Industry leaders in the UK offshore wind and ports sectors believe Wales has an unprecedented opportunity to benefit from the development of floating windfarms in the Celtic Sea, but action is needed on ports and the grid
As the Committee heard, The Crown Estate has committed to enabling the development of an initial 4 GW of floating wind in the Celtic Sea, between Wales, southwest England and Ireland, by 2035, with the potential to accommodate a further 20 GW by 2045. In this year’s clean power auctions for contracts for difference, UK Ministers ringfenced £24M (US$27M) for floating wind for the first time, enabling the TwinHub project in the Celtic Sea to go ahead.
Addressing members of the Welsh Affairs Committee in the UK Parliament on 26 October, which held an evidence session exploring floating offshore wind in the Celtic Sea, Associated British Ports chief executive and executive board director Henrik Pedersen said Wales has a “once in a lifetime opportunity” to benefit from developing floating windfarms.
RWE country chair Tom Glover also gave evidence to the Committee, as did RenewableUK chief executive Dan McGrail, both of whom set out a similar vision of the scale of the opportunity for Wales.
Mr Pedersen told the Committee – which was assessing the potential benefits for Wales of floating wind, how the roll-out of floating wind can be accelerated and how challenges in the region such as grid capacity and supply chains can be addressed – that if the scale of ambition is high enough, Celtic Sea floating wind could be a transformative opportunity for industry and jobs.
Mr Pedersen emphasised that what he called the ‘scale of ambition’ for floating offshore wind in the Celtic Sea would be all important when it comes to how much Wales benefits from the floating wind industry.
He emphasised that ports and the supply chain need to have visibility beyond the initial 4 GW in the Celtic Sea if they are to invest the huge sums that will be needed and told the Committee that floating offshore wind in Wales “will only take off in Wales if we rebuild and repurpose Port Talbot.”
This is because of the infrastructure surrounding the port and the water depth there, he said. “Port Talbot has the characteristics needed for floating wind… for the very big structures that will be built,” he told the Committee.
Mr Pedersen continued, “This year is an incredibly significant one for floating wind and for Wales. We would have to invest around £500M to make this work. It is a once in a lifetime opportunity for jobs, for inward investment in new technology that will be around for decades. But we need to know where the ambition level is.
“Are we only going for assembly, or manufacturing and assembly? If we only go for assembly, and not for manufacturing, we will miss out on thousands of manufacturing jobs. And we need to know about more than just the first 4 GW. What about the 20 GW? When will it happen?
“The role of ports in Wales will be determined by the scale of ambition for floating wind,” Mr Pedersen said. “We can reconfigure ports for assembly work – with the components manufactured overseas – or we can repurpose ports for what I really hope we are going to do and bring in a lot of manufacturing and local content.”
Mr Glover highlighted the need to deploy floating wind at scale for the UK to meet carbon targets. He said RWE welcomed the opportunity given by The Crown Estate for the first 4 GW of floating wind in the Celtic Sea. He told the Committee that 1.0 GW of the initial projects in the region would represent around £1.5Bn in direct investment. “That means just for the first 4 GW we are talking about £6Bn in direct investment,” he explained.
Mr Glover said RWE believes 10 GW to 20 GW of floating wind in the region is “easily possible,” which would represent an investment of around £20Bn overall, as the cost of floating wind falls with increased scale of deployment.
“That leads to indirect investment that would flow from Celtic Sea floating wind that is multiples of that kind of figure,” he said, noting there is “a real opportunity” for the UK and for Wales to take leadership in floating wind and in export markets around the world.
Mr McGrail reinforced what Mr Pedersen and Mr Glover said about the scale of investment that could come to Wales. He told the Committee floating wind “offers huge industrial, economic and environmental benefits to Wales and the rest of the UK.” He said RenewableUK is urging the government to ensure annual CfD auctions are designed in a way which secures as much new capacity as fast as possible, as well as building up the supply chain.
