With the announcement of the option agreement for the Port of Sheerness, Vestas Offshore has taken yet a step in shaping the UK offshore market. Government Relations Director, Matthew Delany explains how Vestas creates a dialog with the political regime in order to shape the future support scheme tariff system for offshore renewable energy. A dialog, which is essential if the UK Government is to achieve its renewable targets for 2020 and secure the “green jobs” it desires.
The targets for the UK Round 3 offshore wind programme have been taking the headlines recently in the media, particularly in relation to the prospects of significant job creation and how offshore wind can contribute to the UK’s economic development. However, a prerequisite for investments of this size is long-term political support, including a stable support scheme tariff system. Components of great importance when companies such as Vestas look to make long-term investments in advanced technological manufacturing facilities. Matthew Delany explains:
“We are now increasing the focus to create market certainty on behalf of our customers and suppliers. After the announcement of the option for land at Port of Sheerness I received many positive responses from customers, investors, and industry stakeholders, who are praising the way Vestas is confronting the regulatory risks in the offshore market. Vestas needs early commitments from our customers to turn the option agreement for the land into a full lease, and thereby, create the jobs desired by the politicians and the public. For this, we and our customers look to the UK Government, because they hold the key to the increased certainty.”
Why does the UK Government hold the key?
“It will be very difficult for any customer to sign a Round 3 contract right now, because of the current uncertainty in the market. The UK Government is currently going through the most radical reform of its electricity market arrangements for decades. It includes a phasing out of the existing support tariff scheme and introduction of a new one. Until the industry knows exactly what this new support scheme looks like, it will be incredibly difficult for our customers to plan ahead and make investment decisions on future projects. Vestas has pioneered the offshore market and we continue to do so now by raising attention to the need for increased market certainty. With the prospect of significant job creation potential at Sheerness it appears more political stakeholders are willing to listen to us.” Says Matthew Delany on the phone from Copenhagen, minutes after returning from a meeting with a UK Member of Parliament.
You seem to focus much on the UK Government. -To which extent does this require the attention and support of the UK Government?
“In short; to a high extent. We have a limited window of opportunity – the UK Government will be releasing their energy white paper before parliament goes to summer recess in late July. The proposals in this paper will have a huge impact on the future outlook of the UK offshore wind market, and given the importance of this market to Vestas Offshore, it is paramount we try everything we can right now to influence those outcomes. Port infrastructure in the UK is not publicly owned as in some other countries, but the Government has the power to support and de-risk investments in port infrastructure which will allow turbine manufacturers, like Vestas, to create stronger business cases for customers who are eager to invest in offshore power plants in Round 3. And the UK Government, therefore, also holds the key to the success of the targets for 2020 as development and investment in the port infrastructure will create more certainty. Furthermore, it is the Government’s decisions around the support scheme mechanism which will determine the fate of Round 3. These two factors are crucial in order to move to the next step in this very exciting offshore journey. On any journey, you will face delays or detours and this is what we are dealing with in advance – we are dealing with those challenges and bottlenecks, which could potentially damage the UK’s future renewable targets and prospects for job creation,” says Matthew Delany.