UK drops from first to seventh ‘most attractive’ destination for offshore wind investment

The lack of bidders for offshore wind projects in the UK’s fifth allocation round (AR5), in 2023, was a “huge setback” in the UK’s goal of reaching 50GW of offshore capacity by 2030 and has lost it the no1 position for offshore wind in EY’s EY Renewable Energy Country Attractiveness Index (RECAI), the organisation said as it published the most recent RECAI. The UK has dropped sharply to seventh place.
EY said the UK’s maximum strike price of £44/MWh was not high enough to entice developers to bid in AR5, but the UK was not alone in experiencing setbacks in that techbology. EY said around 80% of the 15 markets with offshore wind targets for 2030 are predicted to miss their stated goals, challenged by a squeezed supply chain and escalating costs.
Launching the RECAI, Arnaud de Giovanni, EY Global Renewables Leader, said: “For offshore wind to fulfill its role in global decarbonization, it is necessary to mitigate risks that are beyond the control of developers, guaranteeing them a reasonable return on their investments. Tensions in the offshore supply chain could be alleviated by standardizing technologies, offering greater certainty to manufacturers and developers. And governments need to devise strategies that simplify and expedite the consenting process, minimizing risks between the issue of offtake agreements and final investment decisions.”
Ben Warren, EY Renewables Corporate Finance and RECAI Chief Editor, says: “The UK’s recent challenges in the offshore wind sector echo a broader, global struggle. When auctioning contracts for offshore wind generation, governments need to reflect economic conditions in the design of the auction. Considering moving away from cost-only auction formats and incorporating factors other than cost, such as environmental considerations and jobs creation, would boost the supply chain, improve deliverability and benefit wider society.”
There were similar warnings over offshore wind at a recent meeting on energy sector developments hosted by rating agency Moody’s. EDP’s Rui Texeira was relatively positive about the supply chain, saying that there were no constraints in resources, capacity or transport for his company’s current projects in the North Sea. However he explained that his company had to secure installation vessels now for a project off the US East Coast that was not due to reach final investment decision until 2025. He said, “Then we are getting into the risk profile of the project. How willing are we to commit to secure those vessels now?”

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