Gordon Brown unveils £100bn wind farm gamble

Danny Fortson

GORDON BROWN will this week launch a £100 billion green power revolution when he awards a raft of development contracts to build a new generation of offshore wind farms.
The government envisages a third of the UK’s energy coming from wind power by 2020. The plan is far and away the most ambitious in the world and comprises the central plank of the country’s efforts to cut emissions.
It revolves round the construction of nine enormous offshore wind farms on parcels put up for auction by the Crown Estate, owner of the UK’s territorial seabed. The sites will cost more than £100 billion to develop.
The prime minister is expected to use the announcement of the winners, to be made at an event in Exeter, to highlight the employment and economic benefits of the programme. The British Wind Energy Association (BWEA) estimates it will create up to 60,000 jobs.

The bidders, including the big six utilities and foreign energy groups, have already been informed of what they have won but have been forbidden from publicising details until Brown makes the announcement.
The closing of the auction is the first step on a long journey. Utilities haven’t finished building farms on sites that were granted in two previous auctions. Industry experts don’t expect construction to start on the new sites until at least 2015.
Each of the sites are bigger than anything in operation today. The biggest will be at the Dogger Bank zone, located 100km off the east coast. A farm on that site could generate 10GW of power — more than 10 times the capacity of total global offshore wind power in operation today.
At today’s prices that project alone would cost £35 billion. A consortium including RWE Npower, Scottish and Southern Energy, and Norwegian energy groups Statkraft and StatoilHydro is thought to have won the rights to develop it.
Other likely winners include Scottish Power and Vattenfall, a state-owned Swedish power group. The two are understood to have been given the rights for a 5GW parcel off the Norfolk coast. The Aberdeen firm Sea Energy and its partner EDP, the Portuguese utility, are thought to have been awarded a site in the Moray Firth in Scotland.
Mainstream Renewable Power, a start-up chaired by Fintan Drury, the former chairman of Paddy Power, the bookmaker, is understood to have won the rights to the Hornsea site near the Humber estuary. Eon has been awarded a parcel, as has Centrica.
Companies had to submit detailed reports on the power-generating potential of each site. Brown is expected to say that the nine sites will be capable of producing more than the previous estimate of 25GW.
Yet big questions remain over the wisdom of betting so heavily on an intermittent and largely untested power source sited in one of the harshest operating environments, the sea. Andy Cox, energy partner at KPMG, said: “There remain a lot of issues that are still not fully understood. Reliability has got to be the biggest.”
Indeed, around the world there is less than 1GW of installed offshore wind power, according to the BWEA, equal to a single gas or coal-fired power station. These new sites will be farther out at sea and in deeper water, making maintenance harder.
Cox added: “If a gearbox goes down in November, it [the turbine] is going to be shut down for the whole of the winter.”
Companies will have to lay hundreds of miles of undersea cable to connect them to the grid and the electricity network will have to be upgraded substantially to handle the inconsistency of wind supply.
Funding is also going to be an issue. Utilities are already struggling to find the money for today’s smaller projects. The government recently extended a subsidy scheme, among the most generous in the world, to projects that are operating by 2014.
That does nothing for these giant round-three projects. The industry has already begun lobbying to have aid extended well beyond 2014 because the building costs are so much higher than for conventional power plants.
Despite the challenges, companies are piling in. According to the European Wind Energy Association, 2008 was the first year that investment in wind outstripped investment in all other types of energy infrastructure in Europe.