Offshore Energy Development Environmental Report Published

After over a year of carrying out extensive research on the environment of the UK’s seas to assess the potential for developments in offshore wind, oil and gas licensing and natural gas storage, on 26 January 2008, the UK’s Department of Energy and Climate Change (DECC) published “UK Offshore Energy SEA: Future Leasing for Offshore Wind Farms and Licensing for Offshore Oil and Gas and Gas Storage”, a report which is part of its UK Offshore Energy Strategic Environmental Assessment (SEA).

The Report, described by Ed Miliband as “a real advance in our understanding of the ecology and geology of the UK marine environment”, is now out for public consultation and seeks to inform decisions on where future offshore energy development can be built. The Report is likely to be of interest to all those looking to develop or otherwise invest in offshore energy developments, particularly energy companies looking at gas storage, Round 3, tidal, wave and other offshore renewables, as well as other stakeholders in the industry.

DECC has indicated that it considers offshore wind as “hugely important in meeting the UK’s renewable energy and climate change targets” and has proposed to increase financial incentives to keep the UK as an attractive location for offshore wind development. This may be in response to recent announcements by a number of utilities on the high comparative costs of offshore wind investments (circa £3m per MW according to some), and the figures showing that renewable investments are slowing down due to the combined impact of high oil prices, the fall in the value of sterling and credit constraints. It is not currently clear what the additional financial incentives may comprise.

DECC also intends to continue efforts to:

• make the planning process easier;
• ensure quicker connection to the grid;
• offer better support to business and tackle supply chain blockages; and
• reform financial support for renewables.

Background

Draft plan/programme

DECC is conducting a SEA of a draft plan/programme to enable further rounds of offshore wind leasing and offshore oil and gas licensing in UK waters, including the underground storage of combustible gas in partially depleted oil/gas reservoirs. This is in accordance with the Environmental Assessment of Plans and Programmes Regulations 2004 (the SEA Regulations), which apply to any relevant plan or programme which relates either solely to the whole or any part of England, or to England and any other part of the United Kingdom (UK).

Key aspects of the draft plan/programme include:

· For offshore wind energy - to enable further rounds of offshore wind farm leasing in the UK Renewable Energy Zone and the territorial waters of England and Wales. The objective is to achieve approximately 25GW of additional generation capacity by 2020. This part of the plan does not include the territorial waters of Scotland and Northern Ireland.

· For offshore oil and gas - to hold further seaward rounds of oil and gas licensing in UK waters.

· For gas storage – to include future licensing for the underground storage of combustible gas in depleted and other offshore oil and/or gas fields in UK waters.

Focus of the SEA

The SEA considers the alternatives to the draft plan/programme and the potential environmental implications of the resultant activities in the context of various objectives and also the existing regulatory and other control mechanisms; the wider policy and environmental protection objectives; the current state of the environment and its likely evolution over time; existing environmental problems; and the potential spatial interactions with other users of the sea.

Report’s findings and recommendations

To attain the 25GW objective of the draft plan/programme, several thousand wind turbines would be needed which, depending on turbine spacing and wind farm separation, may occupy up to 10,000km2. The Report recommends that there is scope for between 5,000 and 7,000 more offshore wind turbines. In this context it is useful to note that at present there are 7 wind farms currently operating off the UK coast: (North Hoyle, Scroby Sands, Kentish Flats, Barrow, Burbo Bank, Lynn and Inner Dowsing), with 5 further wind farms under construction and 2 wind farms in the planning process stage.

The report concludes that the bulk of the new offshore generation capacity should be sited outside 12 nautical miles (approximately 22km) from the coast, although in certain cases new offshore wind farm projects may be acceptable closer to the coast.

There will be the opportunity for interested parties to be involved as the government will require detailed site-specific information and stakeholder consultation before assessing the acceptability of specific major Round 3 or subsequent wind farm projects close to the coast. The Marine Bill, currently proceeding through Parliament, would also give coastal regulators and communities further opportunities to comment on the way the marine environment is managed.

Next Steps

· Interested parties can respond to the public consultation on the Offshore Energy SEA Environmental Report, which will close on 22nd April 2009. The report and supporting documents are available from the SEA website or on CD or printed copy. A Post Consultation Report indicating comments received and responses is expected in due course.

· The Government is expected to decide on the acceptable level of offshore wind development, as well as offshore oil and gas licensing and gas storage in hydrocarbon reservoirs, in Spring 2009.

· Bids for Round 3 zones close in March 2009, enabling The Crown Estate to make awards later in 2009, following the Government’s decision on the Offshore Energy SEA. The Crown Estate will consider the Report’s findings in developing plans for Round 3 and in defining its proposed offshore wind development zones. DECC expects the earliest projects to be in a position to apply for consents any time from 2010 and to be built potentially from 2015 onwards.

Further information
To access the report, please click here.

To access out previous Law-Now on the Crown Estate launching round 3 of offshore wind farm development (05.06.2008) please click here.

To access our previous Law-Now on the UK government’s renewable strategy (10.12.2007) please click here.

To access information on DECC’s work to facilitate the deployment of offshore wind, please click here.