New Power’s March issue explored whether the UK onshore wind industry could punch above its weight in a growing global market. The key was a pipeline of domestic projects. 

 

Giving evidence to the Lords Economic Affairs Committee in February, energy minister Claire Perry MP said the UK had a “triple test” for providing R&D funding for any form of decarbonising technology: “Can we deliver a cost-effective pathway for consumers, can we decarbonise, and can we create some competitive advantages we can export?” She added: “Some really big opportunities spill out from the energy strategy into the industrial strategy and beyond.” She highlighted smart meters and smart grids, noting that the government had recently signed a deal with South Korea to provide expertise in that sector.

But what happens when the industry has gone past the development stage? Can the UK retain a “competitive advantage” when the first rollout has been completed and the UK domestic industry no longer has political will behind it? This is where the UK’s onshore wind industry now finds itself. The government continues to have broad support for renewables, but in the case of onshore wind that support is highly qualified – three years ago, Amber Rudd, then secretary of state, said “we have enough wind farms”.

That’s not the view of some industry-members. Speaking at the Future of Utilities summit, SSE chief executive Alistair Phillips-Davies said there remain good sites across the UK with excellent wind availability – and he said that existing sites would have to be repowered. Michael Lewis, chief executive of E.On UK, noted that the UK was taking the cheapest form of generation out of the merit order, despite a concern over energy bills that had resulted in plans to cap prices.

The UK invested in the engineering and financial industries that have underpinned its onshore wind rollout and it succeeded in developing an important industry – even in the 1990s when UK build was slow. Now onshore wind is a major global business. At a time when Brexit means the UK has to expand its offering to global markets, can we leverage our wind industry skills into a global brand? With the help of market research company Accent, New Power asked a group of industry representatives whether the UK could retain its industry.

Our respondents were not all advocates of an ambitious new build programme in the UK, but none wanted to halt the programme entirely. One said it should be a priority. They said: “Onshore wind is one of the cheapest forms of electricity generation. Excluding it contradicts the government’s stated aim of decarbonising the energy system at least cost. It is also inconsistent with the approach to other technologies and resources, such as shale gas.”

Six said that it should be part of the generation portfolio, but without direct financial support, and two said the current policy – with tight planning restrictions as well as being excluded from contracts for differences – is appropriate. They thought onshore wind should have more opportunity to compete. One said: “Wind should not have a privileged position – but there is no good reason to have a blanket moratorium either. What matters is decarbonising the electricity system at least cost. That is much less likely while onshore wind is effectively off the table.” One summarised that by saying: “Onshore wind should be allowed an opportunity to generate affordable, local, green power and generate jobs.”

One respondent pointed out that even without expanding the number of wind farm sites there could be a different sort of project pipeline in the UK, because “repowering with more efficient turbines will be increasingly significant”.

 

UK areas of expertise

“The UK is good at implementing onshore wind even if we are not competitive as a manufacturer of turbines,” said one person in response to our survey. If the UK cannot compete on manufacturing terms – especially for projects outside the UK – where is the UK’s specialism? Our respondents chose several areas of expertise where the UK has high-value skills.

The most important were in planning and design, and in the skills needed when wind farms are operating: monitoring, management and optimisation. These were seen as important areas of technical expertise and an opportunity for UK plc. A second important set of opportunities arose in the financial and professional services required to finance and structure a project. Banking and structuring deals, and providing insurance and professional services, were all considered opportunities.

All these skill sets – which apply to wind farms during the operational phase as well as during development and construction – were seen as a more important opportunity than construction of new plants. But also important was expertise in absorbing wind power into the power mix. “There is a need to understand how PV plus wind plus storage could help reduce the costs of green power,” said one, while another highlighted “appropriate grid management, including solutions for frequency response and storage”. “Integration with advanced grid management and combination with local storage and PV.”

 

Government’s role

When New Power/Accent asked whether and how government and industry could leverage these skills for a global industry, the respondents were positive. “UK planning consent is fairly unique but many principles can be applied globally. Mostly we will export expertise,” said one.

Not all were convinced that there was a role for government in making that business a reality. One said it was “none of the government’s business”. “It is for the industries themselves to demonstrate that they offer value – that they can compete in local and international markets without government-mandated subsidies.”

Others saw a bigger role for government. One said there was “an important role for the government to lead and organise a coherent and sustained response to opportunities overseas”. Another agreed it should be active, putting together a “package of development skills and finance” that would enable exports. Another wanted a more fundamental approach, to “organise UK plc research and development to offer a cost advantage for UK design”.

But for several respondents, the opportunity was restricted by the UK’s lukewarm approach at home. “The lack of a domestic market makes it harder for UK-based firms to maintain critical mass,” said one, while another said the government had to “allow the sector to thrive at home as a showcase and support the industry, providing services such as finance and consultancy in emerging markets such as Latin America”.

The opportunity was clearly large. Target markets should be countries “that are either developing fast and therefore have an increased demand in electricity, or those that need to decarbonise”, and certainly “all countries with GHG targets that they intend to meet”.

One respondent was both more overarching and more precise. “Where the wind blows and where there is a large land mass… where there is an absence of fossil fuel reserves,” they said, naming China along with France, Italy and Spain as good candidates.

 

A Brexit gap or a global role?

After the UK leaves the EU, will the UK have to act to strengthen its wind power offering or fill gaps, such as in lost skills or research funding?

One respondent said that was not a concern: “These commodities are hardly non-existent or in worryingly short supply in most of the 200+ countries of the world that are not part of the European Union – why would anyone expect this to be any different in a newly independent UK?”

Others thought differently but had varying levels of concern. “There may be some impacts on research funding, depending on whether the UK negotiates a ‘buy-in’ to EU research programmes,” said one. “Similarly, there may be some impacts from a loss of investment funding from European institutions.” For another, “research funding will be the issue – and university research programmes such as [the EU’s research funding stream] Horizon 2020 become out of reach”.

Some said it was possible to see opportunities in training, for example, “to increase the number of British technicians that would provide significant economic benefits for the UK”.

There is clearly an opportunity for UK plc. In fact one respondent thought the opportunity would help in “overall recovering credibility for the UK brand”. “Brexit has made many overseas question the UK’s ability to behave rationally or consistently. I have seen this apply to subjects that have nothing to do with Brexit.”

We asked what is the minimum domestic requirement to provide credibility and skills if the UK is to play a part in the global wind industry.

Top of the list for respondents was the UK’s reputation for having the necessary skills – and the ability to deliver if that reputation were to be maintained. As important was ensuring that global companies serving the industry had a strong UK footprint.

The next most important attribute was a domestic onshore wind project pipeline. Perhaps because reputation came out so strongly, the UK’s strong offshore wind programme and the potential for repowering existing sites were less of a positive reference, respondents thought, as was the UK’s expertise in other aspects of the electricity supply industry.

It seemed to be summed up by one respondent, who said: “We need a solid home market to be able to export.”

 

New Power, in partnership with market research company Accent, consults the Expert Forum regularly on key industry issues. Many thanks to all those who have joined the group. Comments used will be anonymised, unless members are happy to be identified.

If you are interested in joining the forum, contact [email protected]

Further reading:

From New Power Report’s archive: getting the most out of onshore wind farms