The UK is missing out on billions of pounds in revenue and thousands of jobs, because it is failing to build domestic manufacturing capability for offshore wind, according to a new report from the Institute of Public Policy Research (IPPR).
The IPPR study, published on Friday, also predicts that the current slow pace of manufacturing and installing offshore wind farms means the UK will miss its 2030 net-zero targets for offshore wind by 18 years, and offshore wind farms need to be up and running at three times the rate that they are today.
Between 2008 and 2022, Britain's rate of wind power installation was the world's second-fastest, and in terms of capacity the UK ranked the highest in Europe.
But Simone Gasperin, associate fellow at IPPR, believes while wind power has increased in the UK since 2008, the country has not created the right conditions for offshore wind manufacturing to really take off.
“This has cost thousands of jobs, billions for the economy, and is putting future net-zero targets for wind deployment at risk,” Mr Gasperin said.
“However, the UK is uniquely placed to become a world leader in manufacturing equipment for offshore wind farms. The government should grasp this opportunity with both hands and do all it can to maximise the manufacturing opportunity of its offshore wind power targets.’’
The IPPR report points out that in recent years Britain missed an opportunity to develop the manufacturing part of the offshore wind supply chain.
“Unrivalled wind installation programmes in the UK have mainly benefited producers in neighbouring European countries, notably Denmark and Germany,” the report said, emphasising that despite having more than 15 per cent of the installed wind power in Europe between 2008-2022, just 1.4 per cent of the components were made in Britain.
If the UK had been manufacturing wind power components at the same rate as the likes of Denmark, German and Spain during the same period, it would have made an extra £30 billion for the economy, the IPPR calculated.
Steel production falls
Much of this tallies with a general reduction in UK manufacturing and specific a drop in steel production over the past decade.
While the blades are made out of fibreglass, other parts of wind turbines, including the towers, are built from steel.
However, steel production in the UK has been falling in recent years, with a 6.5 per cent drop in output to 5.6 million tonnes in 2023, compared to the previous year. That followed a 15.6 per cent drop in 2022.
By far the world's biggest producer of steel and the related components for offshore wind farms is China which, thanks to the law of comparative advantage, has meant while Britain has built more than 2,000 wind farms, most of the parts of those farms were imported from overseas.
Steel production in the UK is predicted to fall further in the coming years, not least because Tata Steel will shut two blast furnaces at its Port Talbot facility in south Wales as the company moves to using more environmentally-friendly arc furnaces.
Nonetheless, the IPPR report maintains that the UK could reduce its imports of offshore wind power components and boost domestic manufacturing by making more of the constituent parts of offshore wind farms in Britain.
“In less than five years the UK can and should build at least one additional blade factory, two new nacelle and tower factories and two extra foundation factories,” the IPPR said.
“An investment of £3.2 billon in UK manufacturing facilities could generate tens of thousands of direct and indirect jobs, particularly in small and medium businesses.”
Such an investment would be welcomed by Renewable UK, which together with the Offshore Wind Industry Council and the Crown Estate (which owns the seabed around the UK), recently released the Offshore Wind Industrial Growth Plan, which advocated that Britain should focus on high-value and high-skilled areas of offshore wind manufacturing, including making blades and turbines, as well as electrical cables and foundations.
Ajai Ahluwalia, head of supply chain at Renewable UK, said the plan showed how to triple the UK's offshore wind manufacturing capability over the next 10 years, thereby creating 10,000 jobs a year and boosting the UK’s economy by a further £25 billion in the process.
'It will enable industry, governments and other funders to better align their investments to boost green jobs and manufacturing in the UK by mobilising nearly £3 billion of funding nationwide, with private finance doing the heavy lifting,” Mr Ahluwalia said.
“This will bring a return to our economy of just under £9 for every £1 invested,” he added.
