UK Case Study

As the American economy continues to decarbonize, the deployment of policies and financial support to clear the existing inefficiencies in nationwide OSW deployment are imperative. Applying lessons-learned from leading nations such as the UK can facilitate the rapid, cost-effective, and just deployment of offshore wind in the United States.

Recording of nationwide offshore wind capacity began in 2008, with the first demonstration project, Blyth Offshore, being constructed in 2000 on the Northumberland coast. The Blyth project, at a total capacity of 4 MW (two 2 MW turbines), was home to the largest offshore wind turbines in the world at the time of installation– setting a precedent for the UK’s consistent early success in developing its offshore wind industry ( Catapult, 2022 ). The first major commercially funded utility-scale project was commissioned in 2003: the North Hoyle Offshore Wind Farm, which housed 30 2 MW turbines on the North Wales coast ( Catapult, 2022 ).

History of the Blyth Offshore Demonstration Farm

Blyth Offshore was decommissioned as required by British authorities in 2019, after an operating life cycle of nearly two decades. One of the two turbines was re-installed in the Port of Blyth as a component of a new offshore wind training facility to allow for practical worker training exercises at a safe height, and the other was deconstructed for reuse as spare parts ( Port of Blyth , 2021). The addition of the training facility has enhanced the Port of Blyth’s existing university partnerships, which has enabled the creation of the Post 16 Subsea and Renewables Diploma qualification course. The decommissioning of Blyth Offshore was the first and only recorded occasion of plant “sunsetting” in the country, and the nature of the UK Renewable Obligations Scheme has made the decommissioning of any other existing plants highly unlikely within the next 5 years– even the earliest projects approved from Round 1 were incentivised with subsidies that stand until 2028 ( Deign, 2019 ). As a demonstration project, Blyth Offshore did not share this benefit structure.

An area of the Blyth site further offshore was used starting in 2017 for the installation of a 5-turbine, 41.5 MW floating offshore wind project, Blyth Offshore Demonstrator Phase 1. This project was in talks for a Phase 2 expansion in 2021, which would involve the installation of another 4 to 5 floating turbines that have capacities of up to 14 MW each ( Durakovic, 2021 ). A key requirement for the Demonstrator project is to test, at a relatively small scale, new technologies that have the potential to reduce the cost of future offshore wind expansion. The project developer, EDF Renewables, is still finalizing the project’s design but has estimated that at least 2 turbines will be commissioned by spring 2025 (Durakovic, 2021).

Soon after Blyth Farm’s commissioning, 17 projects including the North Hoyle Farm were made possible through 1998 negotiations between the British Wind Energy Association (BWEA) and the Crown Estate, who held ownership of the majority of high-potential coastal land. Prior to this discussion, the BWEA had consulted with the government to build a framework for effective negotiation, driven by the potential opportunities of being a first-mover in the offshore wind industry (U.K  Department of Trade & Industry, 2002 ). After the approval of project standards, a call for project proposals was released that (1) signaled a commitment from the UK Government to expand offshore wind capacity construction and (2) created a competitive environment for developers that encouraged first-round participation, to gain valuable experience for an advantage in later project development while lowering the cost of generation as much as possible. The development farms of Round 1, which were intended to give developers experience with constructing processes, were approved in 2001. The completion timeline for these projects ranged from  2.5 to 12 years, and the maximum generating capacity for the round exceeded 1.2 GW across 12 projects (with 5 withdrawn following approval). The range for project completion time has since shifted upward, with the first implemented project in Round 3 (Rampion) being commissioned in 2018, 8 years after the round’s bid winners were announced. At the same time, the associated project sizes have increased significantly– approved Round 3 projects have planned generation capacities of 400 MW to 2.85 GW, compared to Round 1 development farms of 60 MW to 194 MW.

