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The future of wind energy in the U.K.
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Google Images: Offshore wind farm
So it looks like shortages of turbines and willing investors are making things difficult for Britain as it attempts to reach a goal of generating 15 percent of its electricity from renewables by 2020. Word is, investors aren't happy with the lack of incentives to develop offshore wind, and the 3,000 new offshore turbines needed to reach the 2020 target are becoming less likely to materialize. After all, there are only two offshore turbine manufacturers that can even deliver these things – Siemens AG and Vestas. And to add insult to injury, it now looks like BP – which was planning to build out a number of onshore wind farms – is seeking greener pastures in the U.S.
I know, it's mind-boggling that the U.S. is now more favorable than the UK for wind farm development. Of course, this has nothing to do with wind resource, and everything to do with hostile regulatory frameworks. Thankfully, those days are coming to an end.
Now BP announced last week that it's planning to spend up to $8 billion in the U.S. wind energy sector. After difficulties in getting planning permission in the UK and lower economies of scale have made the wind sector less attractive than that of the U.S., BP plans to spend its first $1.5 billion in 2009. The company already expects to have 1 GW installed by the end of this year.
Of course, the UK isn't really losing sleep over BPs decision to move its wind development projects to the U.S. Rather the concern is the underlying factors that could deter continued wind development for our friends across the pond. And those factors really boil down to the hold up on investment because of grid access blockages. According to wind energy leaders in London, there's now about £50 billion of private infrastructure investment that won't be released until the Government can rapidly deploy access to the national grid.
Still, upgrading the country's grid is not likely to be an issue that will be set aside until the economy improves. There's too much at stake for consumers and the nation's security, and the wind resource in that region is too valuable to be shrugged off because they can't move the megawatts. Theoretically, the UK could generate enough power for the entire country using its massive wind resource alone. Granted, that's not likely to happen anytime soon, but as the world continues to move forward with the integration of renewable energy, wind energy is sure to be one of the key players in the overall energy mix of the UK.
Over the course of the next decade, billions will be spent to build and upgrade the nation's grid. That has to happen with or without renewables. So doubting the future of wind energy in the UK based on grid development delays only makes sense if you oppose renewable energy integration, and are looking for an excuse to downplay its enormous potential. That's not to say investors should run out and jump on every wind play operating in the UK. But for investors seeking long-term potential, grid development delays should not dissuade you from further investigating the UK's wind industry.
For more on wind energy investing, visit Green Chip Stocks
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