Offshore wind in the Celtic Sea could offer investment on a similar scale as the current ScotWind leasing round and should be taken forward to help maintain a UK pipeline of investment, according to Maf Smith, Director, Lumen Energy and Environment.
In evidence to the MPs on the Select Committee on Welsh Affairs he praised plans for a specific Contract for Difference pot for floating offshore wind and said ScotWind, which is expected to bring forward 10GW of wind projects, would likely see half of that delivered as floating plant. “Similar capacity is available in the Celtic Sea”, he said.
Michelle Davies, international head of clean energy and sustainability at Eversheds Sutherland, said the Westminster government had to “do a lot” to enable the opportunity to be realised. She said the days when having real estate, planning and a grid connection were enough to provide a return for developers were over and developers “don’t have anything of value [in their projects] until you have a revenue source, whether that is a CfD or a contract that satisfies the banker and investors.”
Earlier Davies suggested that the UK energy market had put project developers at a disadvantage, compared with other markets. “In other countries companies knew they could sell power into the market for 15-20 years without a long term contract,” giving them a bankable revenue stream, she said. But she said now “people are taking a long-term view on the power market in a way they couldn’t do 5-10 years ago”.
Juliet Davenport, chair and founder of Good Energy, also said that the market had to change. She said, “I do think there will be a review of the energy market. The way it is structured today, including the capacity market, is around a high fossil world and the price is set on marginal cost, which is fuel driven. If you have fuel that’s fine. But if you have no fuel, like renewables, that doesn’t really work.” It should be redesigned to make surer it brings in renewables she said.
Smith warned that there was a tension between the government’s aim to drive prices down and develop UK wind industries. “The CfD [auction] has delivered on price but it can’t do that and develop a UK supply chain,” he said.