Today, offshore wind represents nearly 30% of the UK’s renewably generated electricity and 13% of electricity generated from all sources ( Office for National Statistics, 2021 ). While this increase in national renewable share came with an eventually sizable domestic supply chain expansion, the UK government faced initial tradeoffs between generation cost reduction and the creation of local economic value. The UK government set a clear goal for globally competitive offshore wind cost reduction in 2012, specifically focusing on lowering the average Levelized Cost of Energy (LCOE) to under £100 per Megawatt-hour (MWh) by 2020 for utility-scale offshore wind operations. LCOE is the measure of the cost required to generate each unit of electricity (most commonly MWh for utility-scale applications), often calculated by dividing the total costs (project development, annual maintenance, etc.) by the total MWh a project is expected to generate over its lifetime. LCOE is often a useful measure of the success and economic performance of a project, as it accounts for both fixed and variable costs, is easily comparable across projects, and can determine the price at which a project’s generated electricity should be sold. Supply chain development accelerated throughout the country soon after this announcement, with many local project development, commissioning, and operations management companies taking root. The development of this goal sent the signal that the UK government had recognized the country’s generation potential and was prepared to provide adequate assistance through the implementation of tax credits and other financial support mechanisms, which were gradually reduced after the set LCOE goals were met and exceeded. Projects due to begin operation from 2021 to 2026 are estimated to generate at a LCOE of under £48/MWh ( Evans, 2022 ). To achieve this, however, many turbine components were outsourced from Asia and the EU to reduce costs– limiting domestic supply chain development primarily to assembly and construction, therefore limiting local job creation on these projects. Projects in development as late as 2017 had an estimated 32% UK content ( McNally, 2022 ), a figure that called into question the government’s success in maximizing the potential local benefit of offshore wind given the country’s advantageous position as a first mover in the industry. Following the success of nationwide LCOE reduction, the UK Offshore Wind Sector Deal has set an objective to increase average UK content in the utility-scale Offshore Wind development process to 60% by 2030 ( BEIS, 2019 ), a figure that more recent projects are steadily approaching (at an average rate nearing 50%). 

Throughout the development of the supply chain, an industry-initiated strategy that proved successful was the concept of “supply chain clustering”– the establishment of groups of offshore wind companies in close proximity to each other. Clustering of companies has been found to improve efficiency across many aspects of the project development process, including transport and collaboration with developers. Clustering alone was estimated to reduce the average Levelized Cost of Energy for offshore wind by over 3% from 2013 to 2020, and there are currently 8 major supply chain clusters across the UK’s coastal areas. The UK’s Offshore Wind Sector Deal in 2019 prompted further collaboration between industry and local government to strengthen these clusters for future increases in development across the country ( Offshore Wind Growth Partnership, 2021 ). In a national survey, it was found that proximity to a major functional port was one of the most highly-sought after characteristics for companies when determining location, followed by local economic incentives and a well-trained local labor force ( Nightingale, 2021 ). This aspect may be slightly more difficult to recreate in the U.S., given the smaller average port size and higher congestion rates. OSW suitability varies significantly for ports in high-potential coastal regions, and costs for bringing aspects of ports up to standard often fall on the developer. To ensure that investment in project development and establishment of local industry are not discouraged by these economic and logistical barriers to entry, port sizes and characteristics are crucial areas of focus.

From 2020-2021, there are full time equivalent (FTE) job estimates, accounting for approximately 5% (10,390 FTE employees) - 12.5% (26,000 FTE employees) of the total 207,800 full-time equivalent employees in the UK low carbon and renewable energy economy (LCREE) (Office for National Statistics, 2021; Buljan, 2021). This number is projected to increase to over 69,000 jobs by 2026,  a 165% - 564% increase in job creation  ( Norris, 2021 ). Of the broad spectrum of jobs offered within the UK’s offshore wind industry, 30% are technical/professional jobs, 19% are skilled manual jobs, and 16% are semi-skilled operative jobs ( Offshore Wind Industry Council [OWIC], 2022 ). The National Careers Service outlines the average salary for a wind turbine technician in 2022 is £23,000- £42,000, with 37-40 hours documented as typical hours a week ( National Careers Service, 2022 ). The reported salary ranges from the 41st percentile up to the 79th percentile of pay, and is equivalent to $54,000-$137,000 in USD ( HM Revenue & Customs, 2022 ). In total the UK low carbon and renewable energy economy (LCREE) generated £41.2 billion in income in 2020 equivalent to $51.06 billion USD in 2020. Of this income, 9% (£3.69 billion or $4.57 billion in USD) was generated directly from offshore wind (Office for National Statistics, 2022). 

