Abstract
This study quantifies the potential economic benefit that the UK stands to gain through the deployment of innovative offshore renewable energy technologies (floating offshore wind, tidal stream, and wave energy) in domestic and international waters. These are quantified in terms of gross value added (GVA) and full-time equivalent (FTE) jobs.
This work is founded on deployment scenarios, where cost, performance and systemic conditions are defined by the 2030 levelised cost of energy (LCOE) targets in the Strategic Energy Technology Plans (SET Plans) for floating offshore wind tidal stream, and wave energy technologies. Deployment and cost reduction modelling informed by the Energy Systems Catapult and the International Energy Agency technology collaboration programme on Ocean Energy Systems (IEA-OES) form a basis for an economic analytical model. Time series of installed capacity are coupled with deployment costs, retention rates, plus economic effects and multipliers, to obtain the GVA and jobs associated to different project phases and components.
Results are presented across two main scenarios of local ambition, to assess the impact on economic benefit of increasing local content in specific areas of the UK supply chain, for example through targeted investment by the UK government. A Higher Ambition supply chain scenario assumes increased levels of spend for domestic and international deployments retained by the UK supply chain. Conversely, a Lower Ambition supply chain scenario assumes less ambitious retention levels of UK content, and a smaller share in overseas projects.
Results from this work can be summarised as:
- UK and international deployments of floating offshore wind, tidal stream and wave energy technologies produce a total of £21bn to £86bn in GVA to the UK economy, dependent on supply chain competitiveness. The higher ambition scenario could lead to nearly 68,000 FTE jobs in 2040, and over 166,000 FTE jobs in 2050.
- Of this total figure, domestic deployments result in £18bn to £41bn in GVA for the UK economy. Within this obtained GVA range, more than double GVA can be observed, due to more ambitious retention assumptions reflecting a stronger UK supply chain. Almost half of the jobs modelled are associated with domestic projects, resulting in a cumulative 756,000 job-years of employment between 2025 and 2050.
- UK content in international deployments could generate a further £3.3bn to £45bn in GVA for the UK economy. Within this obtained GVA range, the higher ambition scenario results in nearly a 14-fold increase in GVA from global exports, highlighting the potential opportunity from a stronger UK supply chain.
- Manufacture of the device, including floating foundations for FOW, accounts for the largest share of both GVA and jobs for all technologies. Indeed, for FOW, manufacture of the floating foundation is the greatest share. Ongoing operations and maintenance over the project lifetime accounts for significant GVA and jobs and is a growing segment over time. Supply of the balance of plant is also an important contribution, particularly for floating offshore wind.
It must be stressed that this economic benefit to the UK economy is only achievable if focused investment in ORE technologies enables a reduction in LCOE, in line with the SET Plan targets. This results from performance improvements and cost reduction through innovative step-changes from research and development combined with learning from continued successive deployments. Focused investment in sufficient domestic supply chain development is required to achieve the levels of spend retention assumed in this work. High level policy recommendations to facilitate this are given in three themes:
- Effective market support
- Sustained innovation funding
- Modernisation of the supply chain