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The UK's Place in the Global Race for Offshore Wind Investment

By Luke Clark, Director of Industrial Development at RenewableUK

Credit: ORE Catapult

The role of the UK in the international supply chain is both uncertain and challenged, yet the opportunity for a new, more strategic approach is ripe. A new Industrial Growth Plan will help support investment that secures the best competitiveness, energy security and economic growth returns across the UK.

Offshore wind will be the backbone of the UK’s future energy system – one that will be clean, secure and affordable. The UK is the largest offshore wind market in Europe, and we are second only to China globally. The technology pioneered in UK waters over the last 20 years is now taking off globally, creating unprecedented opportunities to grow our industry as well as new challenges to meet that demand.

National Grid ESO Future Energy Scenarios

Dramatic changes in global energy markets mean that the UK industry needs to take a new approach to foster growth that secures our near-term objectives and supports long-term growth in an increasingly contested market. Crown Estate Scotland, The Crown Estate, the Offshore Wind Industry Council and RenewableUK have, therefore, come together to develop a new Industrial Growth Plan that will steer investment into crucial areas which will maximise the benefits in terms of jobs, growth and energy security in transition to net zero.

The sector is maturing rapidly, supported by ambition and policies to accelerate deployment, yet we face a challenging international context of high inflationary pressures, supply chain stresses and increased global competition.

The international pipeline of offshore wind projects has more than doubled since Russia’s invasion of Ukraine, and at the global level, we’re increasingly seeing a mismatch between the ambitions for offshore wind deployment and the industrial capacity to meet it. The Global Wind Energy Council has raised the alarm that “by the mid-2020s there may be supply chain bottlenecks in every region of the world except China”.

RenewableUK EnergyPulse pipeline analysis

There are already signs of supply stress in key areas like vessels and electrical equipment, and that pressure is expected to spread to key turbine components unless action is taken. Failure to act would push up costs, delay deployment ambitions and leave countries more dependent on energy imports for longer. Already, we’re seeing countries moving to counter those risks.

In the US, the Inflation Reduction Act provides a range of incentives to attract clean energy supply chains - including tax breaks worth up to $120m to supply chains per GW-scale wind farm. Closer to home, the EU’s recent Wind Power Package doubled support for clean energy manufacturing projects to €1.4bn and confirmed a loosening of subsidy rules targeting renewable supply chains. In the UK, the Government is progressing its £160m Floating Offshore Wind Manufacturing Investment Scheme supporting important port infrastructure, building on its long-established policy and regulatory environment for investors and industry.

While it’s not clear yet what the long-term success or otherwise will be of the incentives put in place by the EU and US, we are in the middle of a global shift to strategic planning for energy security and the supply chains that will underpin this. To respond to the challenge from global markets and competitors, the UK needs a strategic outlook that defines success, as well as the actions and programmes that give us the best chance of achieving that.

When Tim Pick, the Government’s Offshore Wind Champion, reported earlier this year, one of his key recommendations was for an Industrial Growth Plan to set out a ‘sober and thorough strategic competency “make-or-buy” analysis which takes into account the UK’s comparative advantages and opportunities for disruption’ so that we can position British industry to take advantage of the global boom in offshore wind. Since Mr Pick’s report in April, the need for strategies to capture the opportunity has only grown.

The Offshore Wind Industry Council recently quantified that opportunity in the recent Supply Chain Capabality Analysis - £92bn of value is up for grabs if we can develop our capability in key areas. OWIC argued this requires a ‘systemic approach that should be taken forward as part of a coordinated Industrial Growth Plan’. That is precisely what we intend to produce.

SCCA value assessment across different opportunity areas over time

The UK’s existing capability will be a key cornerstone of our work, alongside quantifying the global market opportunity, closing gaps that pose a risk to our deployment targets and understanding our innovation potential in solving key technological challenges. But to turn our ambitions and capability into tangible success, we need identify solutions and actions.

We know that securing new inward investment and supply chain development in the UK will be dependent on the attractiveness of the UK as a global destination and on building our competitive advantage in key areas. We will produce a plan that we can action, report progress against and update as markets and technologies develop. We will learn from best practice in other markets and other sectors, in the UK and globally, so that we can build a programmatic, long-term approach that avoids stop-start cycles in investment.

Clearly, this programme interacts with wider challenges in renewables, energy, manufacturing and wider economic growth policies – skills and education, automation and sustainability, Contracts for Difference and market reform, incentivising investment and taxation. The IGP will not be able to solve all of those questions, and nor should it try to, but it will identify the key enablers and connect to activities and solutions being developed elsewhere.

As the global race for investment, clean energy and supply chains hots up, now is the time to set out a bold vision for the UK offshore wind sector. That vision needs to be backed up by priorities and programmes which will deliver our ambitions to grow our workforce, boost our energy security and provide affordable power to consumers – and that is what the Industrial Growth Plan will provide.

The Industrial Growth Plan is expected to be published in early 2024.



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