Wind Sector Deal

In March 2019, the UK Government and the Offshore Wind Industry Council signed the Offshore Wind Sector Deal, a long-term strategy detailing how to increase the productivity and competitiveness of the UK’s offshore wind supply chain, ensuring offshore wind’s integral role for a low-carbon, flexible grid system ( HM Government, 2019 ). This deal aligns with the pillars of the Industrial Strategy, outlining how the UK can become the most innovative economy in the world. The pillars are: ideas, people, infrastructure, business environment, and places. With these pillars in mind, the UK government is promising £7 billion in public Research and Development spending by 2022, establishing a System Management and Optimization Task Group and pledges £557 million for future Contracts of Difference. The industry pledges to increase opportunities for job mobility between energy sectors and apprenticeships. It also aims to increase diversity in the workforce through the establishment of an Investment in Talent Group, an HR Forum and 3 subgroups to focus on gender balance, ethnicity and apprenticeships (BEIS, 2019). The industry commits to use 60 percent of domestic materials by 2030, and dedicates £250 million across the UK to strengthen the domestic supply chain by setting up a new organization, the Offshore Wind Growth Partnership (OWGP). Finally, this Deal also promises to increase exports to £2.6 billion by 2030 as well as link clusters with educational institutions, innovation hubs, and manufacturing bases to increase competitiveness and productivity ( Naimoli, 2021 ).

Apprentices currently make up 2% of the UK OSW workforce. Following the Offshore Wind Sector Deal of March 2019, a government-industry partnership, the sector aims to have 2.5% of the workforce be recruited through apprenticeships  (BEIS, 2020 ). This equates to 3,000 total apprentices employed by the end of the century  (Norris, 2020).  Apprenticeships in the UK are not union run. Instead, they are managed by wind energy companies in partnership with educational institutions, serving as a direct pipeline to jobs. Three main offers of OSW apprenticeships in the UK are UK Ørsted, RWE Renewables, and ScottishPower. Specifically, Ørsted, a Denmark based wind company, offers a paid three-year apprenticeship. The program is put on in partnership with the Grimsby Institute in Grimsby on the UK's East Coast and Furness College in Barrow-in-Furness on the West coast   (Ø rsted, n.d.).  Successful apprentices who make it through the one year class-based study and two years on-site training graduate with a Maintenance and Operations Engineering Technician (MOET) qualification that integrates a BTEC Level 3 in Engineering have a direct pipeline to a full-time job at Ørsted  ( Ø rsted, n.d.).  RWE Renewables UK offers an offshore wind turbine technician apprenticeship in partnership with Llandrillo College of Rhos-on-Sea in North Wales and Scottish Power Renewables has an offshore apprentice program in partnership with East Coast College in Lowestoft (RWE in UK and Ireland, n.d.; ScottishPower, 2021).

The offshore wind auction process makes it difficult for workers to organize and existing energy companies have excluded unions from their renewable operations  (International Trade Union Confederation, 2022).  The RMT, or National Union of Rail, Maritime, and Transport workers, represents many transit workers, including some seafaring and offshore jobs in the industry and has called for increased ties between offshore wind projects and labor for good quality UK jobs, considering job conditions at every point of the supply chain  (Offshore Engineer, 2021).  RMT has also called for the UK government to“ guarantee employment and apprenticeships throughout the UK supply chain at the lucrative leasing stages currently overseen by Crown Estate and Crown Estate Scotland”  (RMT Press Office, 2021).  The UK government has fallen short in its support of unions to guarantee high quality clean energy jobs.

When analyzing offshore wind workplace safety, the UK saw a 41% reduction in High Potential Incidents in 2020, reporting under 100 for the first time  (The Crown Estate, 2022) . There was also a 20% decrease in incidents that called for medical evaluation or emergency responders  (The Crown Estate, 2022).   G+  Global Offshore Wind Health and Safety Organization, is formed by nine of the world’s largest offshore wind developers in partnership with the Energy Institute, and is an opt-in membership for OSW owners, developers, and Original Equipment Manufacturers (OEMs) of offshore wind turbine generators  (G+ Global Offshore Wind Health and Safety Organisation [G+], n.d.b).  Some notable members of G+ are RWE, ScottishPower Renewables, Equinor, Orsted, EDF Renewables, BP, and Shell  (G+, n.d.a).  By circulating information about good lifting practices, videos on manual handling and fabrication yards, G+ can help lower the number of injuries, since performing these procedures are leading causes of cases in the UK.

