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Can offshore wind be the solution for UK’s Net Zero plan?

The focus on the energy transition towards a decarbonized world is presently the primary long-term trend in the energy industry. This trend is not only altering the technology behind power generation but is also reshaping government policies, social relationships, and people’s minds. When dealing with large-scale changes that impact entire societies, it is crucial to maintain a balance between the resilience of the system and public acceptance on one side and the scope, extent, and speed of the transition on the other. Many promising ideas fail due to very enthusiastic but too naïve implementation.

A compelling illustration of this thought is the situation with offshore wind generation in the UK. According to British policymakers, offshore wind production should rise from the current 14GW to 50GW by 2050. This is envisioned to become the primary and only currently expanding source of electricity production, projected to constitute about 50% of the UK’s expected consumption. Nevertheless, the industry is already encountering significant challenges. New offshore wind projects struggle to attract investors, prompting the government to consider raising subsidies or demanding more cash from taxpayers (essentially, the same thing). Some estimations[1] suggest that, assuming nearly a doubling of electricity demand by 2050, the required investment in additional offshore wind to achieve decarbonization by 2050 would amount to approximately 25% of the British GDP. Moreover, this is not a one-time expense. The lifespan of a wind turbine is estimated at 25 years, significantly less than that of conventional power generation plants.

The primary issue is the nature of wind production, which already now leads to overproduction during periods of strong winds even without additionally planned generation capacity. Consequently, this results in low or even negative prices on windy days. In contrast, prices soar during windless periods. Unfortunately, power storage technology does not resolve this issue, as batteries can only store power for a few hours ahead, while windy weather often persists for much longer. Unlike countries like Denmark, which also rely on offshore wind but also has the possibility to import power from neighbouring countries during calm periods, the UK, due to its relative isolation, lacks such flexibility.

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Reportedly, the National Grid is paying substantial fees to wind farms, particularly in Scotland, to curtail their output on windy days. This is in addition to other subsidies to the wind farms, such as the Renewable Obligation subsidy, Contract for Difference price guarantees, and Power Purchase Agreements with above market prices. All government subsidies are eventually transferred to consumers and taxpayers in one way or the other. With the planned expansion of offshore wind generation, this problem will only escalate unless a commercially viable technology for long-term power storage is developed.

Another aspect to consider is grid reliability and the security of the power supply. A grid capable of managing the high fluctuations in supply from various sources requires substantial investment, which can represent a significant portion of the country’s GDP. These investments would also translate into higher costs for UK households. Given the uncertainty around the possibility of limiting global warming to under a 2-degree increase, expressed by some scientists, it is questionable whether UK households and industries will accept a much higher price or tax burden together with reduced power supply reliability in exchange for prospect of (unfortunately) uncertain success of global warming reduction.

[1] See, for example, article by Barry Norris, CIO of Argonaut Capital Partners LLP in “The Critics” November 2023. “Britain: a goner with the wind”