'Low cost of offshore wind is the breakthrough moment for the creation of thousands of jobs'
THINKING BIG: Matthew Wright, Dong Energy's UK managing director.
By Grimsby Telegraph | Posted: 14 Sep 2017
DONG Energy UK’s managing director has described the huge drop in the cost of offshore wind as a “breakthrough moment for the industry,” as it paves the way for thousands of jobs in an energy transformation.
Matthew Wright said winning the argument on cost, as universally acknowledged this week, was supported by reaching a tipping point on consistency of supply with storage and conversion technologies rapidly advancing.
He addressed Grimsby’s Clean Break summit as the ink dried on the £57.50 strike price for Hornsea Project Two, Dong’s fourth wind farm to be operated out of the town. Auction prices started at £140, and have halved since the last Contract for Difference round in early 2015.
Currently in the midst of a £12 billion investment into the UK, much of which focused on Grimsby, Mr Wright said Hornsea Project Two, would be a “another couple of billion on top of that,” as work is underway now to expand the Grimsby base from where it will be served.
The Danish giant gave it financial sign off as Monday’s announcement was made.
Explaining how the figure was reached, Mr Wright reflected on the last 25 years, with Dong's farm at Vindeby in Denmark starting with 5MW and 11 turbines in 1991. This week's go-ahead is for more than 1.3GW.
He said: “The growth of our projects, the increase in scale, is quite staggering. It is not just scale of projects, but scale of turbines, scale of the whole operation.
“None of it would be possible without two things; the support of government in the UK - successive governments - supporting it. They suffered, critical early projects have been expensive, but that gamble paid off.
“We have had the same tremendous support in the supply chain.”
He told how a series of firsts showed the pioneering spirit, much of which played out from the town. “We have had the world's first 6MW installation with Westermost Rough run out of Grimsby, Hornsea Project One at 1,200MW, to be the world’s biggest, again run from here and we have Race Bank going on, and now Hornsea Project Two at 1,386 MW. That really does represent a bold step change in terms of the cost of offshore wind. By the time Hornsea Project Two is built we will have 10,000MW, and it is quite easy to see where cost reduction has come from. It is good old fashioned economies of scale and by doing something more and more, you get better at it. It is no secret that has happened in offshore wind.
“Hornsea Project Three in the pipeline and potentially a Hornsea Project Four, which hopefully will be bigger still,” Mr Wright enthused. “As size has gone up, cost has gone down and the price we see this week for CfD application round was a surprise to a lot of people but shouldn’t have been if people looked closely at the other auctions in Europe. In Denmark and Germany they are broadly at the same price level.
“The gamble government made to invest has paid off tremendously to bring down the cost.”
Touching on the £92 cost of nuclear, the price of gas, and glowing articles in the national broadsheets on the back of Monday’s announcements, he said: “People are starting to understand that offshore wind can play a much stronger part in the energy mix.
“The North Sea has enormous potential for offshore wind. We could power the whole of Europe 1.8 times, only from the available economic capacity of offshore wind. That is a lottery win, that’s pretty significant, but having won the last argument on price, the next thing we need to correct, to open up that potential, is the next debate about intermittency.
“We are beyond the tipping point, the technology we see coming forward is in storage and conversion are going to make this a reality.
“This region is spectacularly well placed, it is on the door step, it has won the lottery in terms of geographical advantage, so much more so than the south or west coasts, and because of that we will continue to see a number of jobs.
“Our operations base in Grimsby, we are digging up around it to expand and get several more hundred people in. Race Bank, Hornsea Project One, Hornsea Project Two, they will create hundreds of jobs, and it is fantastic news. What about thousands of jobs?
“We shouldn’t just be talking about offshore wind in Grimsby, we should be thinking about energy transformation written large across the Humber and beyond.
“This is a global opportunity, where the UK is leading. Let’s make the most of that and think big, and I can think of no better place to start that than here, and Dong Energy stands ready.”
Underlining a desire to work in partnerships and the long term commitment of the likes of Dong Energy and ABP, leader of North East Lincolnshire Council, Ray Oxby, had opened Clean Beak's day two just before Mr Wright's keynote address.
He said: “We are making the borough an attractive place to live, work and invest.
“We are not just about fishing and tourism any more. Energy Estuary is a term coined some years ago, and look what we’ve delivered so far. We have a clear ambition to be nationally and internationally recognised as UK’s leading region for low carbon energy and the UK champion for renewable energy industry.
“We are promoting a stable economy here where businesses are seeing they can and want to invest. We are very business-friendly. Administrative boundaries should never be a dividing line when investment, jobs and opportunities present themselves.
“It really is happening in the Humber, right here, right now, please come and join the journey and cement the building blocks.”
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