Industry leaders believe the effects of a no-deal Brexit on the UK offshore wind industry will be ameliorated by the benefits of the Sector Deal, a commitment to 30 GW and net zero
Industry leaders believe the potentially adverse effects of a no-deal Brexit on the UK offshore wind industry will be ameliorated by the benefits of the Sector Deal, a commitment to 30 GW by 2030 and net zero greenhouse gas emissions.
In a session on Brexit at the Global Offshore Wind 2019 conference on 25 June, representatives of the offshore wind sector from industry and trade association RenewableUK were upbeat that even if the UK crashes out of the EU without a deal on 31 October, that the offshore wind sector is in good shape to weather the storm.
Despite opposition in Parliament to it, a no-deal Brexit is a distinct possibility once again as candidates for the leadership of the Conservative party vie with one another to demonstrate their Brexit credentials.
All of the panellists in the Brexit session at Global Offshore Wind 2019 agreed that ‘no-deal’ would be the worst possible outcome of the crisis in the UK, but said climate change legislation and a clear pipeline towards 30 GW of offshore wind in the UK by 2030 – possibly more – would help the industry to ride out any fallout from Brexit.
On 24 June 2019 MPs in the House of Commons unanimously agreed an amendment to the 2018 Climate Change Act that will increase the UK’s carbon reduction target to 100% or ‘net zero.’ The House of Lords is due to debate the amendment today (26 June 2019).
Panellists said the growing likelihood that the UK will host the COP 26 climate conference in 2020 was a further boost to its green credentials and the renewable energy sector.
MHI Vestas Offshore Wind UK country manager Julian Brown, who chaired the session, said there would be “many legal impacts” from Brexit and from a no deal outcome but the UK’s commitment to decarbonisation, the Sector Deal and 30-GW target for UK offshore wind made the picture a lot more rosy than it might otherwise have been.
However, he noted that apart from possible outcomes of the political crisis in the UK, much was also changing in the EU that might play into how industry is affected by Brexit. A summit of 28 European Union leaders on 20 June failed to reach agreement on who should take on the EU Commission’s top jobs.
Many of the participants on the panel – and audience members – expressed concern about the political situation in the UK and the effects it might have on industries of all types, but agreed that if the country crashes out of the EU in October the offshore wind industry is now better prepared than it would have been had it crashed out without a deal in March 2019.
Siemens Gamesa Renewable Energy head of business development Ray Thompson said the situation, although confusing, had improved in as much as, in March 2019, industries of all types in the UK faced crashing out of Europe not knowing what rules and conditions might apply to the way business was conducted.
Mr Thompson said Siemens Gamesa’s UK business had done a lot of planning and risk-based analysis. “There are still potential short-term issues we will have to face,” he said, “but the main difference between March and October will be that we are much better prepared.”
Among the issues that Siemens Gamesa and other companies have had to address, Mr Thompson cited potential tariffs on goods coming into the UK, non-tariff barriers and issues around the movement of people.
RenewableUK deputy chief executive officer Emma Pinchbeck expressed concern about the effect that Brexit and no-deal might have on UK participation in interconnector projects linking the UK and Europe, projects that are increasingly seen as a key part of the development of large-scale offshore windfarms.
All of the panellists agreed that no-deal could also affect the cost base of developers who already hold a contract for difference (CfD) for a project or who are seeking one in the CfD auction that is taking place this summer, and that they would need to factor that into the ‘band of estimation’ of costs when bidding for future projects.
All agreed that the political turmoil in the UK would almost certainly feed through into the industry in some form and would have an economic effect and affect costs, but agreed that the 30 GW by 2030 target set out in the Sector Deal – which put offshore wind at the centre of the UK’s clean energy system – and net zero commitment would definitely not be affected by Brexit.
Panellists did however raise concerns that the UK is facing the choice of a new leader of the Conservative Party, a new Prime Minister and a possible election in addition to the choice between leaving the EU with a deal and without a deal. Were the government to fall, a new government – almost certainly a left-wing Labour government – could enact far-reaching changes that might affect the economic attractiveness of the industry to overseas companies.