Offshore wind has certainty that's a rarity in Brexit Britain

I was willing to give Brexit a chance. Honestly, I was. I wrote a bleary-eyed piece on the day of the referendum result looking for the positives in a situation I didn’t like.

I wanted to believe the UK government had a plan for Brexit. I wanted to believe that the politicians and voters that decided to take the UK out of the European Union had an idea of how they could do it, without taking an axe to UK companies and jobs. But, as I’m sure we’re all now painfully aware, it appears that nobody in power has a clue.

UK Prime Minister Theresa May’s government is in deadlock with both itself and the EU; and unwilling to do much about it because it could lose another general election to Jeremy Corbyn’s Labour Party. There now appears to be a serious chance of the UK leaving without a deal – or that, if there is a deal, it’ll leave the UK in an even worse position financially than even those of us who wanted to be optimistic had thought.

The nadir of the argument was, as so often, summed up by charlatan-in-chief Boris Johnson in a reported – and not denied – riposte to concerns of business leaders in a private conversation at a diplomatic gathering. That riposte? “Fuck business.” It’s just one comment, but mixed zeal with ignorance and incompetence. Top work!

It is against this backdrop of deep business uncertainty that the government gave the UK offshore wind industry clarity and, whisper it, good news on 23rd July. It confirmed it would hold a Contracts for Difference auction for offshore wind, remote island wind farms and other technologies next May; and then every two years during the 2020s to support up to 2GW of new capacity each year.

Energy minister Claire Perry said this would support the construction of up to 16GW of new UK offshore wind farms in the 2020s, and means offshore wind farms would generate 20% of UK electricity by 2030. That is on top of the 7GW of wind farms now operational in UK waters, and the additional 7GW in development or being built.

That 16GW assumes that strike prices at offshore wind farms will keep falling from the current lows of £57.50/MWh achieved in the previous CfD auction in September. And more falls should be expected given that some zero-subsidy projects have been agreed in Germany and the Netherlands; and that strike prices in Denmark could fall to around €46/MWh by 2020, according to research from the Danish Energy Agency.

In addition, offshore wind farm owners will find new ways to cut merchant power price risk, including power purchase agreements of the sort agreed by Vattenfall for one-fifth of electricity from the 600MW Danish offshore project Kriegers Flak in July.

The UK government’s announcement is good news. It shows that, far from the “fuck business” slogan, the government is willing to give firms in the offshore wind industry the long-term certainty they need to make investment decisions. It is looking to encourage investment in the offshore wind supply chain in Britain; and develop the skills and products to export overseas. So, a bit like the Brexit we were promised.

However, it could go further. UK leaders should look to give the same certainty to the onshore wind sector, which could help to make onshore wind a bigger part of the UK electricity mix at prices even lower than those seen offshore.

A poll by RenewableUK in July showed that two-thirds of people in the UK wanted an end to policies that have effectively ended government support for new onshore wind farms. This would give certainty to another part of the economy as Brexit looms.

But of course, perhaps the government knows something we don’t. Perhaps the lack of support for onshore wind is a tacit acknowledgement that we won’t need electricity in the dystopian post-Brexit future that some of my fellow Brits are predicting. Maybe it doesn’t want wind farms getting in the way of the cars in the “Mad Max-style Brexit” that former Brexit minister David Davis said in February definitely wasn’t happening.

For now, it’s anybody’s guess.