Offshore renewable energy set to drive UK economic growth, but by how much?

EnergyThe UK economy could gain £6.7 billion per year and 150,000 jobs by 2020 from the development of offshore renewable energy resources according to a report published yesterday (Thursday March 13) by the Offshore Renewable Energy Catapult, the UK body supporting innovation and rapid commercialisation in offshore wind, wave and tidal technologies.

The report, using extensive supply chain data from BVG Associates and analysis from the Fraser of Allander Institute, considers the likely economic and industrial growth from upper and lower estimates (8 – 15GW) for the deployment of offshore wind farms under two different sets of conditions: a ‘gradual growth’ path similar to existing market conditions and an ‘accelerated growth’ path which drives cost reduction and quality improvements through innovation and investment.

In the accelerated growth path for 15GW of offshore wind capacity

• Gross Value Add (GVA) to the UK economy can reach almost £6.7bn in 2020

• 34,000 direct jobs, an increase of 25,500 on 2013 levels

• 150,000 jobs in total in the wider UK economy

At the lower end scenario of 8GW installed in 2020

• GVA reaches £2.3bn in 2020

• Over 11,000 direct jobs

• 50,000 jobs supported in total

Commenting on the report, ORE Catapult chief executive Andrew Jamieson said:

“The UK is in a strong position today, leading the world in both deployment and ambition for offshore renewable energy. We have the industrial base, research capability, regulatory framework and supply chain to continue to prosper and lead.

“This report clearly demonstrates the significant potential economic value of offshore renewables and why it is worth the investment now to develop and grow sustainable industries delivering energy from our offshore natural resources.”

Opportunities are identified in the report for the UK to develop world-leading capability in the development, manufacture and deployment of specific areas of offshore renewable energy technology, including manufacturing of turbines, foundations, cabling and substations, and crucially the expertise in installation, operations and maintenance.

It is in this area that the Catapult sees the biggest long-term opportunity for the UK. The accumulation of the know-how in the effective operation and maintenance of offshore renewable technology will provide an exportable service industry similar to that achieved by the oil and gas industry over recent decades.

The report also considers the impacts of the development of wave and tidal technology, whilst recognising that these remain in their infancy and will be relatively minor contributors to a sustainable UK energy mix until beyond 2020. However they are expected to become increasingly significant over the following decade.

Jamieson added:

“Technology innovation and a deeper understanding of working offshore are the key enablers that will deliver essential reductions in the costs of offshore renewable energy and help us capture significant economic and social benefits.”

 

As an addendum to this Jennifer Webber, the Director of External Affairs, RenewableUK, commenting on yesterday’s report said this:

“This makes a cast-iron case for maximum political support and investment in the offshore wind and marine energy sector. But the jobs and the UK-wide economic reboot won’t happen to the full unless Government policy is 100% supportive.

“To make the most of our world-beating resources, the offshore renewables sector need certainty on policy, with Government standing four-square behind us to achieve growth at a brisk pace. We can’t risk confidence melting away, or other European countries will leap in and grab as many of the manufacturing opportunities as they can.

“In particular, we’re hoping the Chancellor George Osborne will make his support clear in his Budget Speech next week. The industry is calling on him not to freeze the Carbon Price Floor, as that would send the wrong signal about the Government’s commitment to encouraging low-carbon generation. Incentives to wean energy users off fossil fuels and make clean power more attractive should be promoted rather than scaled back”.

 

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed