Offshore wind power worth up to £35bn to the UK by 2050 if innovation is harnessed

Posted on 28 Feb 2012

Innovation is key to developing an offshore wind power industry worth up to £35bn to the economy that can save up to £89bn in meeting the UK’s carbon reduction targets, says new report ratified by six publically-funded organisations.

A multi-billion pound UK offshore wind industry that could be worth 10% of the global offshore wind market came a step closer today with the publication of a report into innovation needs.

Providing a range of innovation needs are fulfilled, the offshore wind industry will create billions of pounds in manufacturing activity, systems installation, improving electrical transmission and operations and maintenance.

The Technology Innovation Needs Assessment (TINA) for Offshore Wind Power says the UK can become a leader in a global offshore wind market with a potential cumulative gross value-added of between £200bn and £1 trillion to 2050.

Successfully implementing the required innovation would save the UK from £18bn up to £89bn to 2050 on the cost of hitting carbon emissions targets, depending on different deployment scenarios.

The new research is authored by the Low Carbon Innovation Co-ordination Group (LCICG) that coordinates the UK’s major public sector-backed delivery bodies in the area of low carbon innovation. The group includes the Department for Energy and Climate Change, the Technology Strategy Board and the Carbon Trust, among others.

But innovation is essential to realising the potential of UK offshore wind, the report says. Offshore wind power is currently very expensive, costing about £3.1m/MW and over £140/MWh for a typical Round 2 site. How much and how quickly it is deployed will depend on innovation to reduce costs.

A range of innovation improvements were identified, from refinements in turbine and blade design to higher voltage cabling between arrays. Innovation opportunities, if applied over the next 10 years, can bring down deployment costs of offshore wind by up to ~25%, with further savings post-2025 likely to reduce costs further by up to 60% by 2050.

Different energy system modeling suggests that offshore wind could cost-effectively deliver between 20% and 50% of total electricity generation by 2050.

While innovation is essential for large scale deployment, the overall capacity installed depends on key ‘exogenous’ factors – including the cost of alternative renewable energy technologies like onshore wind and biomass, and the public acceptability of nuclear power.

The effect of these exogenous factors on offshore wind generated three deployment scenarios – low, medium and high – expressed in installed gigawatts by 2020 and 2050. The report’s analysis was based on the medium scenario, where 18GW will be installed by 2020 and 45GW by 2050.

Potential impact of innovation on levelised costs of an example offshore wind site - graph

The report identifies five sub-areas of offshore wind power infrastructure, where innovation will reduce costs; turbines, foundations, collection and transmission, installation and operations & maintenance (O&M). Public sector innovation investment is identified for each. For example, public money can fund drive train and blade testing facilities to improve turbine design, and design and test new cabling concepts and centralised power clean-up.

Turbines comprise the largest share of the cost of energy (28%), followed by the foundation, installation and O&M (about 20% each). The report assesses the impact of innovation on each sub-area. New design structures for deeper water turbine, for example, could reduce the cost of wind turbine foundations s by 70% by 2050.

Common market failures for offshore wind are also identified in the report. Public sector intervention to catalyse private sector investment is part of the proposed solution.

For example, it says that turbine manufacturers lack the capability to develop their own test sites, and so rely on national centres or developers to provide sites. The UK has a strong position on test sites, with NAREC’s new £35m 100m blade test facility in construction. The Aberdeen Renewable Energy Group is also developing the European Offshore Wind Deployment Centre – an offshore wind test facility off the coast of Aberdeen – in a joint venture with Vattenfall.

“This is a standard data set that six member public sector organizations agreed upon,” says David Bott, director of innovation programmes at the Technology Strategy Board. “The fact that BIS, DECC, the ETI [Energy Technology Institute], us and the Carbon Trust have teamed up and found consensus on methodologies and conclusions, sets this apart. As far as I know it’s the most thorough indicator of technology needs for offshore wind in the UK.”

However, the report is not a straight blueprint for how to achieve multi-billion pound savings.
It includes an alternative scenario, or counterfactual, of ‘perfect system optimisation’ where offshore wind deployment would adjust significantly if cost improvements are not achieved. This scenario is more suitable where lower cost alternatives are readily available and easily substitutable and deployment incentives adjust to changes in cost-effectiveness. The estimated savings in energy system costs would be about 65% lower here.


The LCICG is made up of the Department for Business Innovation & Skills, the Department for Energy and Climate Change, the Energy Technologies Institute, the Technology Strategy Board, the Carbon Trust and the Research Council UK – Energy.

Will Stirling