Costs: Beating the Same Old Drum

As an aspiring and entrepreneurial industry, when it comes to heading offshore, there’s always room for cheer. [There has to be. Otherwise we’d take the numbers far too seriously. Ed] And since all good news comes in threes, last week was no different.

First, Scotland granted permission for the Moray Firth offshore wind project – a joint venture between Spanish firms EDP renewables and Repsol that will provide 300 offshore turbines producing up to 1,500MW.

Second, the European Investment Bank signed off its loan to Vattenfall, for the 100-turbine Thanet scheme. The bank, supports projects in line with the broader aims of the EU. It’s therefore good to see this given the green light, despite the parlous financial state of the Eurozone.

And third, in the UK, the Government approved two funds totaling £30 million, for innovations in the offshore sector.

So that’s all good.

Except, with COP17 this week, and despite a lot of the favourable rhetoric, there’ll be a reluctance by some western economies to commit to any further binding climate agreements. Most likely this will be lead by the US, which, with recent technological developments, feels a resurgent drive towards fossil fuels – notably shale gas, the tar sands and domestic oil.

And it’s not just the US. The Dutch - our country conference hosts in Amsterdam - have already abandoned their renewable energy 2020 commitments.

And that, in a funny way, leads us full circle to a drum we’ve beaten before.

Cost.

Offshore wind just has to get cheaper. And fast.

UK consumers, despite having the lowest energy bills in the EU, are voicing concerns about the expense of buying from the ‘big six’. Something that will continue to remain on the agenda irrespective of the fact that renewable obligation certificates (ROC’s) aren’t the only thing driving up the prices – that classic perception and reality myth. After all, the oil and gas markets will lobby successfully on that misconception every day of the week.

This, combined with recent respective reports from KPMG and Allianz – both claiming that renewables are prohibitively costly and unreliable – only make things tougher.

So, the industry needs to act fast. It needs to swallow the risk.

Let’s be clear – £30 million for UK innovation is a great start. But it’s only that. A start. The industry needs to step up its research and development and develop a healthier appetite for entrepreneurial investment – only then can we have true cause for cheer.

Driving down costs is possible. Let’s make that a real talking point for the discussions in Amsterdam this week.