July 11, 2023
A new DAI technical report reviews local content and economic benefit requirements for offshore wind projects in the United Kingdom. The report, U.K. Local Content Requirements for Offshore Wind Projects, explores local content-related domestic supply chain, workforce, and incentivization policies.
Offshore wind is set to play a key role in Britain’s drive to achieve net zero emissions by 2050. Ensuring that the local supply chains and workforce are equipped to deliver these projects on time will be key to these clean energy and climate ambitions.
For example, since 2013, developers of offshore wind projects in the United Kingdom have been required to submit supply chain plans for projects larger than 300MW. Developers must detail how they plan to contribute to fair procurement practices and develop the infrastructure, skills, and innovation required for the successful delivery of these offshore wind projects, which receive financing support from the Contracts for Difference renewable power offtake scheme. The scheme is designed to incentivise developers’ investments in renewable energy.
Michael Warner, Senior Advisor to DAI’s Sustainable Business Group and Founder of the Centre for Local Content Innovation, said, “We are seeing an increase in the expectation that offshore wind leases and revenue support will deliver higher levels of U.K. content, but this is by no means standardized yet and government remains intent on avoiding preferential treatment for U.K. suppliers. This said, how local content is incentivized in Britain’s offshore wind sector is evolving rapidly, and we are likely to see new policies that mirror the United States and European Union in recognizing the inherent supply chain resilience and net zero advantages of localizing supply chains.”
This report, which follows DAI’s 2022 review of U.S. Federal and State Local Content Requirements for Offshore Wind Projects, sheds light on the evolving policy process in the United Kingdom. “These reports should provide policy makers and investors with a useful review of how countries at the forefront of offshore wind development are approaching the increasing trend toward green industrial policy designed to spur domestic manufacturing,” said co-author Tate Crowards, an economist in DAI’s Sustainable Business Group. “It will take some time before we can measure the success of green state aid mechanisms for local content.”
The report concludes that the United Kingdom remains cautious in navigating local content policy between—on the one hand—the successful EU legal challenge to the content requirements of the U.K. Contracts for Difference scheme, and—on the other hand—playing catch-up with the green subsidies and pro-local content measures driven by the U.S. Inflation Reduction Act and the EU’s Green Deal policies.
Learn more about DAI’s Sustainable Business Group.
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