Mr McGrail told the committee,“Floating wind is a very big opportunity for global growth and the UK has a leading position. As we’ve taken an early mover position, we can establish ourselves as a global leader in this technology, building a new industry here and exporting out technology worldwide.”
As he noted, the UK Government has set a target of 5 GW of floating wind by 2030 and has provided £160M for upgrading ports to enable quayside manufacturing for floating wind. “It’s vital that we build the new port infrastructure we need,” he said, “but we have quite a slow process in building that infrastructure in this country. We need substantial changes in our port infrastructure to enable floating wind and there is recognition in government that needs to be done, so the £160M funding has to be understood as a first step.”
Mr McGrail also welcomed The Crown Estate’s commitment to enabling the development of floating wind in the Celtic Sea. “The Crown Estate has an important job in sending a long-term signal for the future, creating the framework of how we invest in the sector,” said Mr McGrail.
“Setting targets is great, but if you build 4 GW, you also need to know what’s coming after and when – we need a roadmap for opening up beyond 4 GW, optimising leasing rounds to get early investment in the supply chain.”
He highlighted the opportunities to build new factories in Wales and the rest of the UK and noted auctions for CfDs could help to stimulate this. “Building an industry based only on price signals is not the most sustainable pathway,” he said. “Within that competitive framework, we also need to value economic development, innovation, sustainability, jobs, diversity and community impact, and take that into consideration in CfD auctions. You’ve got to care about price because that matters to consumers and to competitiveness, but valuing other factors is allowed too.”
Highlighting the central importance of grid infrastructure, a 21 October 2022 report from the Welsh Affairs Committee argued grid constraints for renewables are a “significant threat” to economic growth in Wales unless they are addressed. The country’s renewable energy potential and the green jobs and skills needed to reach net zero, are threatened by a lack of UK Government leadership on improving grid connectivity, the Welsh Affairs Committee said.
“This inaction – and delays in approving grid connections – holds back progress on the UK becoming more energy resilient,” said the report. “It also puts economic growth at risk for communities across Wales that are poised to exploit opportunities ranging from floating offshore wind to tidal energy.”
The Committee said it recognises there is positive work underway, including National Grid ESO’s blueprint to connect offshore wind to the grid and the appointment of a Networks Commissioner tasked with reducing timelines for grid connectivity. “However,” it said, “more intensive grid reform, led by the UK Government, is necessary to support the anticipated demand for renewable energy and to make decarbonisation in Wales a reality.”
Barriers identified by the Committee include the regulatory framework not allowing anticipatory investment, delays in planning consent and high upfront connection costs making many projects financially unviable.
The Committee said it is keen to learn from the UK Government how it will achieve its aim to reduce consenting and licensing processing times by 50% within a year. This is particularly pertinent as the UK Government seeks to improve the UK’s energy resilience in the wake of the war in Ukraine and squeeze on international energy supplies.
“Resolving these issues, and creating a more streamlined approach, is vital for economic growth in Wales,” the Committee said. “Many renewable energy projects that are ready to be built are being held back amid uncertainty over how they will connect to the grid.”
It said these opportunities – which could support Wales becoming a leader in renewable energy – extend to floating offshore wind in the Celtic Sea and highlighted the fact that projects could support local economies, jobs and skills development across communities in Wales that will be necessary for a net-zero economy, while offering unique export opportunities.
Welsh Affairs Committee chair Stephen Crabb MP said, “The twin challenges of UK energy security and net-zero demand a new approach to grid infrastructure in Wales. Wales has enormous potential as a key location for clean energy generation. But inadequate grid capacity, and the lengthy timescales involved in delivering improvements, will hold back investment in vital new projects. With developers wanting to accelerate investment in opportunities like floating offshore wind in the Celtic Sea, the UK Government must demonstrate a similar level or urgency and ambition in reducing the costs and barriers to new grid connections.
“Although the UK Government has taken steps to improve the delivery of grid improvements, so far it is not clear that these will achieve the necessary step change required. Without clear leadership on this issue that pulls together the different parties involved, inadequate grid capacity will continue to be the biggest block on the pathway to Wales reaching net zero.”
