THE BLOG
29/11/2013 05:54 GMT | Updated 28/01/2014 05:59 GMT

Offshore Wind - It's Decision Time

First things first, 2013 has been a record-breaking year for offshore wind, with over a gigawatt of additional capacity installed. This is in keeping with an annual growth rate of at least 50% in the offshore wind sector, which has been a constant since 2004.

However, nobody is resting on their laurels. We are under no illusions about the scale of the challenge ahead. Whilst this year has been highly successful, investment in offshore wind projects is planned years in advance, so we have to take a long term view.

Ensuring that confidence remains strong is crucial for the future of the offshore wind industry. On Thursday, RenewableUK published what we trust is a thought-provoking position paper, "Offshore Wind: Decision Time", written by Charles Ogilvie, former Chief of Staff to the Energy Minister Gregory Barker. In the document, Mr Ogilvie explains how the offshore wind sector faces "an unprecedented challenge" as it strives to ensure that rapid and successful growth is maintained, and momentum doesn't wane.

So what exactly do we need to see? Well first we need to get real on the issue of volume. If the Government were to specify a minimum volume target for offshore wind within the Levy Control Framework (the Government's budget for spending on renewables), it would go a long way to calm the nerves of investors. There is no such ambition at present. A minimum should not be an end in itself, Mr Ogilvie argues, rather a means that will demonstrate that the sector is deploying at a rate that can achieve the cost reductions to deliver a return on the investment taxpayers have made in the sector to date.

Consistency is the key, and frankly it isn't helpful to have one Government department talking about installing 16GW of offshore wind by 2020 and other departments mooting 8GW. This type of mixed messaging makes it very hard for investors to gauge the real level of commitment and therefore the future scale of the market. We also have to start thinking, now, about what we want to see happen after 2020 if we are serious about bringing the long term economic benefits of offshore wind to the UK - the big turbine factories and a healthy sup[ply chain, creating tens of thousands of jobs. We can't continue to kick the can down the road and, given the importance of energy policy to this country, it shouldn't be treated as a political football.

Of course there are responsibilities for the industry too. We will continue to work tirelessly to drive down costs by learning through experience and achieving economies of scale. However, the proposed fall in the draft strike price for offshore wind (from £155 to £135 per megawatt hour by 2018/19 in the upcoming Contracts for Difference) is too steep. There is a virtuous circle in which higher deployment generates cost reductions, but we must achieve sufficient volume before cuts come into force. This is why is makes more sense to delay steep reductions in support until after 2020.

The British public wants the Government to continue to encourage the growth of offshore wind. In the latest wave of results in DECC's Public Attitudes Tracker, published earlier this month, 72% of people specifically expressed their support for offshore wind as a technology we should be deploying. We hope all parts of Government have heard that call, and that Ministers will act together, speaking with a unified voice, so that there is no room for doubt that the UK is set fair to maintain its pole position at the forefront of the global offshore wind industry.