Green Alliance Makes Suggestions for 2020s

Matthew Spencer of Green Alliance, a charity and independent think tank focused on ambitious leadership for the environment, in a recently published report stressed the importance of policy decisions made and their effect on offshore wind industry through the 2020s.

The UK is likely to need a minimum of 25GW of offshore wind to decarbonise its power sector by 2030, and the market conditions created in the next parliament will determine both the costs and benefits of maintaining a vibrant offshore wind sector in the 2020s.

Electricity market reform (EMR) has created an investible policy regime for offshore wind. According to the report “it has also created new risks which mean that there is a high likelihood that the 2020 project pipeline will be insufficient to meet the UK’s minimum needs.” It looks at modifications to the delivery of this framework that would address these risks, make deployment more cost effective and maximise UK supply chain investment.

However, the next government will have to make decisions within in its first two years on the scale of funding for the low carbon generation market in the 2020s, ahead of full knowledge of the costs.

In the report, Green Alliance made recommendations for cost effective development of the offshore:

1. Set a carbon intensity target for the electricity sector
A 2030 carbon intensity target would remove considerable uncertainty regarding the UK’s likely decarbonisation trajectory. Political parties could act immediately to bolster market confidence by explicitly ruling out 200gCO2/kWh in 2030, narrowing the wide range of potential future power sector scenarios.

2. Confirm the size of the next Levy Control Framework (LCF)
The decision over the next LCF needs to be taken no later than 2017 to stimulate sufficient project and supply chain development for the early 2020s.

3. Confirm the timings of future EMR allocation rounds
Confirming their frequency and timing for the remainder of the current LCF period would remove a major source of uncertainty and enable project developers to plan when and how to bring projects into the allocation process.

4. Set deployment minima for offshore wind in the 2020s
A steady deployment trajectory will avoid ‘boom and bust’ dynamics and create the best conditions for cost reduction and supply chain growth. This would be conditional on the costs of offshore wind coming down, which can be reviewed ahead of contracts being awarded under the next LCF in 2021.

5. Identify new ways to rebalance development risks
The balance of risks between government and developers should be reviewed, drawing on European experience, with the aim of ensuring a robust pipeline capable of delivering a steady flow of projects into the 2020s and beyond.