The Offshore Valuation Group has just released the Offshore Valuation, the first comprehensive valuation of the UK's offshore renewable energy resource over the long-term.
The Offshore Valuation Group is an informal collaboration of government and industry organisations that has commissioned an independent report to address the question: what is the value of Britain's offshore renewable resource? The group includes the UK, Scottish and Welsh Governments, the Crown Estate and eight companies across the energy sector.
It is widely acknowledged that within Europe, Britain holds the largest resource of offshore wind, wave and tidal power. Until now, the full scale of the economic opportunity this represents has been unknown.
The Offshore Valuation reveals that rapid development of the UK's offshore resource – using fixed wind, floating wind, tidal stream, tidal range, and wave technologies – could by 2050 generate an amount of electricity equivalent to a billion barrels of oil per year, or the same as the average annual output of UK North Sea oil and gas production seen over the past four decades. If developed still further to tap their full practical potential, offshore renewables would allow the UK to power itself six times over at current levels of demand.
The study shows that the offshore resource has value to the UK whether it uses the power itself or simply views it as an export commodity to Europe.
Three illustrative scenarios calculate the potential Net Present Value to the UK of developing this resource to maturity by 2050.
The report's central scenario examines what would need to happen for the UK to become a net exporter of offshore renewable electricity. To do so, the UK would need to exploit just under a third of its total offshore wind, wave and tidal resource by 2050 – resulting in infrastructure with a positive Net Present Value of GBP35 billion (US$51 billion). The supply chain necessary to realise the central scenario would have annual revenues of GBP62 billion in 2050, profits of GBP16 billion, and could employ around 145,000 people in manufacturing, installation and operations and maintenance. If fossil fuel prices rise higher than the government's central projections, the benefits would be larger still.
The report sets out a number of key enablers for government and industry to ensure the UK is on a path that allows it to access its substantial and valuable resource:
"This report seeks to present to the UK the true value of an energy resource right on our doorstep – at a time when concerns over security of supply and climate change are ever-present," commented Tim Helweg-Larsen, Director of PIRC.
"To discover that we own a resource with the potential to return the UK to being a net power exporter, and on a sustainable basis, is genuinely exciting, and a wake-up call to those in a position to foster the further development of this industry."
: "Britain's huge offshore energy resource is dominated by wind: offshore wind farms occupying a sea-area the size of Wales would deliver more electricity than Britain's average electricity consumption today," added David MacKay, Chief Scientific Advisor at DECC.
"The key question is what building and maintaining these wind turbines and their associated energy-storage and delivery systems would cost, in material and financial terms. For me, this helpful work brings home the crucial value of investment in innovation in wind machine designs, in floating wind turbine prototypes, in tidal stream, and in novel energy storage systems."
