Britain Pledges $100 Million for Offshore Wind Industry

The U.K., the world’s largest offshore-wind market, pledged funds to increase jobs in the industry sevenfold in a bid to spur economic recovery.

The government will commit 66 million pounds ($100 million) to expand the offshore-wind supply chain and finance research to curb costs, according to a strategy by Deputy Prime Minister Nick Clegg and Energy Secretary Ed Davey. The industry growth may add 7 billion pounds a year to the economy by 2020.

While Britain has more offshore wind-power capacity than the rest of the world put together, none of the turbines are made domestically. The government is trying to ease reliance on equipment imports by expanding its domestic supply chain. The industry could employ 30,000 people in 2020, up from 4,000, the Department for Business said in an e-mailed statement.

“We want to make sure British companies will be able to compete more effectively to get a much bigger slice of that cake,” Davey said today in a phone interview from Grimsby, eastern England where he and Clegg opened the 270-megawatt Lincs wind farm off the coast.

As part of the plans, ministers will set up an Offshore Wind Investment Organization to attract investment. They’ll require developers of offshore wind farms above a certain size to submit a supply-chain plan before applying for guaranteed electricity payments under contracts set up by the government.

“We won’t stipulate it has to be U.K. content,” Davey said. “What we do want to see is companies, before they apply for a contract, showing they have thought through the supply chain properly.”

Canceled Factories

The U.K. had almost 3,000 megawatts of wind turbines installed at sea at the end of 2012, compared with a global total of 5,410 megawatts, according to the Global Wind Energy Council. The European Wind Energy Association said in July that project financing had slowed because of regulatory uncertainty.

Manufacturers of offshore wind turbines including Siemens, which has the most turbines at sea, Gamesa Corp. Tecnologica SA (GAM) and Samsung Heavy Industries Co. plan to build U.K. factories.

South Korea’s Doosan Power Systems Ltd. last year canceled a 170 million-pound plan to build offshore turbines in Scotland, while Vestas Wind Systems A/S (VWS) shelved a proposed offshore-turbine factory in southeast England, citing a lack of clarity in the government’s subsidy plans.

The government provided some clarity on June 27 when it announced draft strike prices, or guaranteed payments for power, that offshore wind developers will get from next year to 2019. The level was set at 155 pounds a megawatt-hour from next year, or about triple current prices, declining to 135 pounds in 2018. That compares with the U.K.’s goal of getting the cost of energy of offshore wind down to 100 pounds a megawatt-hour by 2020.

Stopped Short

At the same time, the government has rowed back on its ambitions for the technology. In 2011, ministers said they were targeting 18 gigawatts of installed capacity by 2020. Two weeks ago, under a new plan for low carbon infrastructure, the central scenario assumed that the goal would be reached a decade later.

Ministers have also stopped short of announcing a target to largely decarbonize power generation by 2030 that Vestas has lobbied for along with Siemens, Gamesa, Areva SA (AREVA), Mitsubishi Power Systems Europe Ltd. and Alstom SA. Under an energy bill being debated by lawmakers, a goal may be set in 2016.

Clegg and Davey announced their latest strategy today as they opened the Lincs wind farm, a project led by Centrica Plc (CNA) along with Denmark’s Dong Energy A/S and a unit of Germany’s Siemens AG. (SIE)

“This document is a blueprint for green-collar job creation,” Maria McCaffery, chief executive officer of the RenewableUK lobby group, said in a statement.

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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