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UK Offshore Wind update

David Charlesworth

Senior Stakeholder Manager

ALL-ISLAND CONFERENCE & EXHIBITION

Offshore wind: Exploring the supply chain opportunities

Thursday 24th November • Fairways Hotel, Dundalk

** Delegate fee only €50 ex VAT **

Sponsored by: Supported by: Host local authority:

The Crown Estate Is a landowner

Is not a regulator

Is a public body – The Crown Estate Act 1961

Is not part of Government – but works closely with Government, statutory bodies etc.

Annual surplus is passed to the UK Government

Urban Estate

Marine Estate

Rural Estate

Windsor Estate

The Marine Estate • Approx. 17,250km of foreshore (land between mean high

and mean low water), around half of UK total

• Approx. half of UK estuaries and tidal river beds

• Ownership of the territorial seabed (out to 12 nautical miles)

• Rights to explore and exploit the natural resources of the Continental Shelf (<200 nautical miles)

• The Renewable Energy Zone – rights vested in us by the Energy Act 2004

• Rights of carbon dioxide and methane gas storage – vested in us by the Energy Act 2008

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Previous offshore renewables activities • Round 1 (Launched 2001, developer led site selection, 13 sites)

• Round 2 (Launched 2003 within 3 strategic areas, 17 sites)

• Round 3 (Launched June 2008, 9 areas around Great Britain)

• Scottish Territorial Waters (Launched 2008, 23 bids)

• Extension projects (Launched 2009, 4 sites)

• Offshore wind demonstration sites (4 projects)

• Wave and tidal demonstration sites Pentland Firth, Shetland Island, Orkney, Scottish West Coast waters (20+ projects)

• Saltire prize

• Other tidal projects including MCT at Strangford Lough, Ramsey Sound in Wales and on the Humber in England

UK Offshore Wind Programme Rounds 1&2 including Extensions and Demo’s

• 1.5 GW operational

• 2.7 GW under construction (8 projects)

• 3 projects consented, pre-construction (up to 1 GW )

• 4 projects awaiting consent (up to 1.3 GW)

• 8 projects pre-application (up to 2.9 GW)

Scottish Territorial Waters (STW)

• 5 projects active in pre-application (up to 5 GW)

Round 3

• 32 GW in development

R3 focus is

Renewable energy targets

Jobs

Scale and programme

Northern Ireland • Only part of the UK where there are no active development rights

granted by The Crown Estate for offshore wind farm development.

• Wave and tidal - Marine Current Technologies tidal stream development in Strangford Lough, innovative and successful example of the pursuit of tidal opportunities in NI waters that we would wish to see repeated.

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Background

• DETI vision through its Strategic Energy Framework for renewable sources, including offshore opportunities.

• DETI’s target of 40% of NI electricity consumption in 2020 derived from renewable energy sources.

• ORESAP and SEA identified 8 possible Resource Zones covering offshore wind, wave and tidal.

• Four zones highlighted as affording commercial development opportunities, two for wind and two for tidal resources.

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Northern Ireland Waters: Resource Zones

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Northern Ireland Waters: The Industry Design Consultation

The industry design consultation document was on our web site from 1 April 2011 to 31 May 2011, aimed at renewable energy project developers.

Seeking to confirm:

•the level of interest in offshore wind and tidal projects in the waters off Northern Ireland; and

•understand how best a leasing round might be structured to achieve the best results for industry and Northern Ireland.

Responses - Overview • Positive statement from several developers: “very pleased that

developer opinion is being sought before moving towards tendering seabed licences for potential offshore wind farms within NI territorial waters”

• 20 responses received, 18 positive, 2 confirmed no interest in NI opportunity

• International coverage – responses from UK, ROI and rest of Europe

• 10 responses from wind developers

• 7 from tidal developers

• 1 from public body

• 2 from trade organisations

Issues Highlighted By Developers

• DETI and The Crown Estate to provide clear market signals to encourage the development of projects in NI.

• Clarity on Marine Jurisdiction.

• Clear consenting process with unambiguous timelines and requirements.

• Grid Investment and interface.

• Continue enabling actions work.

• Open communication between leasing round applicants, regulators, DETI and The Crown Estate.

• Importance of stakeholder engagement at all stages of the process

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NI CONCLUSION • Design Discussion has confirmed a good level of market interest in

both offshore wind and tidal opportunities in NI waters.

• There is an appetite for competitive leasing rounds.

• DETI and The Crown Estate working collaboratively on the key issues.

• The Crown Estate is looking forward to successful tender rounds for Northern Ireland to achieve its renewable energy targets.

