First published in Cleantech Infocus: Offshore Renewable Energy in the Isle of Man, May 2012. Copyright Cleantech Investor Ltd
The constitutional status of the Isle of Man, which is located in the centre of the Irish Sea, remains anomalous: the island is a Crown dependency but is neither a member of the EU nor part of the United Kingdom.
What is not anomalous, though, is the determination of the Isle of Man Government to participate in the heavy energy investment upgrade that is forthcoming throughout the British Isles, including the Republic of Ireland – and which will involve the roll-out of extensive renewable energy generation capacity.
The new Secretary of State at the UK’s Department for Energy and Climate Change (DECC), Ed Davey MP, has set a long term target of £100 per MWh for the cost of offshore wind generation. If achieved, this would undoubtedly kick-start the sector. There is already considerable offshore wind sector activity around the coasts of the UK – and notably in the Irish Sea.
Mainly for geographical reasons, the Isle of Man finds itself at the centre of the UK’s developing offshore energy sector. As Dr Ken Milne, the Senior Manager for Energy Policy at the local Department of Economic Development, has pointed out, the island scores very highly on ”location, location, location”.
In fact, going clockwise, the Isle of Man is surrounded by parts of the west coast of England, the north-west coast of Wales and much of the east coast of Ireland: it is also relatively close to south-west Scotland.
Mindful of this ideal location – the Manx Government has been considering what role the island is best placed to play.
Of interest to the Isle of Man’s future energy strategy was the award in 2010 by the Crown Estate of the 2,200 square kilometre Irish Sea Zone – located to the south of the island – to Centrica. Crucially, though, the Isle of Man Government continues to own the 12 nautical miles of sea bed surrounding the island itself – a real opportunity to earn revenue from its leasing.
Aside from Centrica, other offshore wind generators operate in the Irish Sea; they include Denmark’s Dong Energy, npower, owned by Germany’s RWE, as well as Scottish and Southern Energy. To support these – and future – operations, the Isle of Man Government has been considering whether an offshore wind operations and maintenance base should be constructed at the port of Douglas.
The Hon John Shimmin MHK, Minister for the Isle of Man Department of Economic Development, views the 12 miles of sea bed owned by the island as a resource. The seas around the Isle of Man have significant potential to generate renewable energy – and the Manx Government is currently re-assessing this potential. Suitable prospective sites for marine renewable energy development will be identified upon completion of a Manx Marine Environmental Assessment (similar to a Strategic Environmental Assessment in the UK) and a public consultation within the next few months.
The official line on Isle of Man energy policy continues to emphasise the maintenance of security of energy supply and the efficient use of affordable energy. Government policy also aims to minimise the impact of energy use on the environment, and a target has been established for 15% of electricity to be generated from renewable sources by 2015.
The CO2 emissions from generation on the Isle of Man are already significantly lower than the UK average. Going forward, offshore renewables offer the potential to transform the island’s energy industry from an ‘energy security’ focused business into a substantial revenue generating industry – both through exports of energy and from support businesses to the offshore renewables sector.
During a presentation to a group of key stakeholders at the Isle of Man Offshore Renewable Energy Conference in April – held in Douglas – the Manx Government put forward various proposals from which it believes the island could derive real benefits. Dr Ken Milne summarised the priorities within three specific energy sub-sectors.
• Leasing of the island’s sea bed for offshore wind and marine power development (allowing the Isle of Man to become a major net exporter, and assisting neighbouring jurisdictions to meet national and EU targets).
• Creation of a transmission hub in the central Irish Sea for the interconnection of offshore wind plants to the GB electricity network.
• Construction of an operations and maintenance base at Douglas to service this infrastructure – and also, potentially, projects outside of its waters.
Provision of electricity on the Isle of Man is managed by the Manx Electricity Authority (MEA). Its generating capacity is around 170MW, much of which is located at Pulrose in Douglas: over 50% of this capacity is accounted for by a combined cycle generating turbine (CCGT) plant. Electricity is both imported and exported through the 60MW subsea cable which terminates at Bispham near Blackpool. The island’s capacity to export electricity is currently underused.
Offshore Wind Energy Export Potential
Central to the Isle of Man’s plans, which were set out at April’s wide-ranging conference, was its determination to utilise its land and sea resources to develop offshore wind power. Given its ownership of the 12 nautical miles of sea bed surrounding the island, over 85% of the Isle of Man’s total territory lies on the sea bed – thereby offering considerable potential for its lease to offshore wind developers or operators.
The emphasis is very much on a collaborative approach: the Isle of Man Government has no plans to build offshore wind plants on its own account. Hence, the search is on for suitable partners – preferably with a robust balance sheet to limit the financial risk.
Dr Ken Milne points out that the Isle of Man has:
“a significant wind and tidal resource, in shallow waters, within close proximity to the UK.”
