Floating wind added to CfD menu in UK consultation process

Apart from onshore wind and solar being added to the CfD auction, a plan to extend the delivery years to 31 March 2030, and create a new ‘Pot 3’ to protect offshore wind because of its strategic importance to the UK, probably most important to the future of the offshore wind industry in the UK is the potential for floating wind to be considered as a ‘separate technology’ and have its own administrative strike price. If it is, it could compete in future auctions for ‘less established’ technologies (known as ‘Pot 2’).

In order to support the increase in ambition needed to deliver the UK’s 2050 net zero target, the consultation considers whether the structure by which different technologies currently compete against each other within groups (pots), should be altered.

As well as working with the sector in seeking to deliver 30 GW of offshore wind by 2030, the government said it is likely that higher levels of wind deployment will be needed to help the UK achieve its 2050 net zero target.

It is therefore considering how best to facilitate the acceleration of floating offshore wind projects to commercial deployment and harness the potential benefits it offers for the UK if costs can be brought down to a level competitive with other cost-effective renewables.

“Although the various technologies utilised in floating offshore wind projects such as turbines, floating structures and dynamic cables are relatively well established, their use together to create a stable operational platform for offshore wind turbines generating electricity in deeper water remains novel,” said the consultation documentation issued on 2 March 2020 by the government.

“To date there have been only a small number of demonstration projects deployed around the world and the costs of floating offshore wind turbines remain higher than those for fixed bottom turbines.

“Floating offshore wind is yet to develop to a point where the most effective, lowest cost floating foundation concepts have been determined or sufficient deployment to deliver economies of scale has occurred.

“In view of this, although the technology is currently eligible to compete in allocation rounds as offshore wind, its cost means that it does not currently have a clear UK route to market.”

Theoretically, the UK Government target of 40 GW of offshore wind by 2030 could be met almost entirely with fixed bottom offshore wind. However, with the significantly higher levels of deployment needed to 2050 to meet net zero, the government now says it makes sense to consider the risk of cumulative impacts – such as environmental, radar interference, conflicting uses of the sea for example – which could increasingly affect the ability for fixed bottom wind deployment to be realised.

“Should such risks materialise it is likely that the commercial deployment of floating offshore wind will be needed sooner than previously anticipated and at greater levels, particularly during the 2030s,” the consultation said.

“Floating offshore wind could also find use in other applications to help decarbonisation, for example the oil and gas sectors are considering whether it could be a useful power source for deepwater oil and gas fields, displacing fuels such as diesel or replacing the need for long cables from shore.

“Given the still relatively early stage of development of the floating offshore wind sector it may be necessary to consider introducing measures over the coming years to encourage early deployment and cost reduction. This would allow larger scale deployment to begin during the 2030s without a deployment hiatus which could jeopardise maintaining our decarbonisation trajectory and at lower cost than would otherwise be possible. Introducing a separate definition for ‘floating offshore wind’ within the list of eligible technologies would facilitate the use of the CfD process if that was considered the appropriate mechanism.”

A separate definition and administrative strike price would also be necessary if further measures to support floating offshore wind were to be considered in future allocation rounds. These measures could assist such pre-commercial technologies, for which the levelised cost of electricity is significantly above that of more mature technologies, to access support under the CfD. It could help accelerate the path from pre-commercial pilots to commercial deployment at scale, where the industry can benefit from learning and economies of scale to reduce costs. In turn, should floating offshore wind projects access support under the CfD scheme this would support greater diversification of the energy system.

Given all of the above the consultation is seeking views on:

• The merits of introducing floating offshore wind as a separate eligible technology with its own administrative strike price, providing a distinction from conventional, fixed-bottom projects under the CfD scheme.
• Potential trajectories of floating offshore wind deployment in the UK and globally.
• A proposed legal definition for floating offshore wind projects.
• What wider benefits or disadvantages floating offshore wind projects may bring to the UK.

The consultation also highlights that floating offshore wind has the potential for deployment in deeper water sites, where fixed bottom offshore wind is either not technically feasible or uneconomic, and where wind speed can be higher. In the UK, this could open areas of Scotland, Wales and southwest England for deployment. This also potentially creates additional diversity benefits as generation will increasingly be moved beyond the east coast of England where different weather systems will operate.

Although not a primary rationale for supporting floating offshore wind within the CfD scheme, the early deployment of the technology in the UK could have additional systems, economic growth and industrial development benefits. For example, in the longer term, this could create export opportunities for the UK should floating wind deploy in countries which have limited shallow water sites, for example Japan and the west coast of the US.

In addition, deployment in areas of sea remote from existing deployment in the North Sea, for example, Scottish waters or off the south west of England, could increase diversity of supply. It may allow offshore wind generation that is decoupled from the weather patterns in the North Sea to provide some insulation against the effects of intermittency on the grid.