Why Norfolk and Suffolk’s energy sector needs greater clarity

Offshore wind farm. Picture: Garry O'Neill.

Offshore wind farm. Picture: Garry O'Neill. - Credit: Archant

The East of England is the UK centre for offshore wind, with multi-billion pound projects in the pipeline. But industry leaders fear the government's silence around energy policy could stifle future investment. Ahead of a special offshore wind conference held at the Orbis Energy Centre in Lowestoft tomorrow, Business editor BEN WOODS speaks to energy sector leaders about their progress in the region – and what the future might hold.

Charlie Jordan, Scottish Power Renewables. Picture submitted

Charlie Jordan, Scottish Power Renewables. Picture submitted - Credit: Archant

• Advances in technology should help operators deliver subsidy-free wind farms shortly after 2020, according to an industry analyst.

Johnathan Reynolds, director of Lowestoft-based energy industry experts Nautilus Associates, believes the industry is capable of standing 'on its own two feet' in five year's time, but it still needs clarity from the government in the short term.

He added: 'The East of England is the centre of the UK's offshore wind industry, with 63 per cent of our national capacity off our shores.

'It is crucial that the development pipeline continues to grow here to support the potential for the thousands of high quality jobs, infrastructure, support operations and skills in our region – as well as providing another competitive source of energy for the nation's mix.

People: Powering the Future conference at the John Innes centre. Simon Gray. Photo: Bill Smith

People: Powering the Future conference at the John Innes centre. Simon Gray. Photo: Bill Smith - Credit: Archant © 2013

'The offshore wind industry is working hard to preserve our position as world leader, with innovation, research and development producing ever more sophisticated technology to drive down costs to move rapidly towards subsidy-free projects.

'All subsidies are ultimately passed on to the bill payers so lower costs are a priority leading to lower bills for everybody.

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'But to stand on its own feet, the industry needs a clear energy policy from the government.

'Only when the government reveals its views on the future of offshore wind will there be a stable framework to encourage future investment in the industry – and in the East of England.

Jonathan Reynolds, Nautilus Associates

Jonathan Reynolds, Nautilus Associates - Credit: Archant

'Like any developing industry, offshore wind has had to rely on government subsidies to gather momentum as an effective energy source.

'But larger 8MW+ turbines, floating turbines and other innovations such as smarter ways in delivering offshore logistics, inspection and maintenance activities are combining to reach its realistic ambition to hit a the target price of £100 per megawatt hour by 2020 and subsidy free soon after that.

'Scottish Power Renewables won consent for East Anglia ONE with a strike price of £119 per megawatt hour so achieving the target is not far away.

'Cost reduction through innovation will remain a key focus for this region. The support from a flexible and adaptable supply chain is vital to achieve this.

Halfdan Brustad. Picture Submitted

Halfdan Brustad. Picture Submitted - Credit: Archant

'Our oil and gas supply chain, with 50 years' expertise, has a real contribution to make, sharing experience and best practice which could lead to new lower cost solutions in offshore renewables, which we hope will happen at this week's event.'

• Energy companies need greater clarity from the government on its long-term plans for subsiding offshore wind farms if operators are to attract future investment, a business leader has said.

Simon Gray, chief executive, East of England Energy Group (EEEGR), said uncertainty surrounding the government's position made it difficult for operators to attract investment and plan for the future.

He added: Never mind about the Northern Power House or the Midlands' Engine, The East of England is the UK's real energy hub.

'But to build on the success so far of offshore wind in our unique energy mix in our region, we are waiting for a clear message from the government where offshore wind sits in its plans.

'The government's investments in offshore wind technologies to date should be applauded but now clarity of strategy is necessary for the future funding of further developments.

'Operators can then go to market to attract the huge investments needed to continue to develop, what I view, as an essential piece in our energy jigsaw to provide clean energy for our homes and businesses and playing our part in helping the UK meet carbon reduction targets and reduce the issue of global warming.

'The supply chain that EEEGR represents is also affected by the uncertainty of policy, waiting for the government to reveal its hand so it can predict and plan its pipeline of business.

'With funding announced in ad hoc tranches, the offshore wind industry has to gear up and then wind down as projects come and go. What is required is a regular stream of work allowing businesses to maintain their workforces and break free of the peaks and troughs that we have seen in recent times.'

