Anthony Alderman, Womble Bond Dickinson partner and energy specialist, teamed up with Ulrik Stridbæk, head of regulatory affairs at Danish wind developer Orsted, to discuss the future of offshore wind in the UK and Denmark for the third episode of the Bigger Faster Better podcast series with Energy Voice.

Widely considered the titans of the offshore wind industry, both the UK and Denmark have overcome the early-stage difficulties of kickstarting offshore wind markets, but questions still remain around pricing, location, government support, and competitiveness.

The importance of political support

For Anthony, broader political support and frameworks remain vital for the offshore wind sector:

“The target for net-zero and needing 40GW offshore wind by 2030, as well as the larger ambitions after that date, are still important because the desire for net zero generation and the desire for increased use of renewable and clean green electricity is the foundation stone for the demand, and without the demand there would be no reason to develop generation offshore to fulfil it.”

The certainty offered by the contract for difference (CFD) regime provides an important plank in the commercial framework for developers to invest money, he added.

Ulrik noted how the dynamics of political commitment have changed in Denmark and in the UK:

"The discussion has changed from quarrelling about how much we can afford to develop and who to fund, into one of now we cannot afford not to develop offshore wind. Now it’s more a discussion about how much? How fast? How do we manage the planning, consent, the permits? How do we match the development with demand?

“This is where political commitment still plays a huge role together with the industry to manage risks,” he continued. “In the UK and Denmark, we are still working hand in hand, both countries helping each other, supporting each other into taking the offshore wind industry to the new age - to the next generation.”

The challenges of demand

Ulrik also highlighted some of the challenges facing the industry, particularly around demand for new sites, which has surged and triggered a rise in option fees. “One of the hardships that has to be addressed is making enough sites available,” he said.

He also raised concerns about demand:

“The great uncertainty for us as investors today is not the technology – we have mastered it, we know how to do it and it’s competitive. But the big uncertainty is demand, will there be anyone who needs our electrons?

“Demand is becoming very political because of the electrification push for EVs and for hydrogen and for all these industrial processes. Those will also be politically driven and outside of our control. Therefore, CFDs are still very useful to help manage those risks and uncertainties".

Ulrik and Anthony discussed the two-step approach faced by offshore wind developers in the UK and how this compares with the more straightforward arrangement in Denmark, where the site and contract are awarded at the same time.

They also explored the arrival of the big oil companies, such as BP, that are willing to pay enormous sums of money for offshore sites, marking a truly different stage of development for the industry.

For Ulrik, there is a need for a more holistic approach to the tender process. He believes more complexity needs to be included to help foster value creation by linking offshore wind to hydrogen, batteries, as well as sustainability demands, such as biodiversity concerns.

Embracing tech-led solutions

Anthony explained how technology, especially the deployment of floating wind, will also be crucial going forward:

“Floating wind is vital for the UK’s further deployment given the deeper waters that we need to tap into.

“Offshore wind in the UK has been focused on the North Sea and Irish Sea, but to exploit some areas off Scotland, the Celtic Sea, South Wales and offshore from Cornwall, where developers will be working at much greater depths, floating wind will be really important.

“Getting floating wind, which is really at the testing stage, up to full commercial deployment, will be crucial to utilise new areas of sea bed. Which comes back to the point of making more space available”.

Ulrik agreed that floating wind represents a new frontier:

“At Orsted, we look forward very much to engaging in that.

“Of course, there is always room for improvement in mature technologies, such as fixed-bottom wind, but we are quite far into the maturity curve”.

Future visions for energy transition

Looking forward, Ulrik highlighted the excitement around the technologies associated with the turbine. “We have just announced a partnership related to refuelling electric ships from offshore wind,” he added.

The structure of grids will also be an important area of development in the future. Denmark has announced plans to build the world’s first energy islands, utilising the country’s substantial wind resources in the North and Baltic seas. The islands will serve as hubs to better connect energy generated from offshore wind to the energy systems in the region around the two seas.

Operating as green power plants at sea, Ulrik explained that the islands are expected to play a major role in the phasing-out of fossil fuel energy sources in Denmark and Europe.

The initial plan involves the creation of an artificial island in the North Sea that will serve as a hub for offshore wind farms supplying 3GW of energy, with a long-term expansion potential of 10GW.

This article is for general information only and reflects the position at the date of publication. It does not constitute legal advice.