Drawing on the UK’s Offshore Wind Experience

The offshore wind (OSW) industry has emerged as a key pillar toward energy transition efforts in the UK. Besides its geographical position and wind potential, the UK has steadily developed a set of robust policies, innovative technologies, financial instruments, and regulatory frameworks to boost OSW projects, contributing to national clean energy and decarbonization targets. With a significant OSW potential, particularly in its southeastern region, Mexico could draw on the UK’s experience to boost its own OSW industry.

Early Days of OSW in the UK

The UK’s OSW journey formally began in the early 2000s; however, the foundations of the industry were established much earlier. Wind turbines for OSW generation were designed as early as the 1990s in Europe, and the UK quickly positioned itself at the forefront of these developments due to its OSW wind potential, particularly along the eastern coast.

Recognizing the potential and importance of the OSW industry, the UK government incorporated this technology in the Renewable Energy Strategy in 2001. Two years later, the government launched Round 1 Offshore Wind, the first phase of seabed leasing for OSW farms, which became the first major milestone of the OSW development in the country. Under this scheme, the Crown Estate – an independent business sitting between the public and private sectors that owns and manages land, including the UK’s seabed – started to lease areas for the development of OSW farms. Round 1 resulted in the construction of the first OSW farms in the UK, such as the Scroby Sands Wind Farm, which became operational in 2004, and the North Hoyle Wind Farm in 2005.

OSW Policies and Regulations

The success of the OSW industry in the UK can be largely attributed to a robust combination of policies and regulations that incentivize investment and innovation. One of the key milestones was the Renewable Energy Act of 2008, which set the basis for the expansion of renewable energies, including OSW. Among other things, this legislation established the Renewables Obligation, a scheme that encouraged renewable generation, requiring electricity suppliers to purchase a portion of their supply from renewable sources.

Another key policy initiative was the Carbon Plan of 2011, which set ambitious decarbonization targets and aimed to increase the share of renewable energies in the country’s electricity mix. This plan established the target of deploying 40GW of OSW capacity by 2030, further boosting the industry development. One year later, the UK government launched the Offshore Wind Investment Plan, aiming to attract £60 billion (US$79 billion) of investment into the sector.

The OSW regulatory environment was also strengthened with the creation of the Department for Business, Energy, and Industrial Strategy (BEIS) – replaced in 2023 by the Department for Business and Trade (DBT), Department for Energy Security and Net Zero (DESNZ) and Department for Science, Innovation, and Technology (DSIT). In those years, BEIS played a key role in managing energy policies and setting governance structures. The Low Carbon Contracts Company (now regulated by DESNZ) is currently in charge of administering the Contracts for Difference (CfDs). These CfDs, introduced in 2014, are long-term financial contracts that guarantee a fixed price for the electricity generated by OSW farms, giving stability and certainty to OSW investments.

In addition to robust policies and incentives, the UK developed a sophisticated planning and permitting system for OSW farms. The Marine and Coastal Access Act of 2009 created streamlined processes and reduced market barriers for OSW developers. In 2023, the UK government launched the Offshore Wind Net Zero Investment Roadmap, aiming to achieve 50GW of OSW (including 5GW of floating OSW) by 2030, and establishing additional incentives like the Clean Industry Bonus, which offers financial support to developers who prioritize investment in areas historically tied to the oil and gas industry.

Technology and Innovation

Technology and innovation have been key to the success of the OSW industry in the UK. In the early days, OSW farms were relatively small, and technology was expensive. However, rapid advancements in recent years have enhanced the efficiency, scale, and durability of turbines, ultimately reducing the cost of OSW projects. The UK's leadership in OSW technology and innovation can be partly attributed to its robust innovation ecosystem, which includes top-notch universities, research centers, and the involvement of the private sector.

One key technology advancement is the size of OSW turbines. Early turbines had capacities of less than 2MW, but by 2020, turbines of over 10MW were being installed in the UK. One such example is the Haliade-X turbines installed in the Dogger Bank Wind Farm, which will become the largest OSW farm in the world. Larger turbines have significantly improved the economics of OSW projects by reducing costs and enhancing the efficiency of electricity generation.

In recent years, the development of floating OSW turbines has opened a new horizon for deep-water projects, where traditional fixed-bottom turbines are not feasible. The UK government has bolstered R&D efforts in floating OSW, providing funds for projects like the Kincardine Offshore Wind Farm, the world’s largest floating wind farm, which will help the country achieve its OSW ambitious targets.

Financing OSW Projects

Financial support has been a key factor in the rapid expansion of OSW in the UK. For instance, the government’s CfD mechanism has played a crucial role in attracting private investment by providing long-term price stability for OSW energy producers. This scheme ensures that developers receive a guaranteed price for the electricity generated by their wind farms, protecting them from market fluctuations.

In addition, the UK has developed a mature OSW supply chain, including turbine manufacturers, construction companies, and maintenance providers, enabling economies of scale that further reduce costs. Public-private partnerships (PPPs) have also resulted in billions of pounds of investment, making OSW projects competitive vis-à-vis other energy sources.

Drawing on the UK Experience in Mexico

Mexico has significant OSW potential, particularly in its southern coast and the Yucatan peninsula; however, the country has yet to harness this resource. Mexico has a small but growing renewable energy sector, with wind and solar power leading the way. However, all the wind farms in Mexico are onshore. Under President Claudia Sheinbaum’s leadership, Mexico has committed to ambitious renewable energy targets (45% of renewable energy by 2030) and decarbonization goals (net-zero emissions by 2050). The development of the OSW industry could help Mexico boost the energy transition and contribute to the attainment of national and international climate commitments. 

Leveraging 200 years of bilateral relations, Mexico could draw on the UK’s experience to foster the development of a robust OSW industry. For instance, the development and strengthening of different policies and regulations have been key to attracting investment to the OSW industry in the UK. Similarly, Mexico could develop a national OSW strategy – supported by long-term policy goals and clear regulatory frameworks – to attract private capital and start developing the industry. In addition, the Mexican government could further incentivize the OSW industry by designing financial schemes that ensure long-term price stability for energy producers (like the UK’s CfD), thus making the sector more attractive to investors.

Mexico could also learn from the UK’s experience in streamlined permitting processes, which have facilitated the rapid expansion of the OSW industry. Clear and transparent permitting processes for OSW projects can significantly reduce bureaucratic barriers and attract developers. In terms of technology and innovation, Mexico could partner with international companies and research institutions to share best practices, promote technological advancements, and exchange knowledge, particularly in emerging technologies like floating wind technology. International advancements and state-of-the-art technologies could allow Mexico to reduce the costs of OSW projects and unlock the potential of deeper waters along its coasts. Finally, in line with Plan Mexico, it will be important to develop a robust local supply chain for the OSW industry. Besides invigorating the Mexican economy and reducing the reliance on foreign suppliers, local supply chains have the potential of creating thousands of green jobs in Mexico. 

In conclusion, the UK’s OSW experience could serve as a roadmap for countries like Mexico to harness their own OSW potential. Through the implementation of clear policies, innovative technologies, financial mechanisms, and robust regulatory frameworks, the UK has positioned the OSW industry as a global leader and a key pillar for its energy transition. By adopting similar strategies, Mexico could accelerate the development of its OSW sector, contributing to its energy transition, job creation, and climate goals.