The UK is striving to cultivate a diverse and inclusive offshore wind labor force and has established an Investment in Talent Group to enhance diversity and equity in the workplace  (BEIS, 2020 ). The UK offshore industry is set to have women account for at least a third of the workforce by 2030 (BEIS, 2019). Comparatively, Taiwan is leading the world in accomplishing a greater gender balance, with women accounting for 26% of the sector’s workforce (British Chamber of Commerce in Taipei, 2021).  Additionally, the UK has set a DEI target of Black, Asian, and minority workers comprising 9-12% of the OSW workforce by 2030 ( Norris, 2020 ). Integrating targeted recruitment and increasing access to apprenticeship programs from the beginning of OSW supply chain development is vital to ensure talent of all genders, backgrounds, and racial groups are represented in the climate workforce (The Crown Estate, 2022). More regular granular data on employee profiles is needed to accurately track improvement in gender, racial diversification, and equity within roles.

2021 saw the largest UK OSW Power Purchase Agreement (PPA) in volume signed between RWE Renewables and EDF Energy. This fifteen year PPA will service renewable electricity to the equivalent of over 1.2 million UK homes, securing the UK’s spot as a leading market for renewable energy ( RWE Renewables, 2021 ). The UK government has dedicated £31 million in government funding to implement turbines in deep-sea regions (BEIS  & The Rt Hon Greg Hands MP, 2022 ). The private industry matched this amount for a total of £60 million invested for floating offshore wind technologies. 11 successful projects have been each granted £10 million by the government. With the government funded Floating Offshore Wind Demonstration Programme, the costs of developing such technologies will be significantly decreased, meaning the UK supply chain can be built out quicker. This Programme has already led to new floating wind technology projects (BEIS  & The Rt Hon Greg Hands MP, 2022 ). For example, one project is both creating and implementing new technologies for “mooring floating turbines to the seabed, cable protection, a floating turbine base design and an advanced digital monitoring system” and another is working on a “compact floating turbine foundation and anchors that will likely enable a 2 MW, or larger, turbine to be demonstrated in UK waters” (BEIS &  The Rt Hon Greg Hands MP, 2022 ). These investments and developments will help meet the 5 GW target of offshore wind energy via floating technology, out of the overall of 50 GW of OSW by 2030, as outlined in the British Energy Security Strategy (BESS) ( HM Government, 2022 ).

When evaluating the UK’s offshore wind industry, some key lessons for the U.S. emerge: 

• Supply chain clustering is an effective measure to lower LCOE and project completion time in the long term. However, expansion projects for major U.S. ports will be necessary to facilitate this. 
• For early-stage projects, there is a trade-off between minimizing LCOE and maximizing local content. However, this trade-off decreases in significance as the domestic supply chain expands and competition begins within local industry.
• Given the U.S. has an infant offshore wind economy, it is imperative the U.S. prioritizes DEI from the beginning, through targeted hiring as well as establishing diversity requirements and strong reporting systems for tracking. 
•  The UK is taking key steps to reduce time spent on the planning and delivery of power to accelerate offshore wind development and deployment which currently takes up to thirteen years. At this early stage of OSW development, the U.S. is in a position to create an American siting solution in order to streamline these processes now, instead of fixing the problem later. 
• To further accelerate build out of its domestic supply chain, the UK government leads programs that incentivize technology innovation, which the U.S. could mirror to boost floating wind development. 
• The UK government encourages paid apprenticeships directly from industry in partnership with educational institutions to ensure a strong offshore wind workforce pipeline. The U.S. could follow a similar model and strengthen such programs by also partnering directly with labor unions. Such apprenticeships would lead to an increase in local workforce availability, and can also be targeted to increase access to green jobs for frontline communities.