The island can accommodate small projects within its grid; it has experience of power purchase agreements (SITA IOM runs an EfW plant on the island); and the MEA is an integrated, ‘one stop’ organisation. There is clear potential for the Isle of Man to lease its sea bed in order to generate renewable energy for export.
In terms of the All Islands Approach (involving ‘joint projects’ with the UK), a timeframe of 12-18 months is envisaged for the projects to be identified and approved. It is understood that the Isle of Man would like to dedicate its resources to one or more (large) offshore wind projects.
In framing its strategy, the Manx Government argues that it does offer salient advantages to potential offshore wind developers. These advantages include: a superb location with decent wind speeds; a consent/bidding process that seeks to minimise delay; and a near-zero tax rate.
An ‘Interconnector Hub’
The Isle of Man may also have the potential to become an ‘interconnector hub’ in the central Irish Sea region, connecting offshore projects to the GB electricity grid network, with its central location meaning a significant reduction in transmission costs for offshore renewable energy developers.
The Hon John Shimmin MHK points out that:
"The sea can be more economically viable using an Isle of Man interconnector."
The island has an existing subsea cable and electricity trading arrangements with the UK and has fewer grid constraints than regions to the north (Scotland, for example, needs to export its energy but is limited by a lack of high density cables); and the island is closer to southern England, where energy is required. The Isle of Man is understood to be in early discussions with National Grid.
With the many uncertainties currently surrounding renewable energy, the Isle of Man faces a challenge to deliver its ambitious plans. However, its energy experts remain confident that, with the completion of the necessary groundwork in the coming years, material progress will have been made by 2017; by this time, the first offshore wind turbines within the 12 nautical mile zone may be operational. There is interest, too, in developing tidal power – which indeed may happen before that date – albeit on a smaller scale than offshore wind.
As renewable power facilities develop around the Isle of Man zone, there is an outline plan to build a transmission link between the many offshore wind plants that are expected to be in operation. The Isle of Man could play a part in the ISLES Project, which involves many small communities within the British Isles who suffer from the pronounced – and inherent – diseconomies of power generation supplying a very small population. It is also a signatory to the All Islands Approach which ultimately envisages a super-grid connecting the islands which comprise the British Isles.
An Operations and Maintenance Centre
In parallel to the development of an offshore renewable energy industry, the Isle of Man port authorities are keen to convert part of the existing base at Douglas to host an operations and maintenance (O&M) facility. O&M bases in Isle of Man harbours would be in close proximity to offshore projects both in the island’s own waters and beyond, in neighbouring jurisdictions.
Although there would undoubtedly be competition with other facilities, it may be possible to create a partnership with an offshore wind developer or operator, to the mutual benefit of both parties.
Other ports are also gearing up to compete in this space. Barrow, on Cumbria’s west coast, is an obvious candidate for a large offshore wind O&M base; it is just 40 miles distant from the Isle of Man. Certainly, if the cash-strapped UK Government declines to press ahead with a Trident replacement, Barrow would be very active in seeking new investment opportunities.
Belfast Harbour, in Northern Ireland, is also focusing on the renewables sector. The long-established Harland & Wolff shipyard has been active in the offshore wind turbine assembly space for some time, working on behalf of clients such as Statkraft. Belfast Harbour also recently secured a major investment from Denmark’s Dong Energy to establish an assembly base for offshore wind turbines.
Although large scale assembly operations would not be viable on the Isle of Man, Ken Milne points out that it has the infrastructure suitable for an O&M base.
Furthermore, the Isle of Man population has appropriate skill sets in fields such as aerospace and precision engineering. Companies active in related fields include fluid system technologies and aerospace manufacturer, Swagelok; Bruce Anchors, which has developed the Bruce Tracker and Anchor Communication System; and mooring consultant Promoor.
The Isle of Man also has a shipyard and it has an important ship registry, which includes ships involved in offshore cable laying.
There are proposals for the redevelopment of Douglas Harbour, to include a pier for O&M facilities (alongside the possible redevelopment of space for industry). Other piers could also be upgraded. The Douglas harbour has spaces with 25 metre length, 2 metre draft, inside and has larger vessel capacity outside the harbour. It also has a cruise ship berth.
There is certainly no shortage of opportunities in the energy sector for the Isle of Man, which can trade on its excellent location, its lack of bureaucracy and its highly attractive tax regime. Undoubtedly, the Isle of Man Government has bold plans for developing its energy and port operations; they have been the subject of earnest discussions for some time.
The real challenge – as with so many innovative energy ideas – will be to secure the necessary finance and to deliver the various projects. Whether or not substantive progress can be made within a decade remains to be seen.
This article was first published in Cleantech Infocus: Offshore Renewable Energy in the Isle of Man, May 2012 - which is freely available to download. Copyright Cleantech Investor Ltd
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