Minister: Offshore wind could power 20m homes

The UK has the potential to generate an extra 25GW of offshore wind energy on top of the 8GW that is already planned, providing enough power for 20 million homes and supporting up to 70,000 new jobs.

That is the conclusion of the government's Strategic Environmental Assessment, the release of which effectively fires the starting pistol on the Crown Estate's planned Round 3 development of new offshore sites.

Industry insiders said the Crown Estate would now begin interviewing potential offshore wind developers early next month and could announce the winning bidders by the end of July.

Announcing the findings of the new report at the British Wind Energy Association's (BWEA) offshore wind conference in London, energy minister Lord Hunt reiterated the government's support for the sector, insisting that it had a "fundamental" role to play in meeting the UK's renewable energy targets.

"We have confidence there can be a massive expansion of 25GW… and we are providing the regulatory and financial regime so that companies can make investments," he said. "I am confident this is the moment when offshore wind will really take off."

Lord Hunt also announced that Ofgem will today launch a tendering process for £15bn of cabling designed to connect offshore wind farms to the grid.

Alistair Buchanan, chief executive of Ofgem, said the joint tendering process would deliver cost savings of up to £1bn for wind farm developers and promote competition across the sector.

The offshore wind industry endured a tempestuous start to the year, which culminated in the government announcing in April that it was to temporarily increase the level of subsidy offered through the Renewable Obligation mechanism in order to protect the financial viability of projects hit by rising construction costs.

However, Maria McCaffery, chief executive of the BWEA, insisted that despite these short-term challenges, the sector remained on track to meet its targets for 2020. "We keep hearing we are not going to meet our 2020 targets, but if we add up operational wind farms, those in construction, and those that have been consented, we are already a third of the way there and we have 11 years to go," she said. "We must not adopt a defeatist attitude at this early stage."

The BWEA today released two new studies backing up McCaffrey's message and insisting the offshore sector can reduce installation costs and deliver its projected 9GW of capacity over the next five years.

However, the BWEA's chief economist Dr Gordon Edge warned that the projected 20 per cent reduction in offshore costs to about £2.5m per installed MW was dependent on the development of a dedicated offshore turbine supply chain. He added that costs would only fall if the sector can bring an end to the scenario whereby developers compete for parts with onshore wind farms and compete for installation vessels with the offshore oil and gas industry.

But many within the sector are increasingly confident that the required investment can be found. Captain Peter Hodges, founder of marine engineering firm SeaRoc Group and a veteran of the North Sea oil and gas industry, insisted that investors and engineers from the offshore engineering sector were now "queuing up" to get into offshore wind.

"Don't be worried about going further out to Dogger Bank," he said. " We have the skills, we have the supply chain, and we have the technology… This technology is in the water now."