK jobs and industries, as well as substantially improving UK energy security as North Sea gas run out. In fact, offshore wind is central to meeting the UK’s binding EU renewables target of 15% of energy by 2020.

But it will not be cheap.

Controlling climate change will be much cheaper than not controlling it, as the Stern Review showed (see Stern Review – the Economics of Climate Change). However, the cost of the transition to a low carbon economy will be many billions of pounds. To date, the government’s attempts to control the costs of offshore wind have focussed on getting competitive bids for constructing and operating grid connections. It has also removed the requirement that, in the future, turbines should be at least 12 miles from the shore, which is very welcome and will substantially reduce the cost. What it must do now is ensure that wind turbines are manufactured in the UK, which would remove the risks of exchange rate fluctuations (in the last year, the price of turbines for UK developers has increased by about 30% due to sterling’s decline) and also protect jobs in the UK steel industry.

Yet, even if this is done, UK citizens will have to pay the substantial costs, either through taxes or fuel bills. Like that of most other countries, the UK national debt, is now enormous, so increased money from the public purse looks unlikely. One obvious way forward would be for the UK to scrap the proposed expansion of Trident nuclear weapons, which have no defence value and are incompatible with its Nuclear Non-Proliferation Treaty obligations. It could then invest the £20 billion initial saving (rising to around £70 billion) in the low carbon transition instead. However, energy price increases are inevitable and, in some ways, welcome, in that they discourage the waste of energy. The government is financing renewables and proposing to finance carbon capture and storage through a levy on electricity bills. It increased the money offered to offshore wind in April 2009, which led to a consortium planning the world’s first 1Gw offshore wind farm, the London Array, and confirming it will be built.

Fuel poverty, which is a major and growing problem in the UK, should be addressed through ‘social tariffs’ – lower prices for each unit used for those on low incomes. Energy companies offer some of these already and should offer more. If they fail to do so, the government should make them.

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