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Scottish Territorial Waters: Medium Term Options

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Strategic Environmental Assessment

(SEA) of Draft Plan

for Offshore Wind Energy in Scottish

Territorial Waters:

•“Do maximum” Option

•2221 sq.km

•Marine Scotland Consultation closed

evaluation ongoing

UK Offshore Wind Market

0

10,000

20,000

30,000

40,000

50,000

60,000

0

2,000

4,000

6,000

8,000

10,000

12,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Round 3

Scottish Territorial Waters

Demo Sites

Round 1 and 2 (including extensions)

Cumulative Installed MW

Opportunity for generating capacity from all current leasing rounds

Year

Cu

mu

lati

ve(M

W)

An

nu

al(M

W)

Future Rounds

Information taken from Developers updated Dec 2010 forward plans and projected capacity

0

1000

2000

3000

4000

5000

6000

7000

8000

SSE

RW

E n

po

we

r

Ce

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ica

Ibe

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la (

Sco

ttis

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E.O

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Do

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Stad

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Stat

oil

EDP

Re

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vave

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Stad

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Mu

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Mai

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ream

War

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SeaE

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Re

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wab

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Sie

me

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Pro

ject

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ntu

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Flu

or

Mas

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TCW

PG

GM

& D

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JP M

org

an II

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Pru

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&G

UK "Big 6" Integrated Suppliers Other Energy Companies SpecialistDeveloper

OEM EPC Infrastructure Fund/Institutional/ Sovereign

Pre- planning application

Awaiting planning consent

Consented

Under Construction

In Operation

MW

UK Pipeline Market Shares

April 2011

Round 3 Programme Update

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0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Cap

acit

y (M

W)

Round 3 programme delivery curves

MW of Grid Connection Offers

AcceptedMW of project approvals

MW of Draft ES issued for consultationMW of Planning Applications

MW of KPC granted

MW of Leases Signed

MW of Project Construction startedMW of Projects Commissioned

Year

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Information taken from Developers updated Dec 2010 forward plans and projected capacity

The Round 3 Approach • Development in partnership with The Crown Estate to consent

Shared development risk. Pre-consent co-funding > £100m. Contract obligations on programme and budget to consent. Competition criteria based on confidence in end-to-end delivery.

• A zonal approach (exclusivity for development partner/consortium)

Assess cumulative impact, engage holistically with stakeholders, supply chain confidence, strategic supply chain development.

• Direct intervention by The Crown Estate to promote and de-risk

Investment in enabling actions on national issues, master planning, workstreams on key risks, forums of developers and politicians.

Partnerships

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• Strategic workstreams in support of zone wide issues

• Positive programme of relationship management

• R3 ZDA feedback and workstream coordination between

partners.

• Six monthly programme updates

• Annual reports

Strategic Challenges to Programme Delivery

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Health & Safety Planning & Consents

Grid & Technology

Supply Chain & Skills

Project Economics & Financing

Rapid sector growth, further

from shore

New Planning Act, revisit IPC and

NPS’s, untested new processes

and teams, funding aviation

solutions, MCZ uncertainty

Coordinated offshore devt,

OFTO regime, charging,

technical standardisation, risk

and perception

Competing markets,

capacity, early investor

confidence, delivering

infrastructure investment

and OEMs, leadership on

skills

Consented projects reaching investment hurdle rates, access to

construction finance, facilitating refinancing when operational

Levelised

Cost of

Energy

Supply Chain Progress

Turbine supply

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0

2

4

6

8

10

12

2000 2005 2010 2015

Turb

ine

Size

MW

Year

Progressing Offshore Wind Turbine Design

Geared Drive

Products by OEM

Direct Drive Products by OEM

Data from BTM Consult ApS Offshore Report Nov. 2010 and The Crown Estate

2 years

operational

experience

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MPI: Adventure

Swire Blue Ocean MPI: Discovery

Beluga Hochtief

RWE: 2 vessels

FOW: Bold Tern (X2) Van Ord

A2SEA: Sea Installer Seajacks: Zaratan

Turbine Installation Vessels

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Infrastructure

Belfast

Sheerness, Kent Humber

Dundee

25

39 54

436

36

6307

861

150

Publically stated investment intent in supply chain 2010

Towers

Substructures

Turbine

HVDC/Cables

Ports

Generators/Blades

Vessels

Demonstration Sites

Source The Crown Estate: Figures in £M

Investment

40

45

50

55

60

65

70

75

80

85

Q3-2008 Mar-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11

E&Y Country Attractiveness Index: Offshore Wind China

UK

US

Germany

Italy

France

Ireland

Sweden

Netherlands

Belgium

S Korea

Denmark

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Thank you

http://www.thecrownestate.co.uk/energy/offshore-wind-energy/