The UK announces 'Clean Industry Bonus'
One of the biggest issues facing the renewable industry worldwide is a lack of skilled workers - this is due to salaries struggling to be competitive, lack of domestic supply chains and competition from sectors like oil & gas.
The UK Government has aimed to combat this by introducing a ‘Clean Industry Bonus’, under which offshore wind developers can access enhanced financial support for delivering so-called ‘non-price factors’ such as job creation within the UK.
To secure bonus payments, which have a starting rate of £27m per gigawatt of project capacity, developers will be required to prioritise their investment in UK regions which need an economic boost.
They can do so by investing in relationships with local suppliers, or by creating their own factories to provide a domestic supply of components such as blades and cables.
The UK Government is placing a particular focus on regions where there are risks of net job losses as high-carbon industries like oil and gas extraction and/or refining scale back.
This bonus not only aims to support job creation and tempt skilled workers towards the renewable industry, but also to improve the UKs domestic supply chain.
Currently, the UK relies heavily on imports with only a small domestic manufacturing base. Trade union Unite claims that only 8% of the wind turbines and other equipment used for offshore projects are produced domestically. The Government is aiming to increase the proportion to 60% by 2030.
A Clean Industry Bonus was first promised in November 2023 under Rishi Sunak’s government. The pledge was made after offshore wind developers faced rising component and raw materials costs, caused in part by the energy price crisis. Developers of large projects in the US, UK and other markets axed, paused or sold projects in 2023 as costs increased by around 40%.
Now, the Labour-led Government is framing the approach as a means to assist the delivery of its 2030 Clean Power Mission and to contribute to its plans to grow the economy in a manner that benefits working people.
Energy UK's Chief Executive said “The Clean Industry Bonus will help to unlock economic growth, create job opportunities, and maintain the UK’s position as a global leader in offshore wind. Alongside the development of a broader industrial strategy, the Clean Industry Bonus will play an important role in strengthening the CfD mechanism.”
The Clean Industry Bonus could work towards similar ends inteded by Trumps recent executive orders to reduce reliance on foreign imports and kickstart an incentive for more domestic manufacturing.
Whilst the UK is currently a world leader in offshore wind energy production, costs for new projects still remains very high and this could be the key to maintaining the UK's position.
Could this be the stimulant the UK's Offshore Wind Industry needs?