The Offshore Valuation Group is an informal collaboration of government and industry organisations that has commissioned an independent report to address the question: what is the value of Britain’s offshore renewable resource? The group includes the UK, Scottish and Welsh Governments, The Crown Estate and eight companies across the energy sector.
You can download a copy here [zip file].
It is widely acknowledged that within Europe, Britain holds the largest resource of offshore wind, wave and tidal power. Until now the full scale of the economic opportunity this represents has been unknown. The Offshore Valuation reveals that rapid development of the UK’s offshore resource – using fixed wind, floating wind, tidal stream, tidal range, and wave technologies – could by 2050 generate an amount of electricity equivalent to a billion barrels of oil per year, or the same as the average annual output of UK North Sea oil and gas production seen over the past four decades. If developed still further to tap their full practical potential, offshore renewables would allow the UK to power itself six times over at current levels of demand.
The study shows that the offshore resource has value to the UK whether we use the power ourselves or simply view it as an export commodity to Europe.
Three illustrative scenarios calculate the potential Net Present Value to the UK of developing this resource to maturity by 2050.
The report’s central scenario examines what would need to happen for the UK to become a net exporter of offshore renewable electricity. To do so, the UK would need to exploit just under a third of its total offshore wind, wave and tidal resource by 2050 – resulting in infrastructure with a positive Net Present Value of £35 billion. The supply chain necessary to realise the central scenario would have annual revenues of £62 billion in 2050, profits of £16 billion, and could employ around 145,000 people in manufacturing, installation and operations & maintenance. If fossil fuel prices rise higher than the Government’s central projections, the benefits would be larger still.
The report sets out a number of key enablers for Government and industry to ensure the UK is on a path that allows it to access its substantial and valuable resource:
- Make Round 3 offshore wind grid connections ‘super-grid compliant’ to avoid locking out potential future electricity sales to Europe;
- Take a leadership role in the current EU super-grid negotiations, to ensure that the UK derives maximum value from its design and implementation;
- Continue to develop the UK supply chain as key to deployment at scale and least cost;
- Develop new financing structures that complement the fundamental features of renewable energy infrastructure and can support the scale and speed of industrial growth required.
Tim Helweg-Larsen, Director of PIRC, commented, “This report seeks to present to the UK the true value of an energy resource right on our doorstep – at a time when concerns over security of supply and climate change are ever-present. To discover that we own a resource with the potential to return the UK to being a net power exporter, and on a sustainable basis, is genuinely exciting, and a wake-up call to those in a position to foster the further development of this industry”.
David MacKay, Chief Scientific Advisor at DECC, said: “Britain’s huge offshore energy resource is dominated by wind: offshore wind farms occupying a sea-area the size of Wales would deliver more electricity than Britain’s average electricity consumption today. The key question is what building and maintaining these wind turbines and their associated energy-storage and delivery systems would cost, in material and financial terms. For me, this helpful work brings home the crucial value of investment in innovation in wind machine designs, in floating wind turbine prototypes, in tidal stream, and in novel energy storage systems.”
The Offshore Valuation Group is comprised of a wide range of organisations representing government, industry and the public interest.
The full report is also available for download from: www.offshorevaluation.org