• An operator spearheading the construction of giant wind farm off the region's coastline believes the sector can only grow if it drives down costs.

Andy Paine, head of offshore wind UK, Vattenfall, developers of the northern half of the East Anglia Array, said: 'Price competitive and profitable wind power must play an important part in the UK's move to an affordable, low carbon electricity sector.

'If the sector is to grow, it must target significant reductions in the cost of energy. Vattenfall has an ambitious programme to achieve that.

'So far Vattenfall has made total investment of nearly £2bn in offshore wind farms built and operated in partnership with local and UK supply chains and supporting thousands of jobs.

'That includes Sembmarine SLP in Lowestoft, which supplied our substation platform for Thanet and Subsea Protection Systems of Great Yarmouth, which manufactured and installed cable protection for KFE.

'We celebrated the tenth birthday of our 90MW Kentish Flats Offshore Wind Farm this year - one of the first offshore wind farms to be built in the UK.

'A second phase of UK sector growth followed; this year was the fifth birthday of the 300MW Thanet Offshore Wind Farm. Our 150MW Ormonde, off the Cumbrian coast, is a toddler at three years old. And then this year, our Kentish Flats Extension (KFE) was born adding another 49MW.

'With a third phase of sector growth well underway, Vattenfall wants to develop the northern half of the East Anglia development zone, with the potential of up to 3.6GW of capacity. This exciting opportunity for local business, which we believe, stands on the shoulders of all our other projects.'

• Scottish Power Renewables said it is in advanced talks over the location of its operations and maintenance base for the giant offshore wind farm, East Anglia One.

The company confirmed that East Anglia would be the home of the OEM base and was on the cusp of finalising the agreement.

Charlie Jordan, ScottishPower Renewables project director for East Anglia ONE, said: 'We have been very encouraged by progress on East Anglia ONE. Very quickly after we secured the Contract for Difference, we were able to agree with Siemens that they will provide their advanced 7MW turbines for use on the project. We are very pleased that blade manufacturing will happen in Hull, a first for the UK, and together with Siemens we have been speaking to business across the East Anglia region to discuss opportunities on the project. Recently we have been completing a major riverbed survey on the Deben, and carrying out an extensive onshore archaeological project, as our plans move forward on the underground cable connection for the project. East Anglia ONE will be a major infrastructure development, and requires a wide range of complex engineering sub-projects to work together, but very good progress is being made on all fronts.'

He added: 'Our operations and maintenance base will be in the East Anglia region. Very advanced discussions are taking place, and we are close to finalising agreements. This is one of the biggest decisions we make on a project like East Anglia ONE, because this will be the home of the project for the next 30 years. This is where all of the work to manage the project will be based, supporting a large number of highly-skilled jobs, both directly and across our supply chain. It is important that we make the right decision, and we are confident that we will have an agreement in place in the near future.'

Jonathan Cole, managing director of offshore wind at ScottishPower Renewables, said: 'Our entire industry wants to get a place where subsidy is not required, and we are all making significant strides forward to make this a reality in the near future.

'We now have more powerful and more efficient turbines, we have better vessels, more experience of working offshore, a healthier supply chain, as well as ever increasing investment in UK infrastructure.'

• The boss of the Dudgeon Offshore wind farm said investment in technology was key to slashing back the costs of renewable energy.

Halfdan Brustad, vice president for wind projects in Statoil and chairman of the wind farm project off the coast of Cromer, said: 'Statoil is determined to bring new technology onboard in our projects so that offshore wind can be even more cost efficient in the future

The UK supply chain is in general very competitive in the segments where there are relevant products. Dudgeon has used a multi-contracting strategy with contract packages suitable for the UK supply chain. The project has increased UK content by 50pc in construction phase since Sheringham Shoal, even though there are still no Wind Turbine Generator (WTG) suppliers in UK. However, the decision to invest in the Dudgeon project has been instrumental to enable Siemens and ABP to invest more than £300m in Hull for their manufacturing and assembly site, which is expected to result in up to 1,000 direct jobs.

Our two projects demonstrate that the UK content is increasing and we are on track to achieve the Government ambition of more than 50%. In Statoil, we aim to meet the world's energy needs by creating long-term value both for our shareholders and the societies in which we operate.