UK Offshore Wind: Broken Economics?

Published: 27 January 2009

6 pages, 2 figures

Executive Summary 

This report helps individuals seeking to understand the future of the UK offshore wind market following announcements by oil majors, utilities and financial investors about problems with the economics of the sector. Offshore wind power generation is a crucial part of the UK government’s plan to generate 15 per cent of electricity from renewables by 2020. In 2008 Shell and BP walked away from the UK offshore wind market. But for European utilities with fossil fuel generating plants, climate change policy enhances the investment rationale for offshore wind. The offshore wind sector is also well-aligned with utilities’ strategic priorities. Our analysis indicates that expansion of the UK’s offshore wind sector faces delay not failure. The policy goal is at risk — not the market. 

TABLE OF CONTENTS

INVESTMENT UNCERTAINTY FAVOURS UTILITIES
UK Offshore Wind Assets Change Hands
Challenging Economics Will Delay - Not Stop - UK Offshore Wind
Power Generators Will Commit Funds To UK Offshore Wind

TABLE OF FIGURES

Figure 1. Utilities Buy Up UK Offshore Wind Assets
Figure 2. The UK Offshore Wind Market Will Come Of Age By 2010

Companies Mentioned

BP
Centrica
Christofferson, Robb & Company
Enercon
London Array
Masdar Initiative
Scira Offshore Energy
Scottish & Southern Energy
Shell WindEnergy
StatoilHydro
Thanet Offshore Wind
Vattenfall