This week’s Global Offshore Wind has been dominated by big talk about the UK.
The Government says it wants a major programme of offshore wind developmentbetween now and 2020. It wants this to drive down the costs of building offshore.
Meanwhile, the Crown Estate says the UK is on course to double offshore wind capacity to 10GW or more by 2020. If this happened then the sector would generate 10% of UK energy.
And let’s not forget that the UK is still the world leader in offshore wind.
But we should not let such positive talk hide the underlying challenges facing offshore wind. If the industry is to make big strides by 2020 then we need most of these schemes to gain consent over the next three years. Unfortunately, the current consenting system makes this difficult.
Dr Steve Freeman, director of environment at TUV SUD PMSS, explained some of these issues in a talk yesterday about the consenting process. He argues the current system produces unrealistic assessments about potential impacts of schemes, and this makes them less likely to win consent. It also means more financial risk for the investors and developers who back the schemes.
This problem stems from EU rules about the habitats of birds and sea mammals.
It is clearly right for developers to do what they can to mitigate the impact of schemes on birds and sea mammals, but the current system does not realistically assess the scale of these risks. This is because developers have to use theRochdale Envelope method.
Essentially, the Rochdale Envelope is an approach to assessing a project’s potential environmental impact. This takes into account the worst-case scenario impacts on wildlife and the different types of technology that the developer could use, among other factors. The tool is designed to work out a realistic worst-case scenario impact of a scheme. It is failing to do so.
Freeman argues that adding up different worst-case scenarios makes schemes look unrealistically risky, and allows risk-averse consenting bodies to throw out perfectly good proposals.
This is surely the worst-case scenario for an investor, closely followed by long delays and costly fight to win permission. So what should developers do to mitigate these financial risks?
First, don’t blame consenting bodies that don’t have the time or resources to analyse projects. The Government has cut their resources and they have to make their decisions within six months.
Rather, the onus must be on developers to take the tough decisions that can reduce the worst-case scenarios in the Rochdale Envelope. Making early decisions about what technology to use, and choosing technology that reduces the impact on wildlife, can increase this certainty.
This may require tough conversations with finance teams. It may also mean projects cost more in the short-term. But it makes it more likely that they will be built without long and costly delays.
This can only bring benefits. There’s no profit in a scheme that never happens.
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