The Offshore Valuation Group Today Publishes The Offshore Valuation

The First Full Economic Valuation of the UK's Offshore Renewable Resource

ABERDEEN, Scotland, May 19, 2010 -

    - Valuation suggests that the offshore renewable energy
      industry in the UK, using less than a third of the total available
      resource, could:
        - generate the electricity equivalent of 1 billion barrels of
          oil annually, matching North Sea oil and gas production
        - create 145,000 new jobs in the UK and provide the Treasury
          with GBP28 billion in tax revenues annually
        - ensure Britain could become a net electricity exporter
        - result in cumulative carbon dioxide savings of 1.1 billion
          tonnes by 2050
    - Report lays out key steps to set UK on a path to access this
      valuable resource

The Offshore Valuation is published today by the Offshore Valuation
Group. It is the first comprehensive valuation of the UK's offshore renewable
energy resource over the long-term that explicitly assesses electricity
exports to Europe.

The Offshore Valuation Group is an informal collaboration of government
and industry organisations that has commissioned an independent report to
address the question: what is the value of Britain's offshore renewable
resource? The group includes the UK, Scottish and Welsh Governments, The
Crown Estate and eight companies across the energy sector.

It is widely acknowledged that within Europe, Britain holds the largest
resource of offshore wind, wave and tidal power. Until now the full scale of
the economic opportunity this represents has been unknown.

The Offshore Valuation reveals that rapid development of the UK's
offshore resource - using fixed wind, floating wind, tidal stream, tidal
range, and wave technologies - could by 2050 generate an amount of
electricity equivalent to a billion barrels of oil per year, or the same as
the average annual output of UK North Sea oil and gas production seen over
the past four decades. If developed still further to tap their full practical
potential, offshore renewables would allow the UK to power itself six times
over at current levels of demand.

The study shows that the offshore resource has value to the UK whether we
use the power ourselves or simply view it as an export commodity to Europe.

Three illustrative scenarios calculate the potential Net Present Value to
the UK of developing this resource to maturity by 2050.

The report's central scenario examines what would need to happen for the
UK to become a net exporter of offshore renewable electricity. To do so, the
UK would need to exploit just under a third of its total offshore wind, wave
and tidal resource by 2050 - resulting in infrastructure with a positive Net
Present Value of GBP35 billion. The supply chain necessary to realise the
central scenario would have annual revenues of GBP62 billion in 2050, profits
of GBP16 billion, and could employ around 145,000 people in manufacturing,
installation and operations & maintenance. If fossil fuel prices rise higher
than the Government's central projections, the benefits would be larger
still.

The report sets out a number of key enablers for Government and industry
to ensure the UK is on a path that allows it to access its substantial and
valuable resource:

    - Make Round 3 offshore wind grid connections 'super-grid
      compliant' to avoid locking out potential future electricity sales to
      Europe;
    - Take a leadership role in the current EU super-grid negotiations,
      to ensure that the UK derives maximum value from its design and
      implementation;
    - Continue to develop the UK supply chain as key to deployment at
      scale and least cost;
    - Develop new financing structures that complement the fundamental
      features of renewable energy infrastructure and can support the scale
      and speed of industrial growth required.

Tim Helweg-Larsen, Director of PIRC, commented, "This report seeks to
present to the UK the true value of an energy resource right on our doorstep
- at a time when concerns over security of supply and climate change are
ever-present. To discover that we own a resource with the potential to return
the UK to being a net power exporter, and on a sustainable basis, is
genuinely exciting, and a wake-up call to those in a position to foster the
further development of this industry."

David MacKay, Chief Scientific Advisor at DECC, said: "Britain's huge
offshore energy resource is dominated by wind: offshore wind farms occupying
a sea-area the size of Wales would deliver more electricity than Britain's
average electricity consumption today. The key question is what building and
maintaining these wind turbines and their associated energy-storage and
delivery systems would cost, in material and financial terms. For me, this
helpful work brings home the crucial value of investment in innovation in
wind machine designs, in floating wind turbine prototypes, in tidal stream,
and in novel energy storage systems."

The Offshore Valuation Group is comprised of a wide range of
organisations representing government, industry and the public interest.

Further quotations from other members of the Group are available on
request.

The full report is available for download from:
www.offshorevaluation.org

    Notes for Editors

    The Scenarios

    - Scenario 1 envisages generating enough offshore renewable energy to
      meet 50% of UK electricity demand in 2050 - the maximum possible the UK
      grid can support.

    - Scenario 2 envisages generating enough offshore renewable energy to
      meet total UK electricity demand in 2050, allowing the UK to export the
      50% it could not use to Europe, becoming a net exporter of electricity.

    - Scenario 3 envisages generating enough offshore renewable energy to
      meet total energy demand in 2050 (from electricity, gas, oil-based
      fuels and other sources), allowing the UK to export what it could not
      use to Europe, becoming a net exporter of energy.

The Offshore Valuation Group

The Offshore Valuation Group is a group of organisations drawn from
across industry and government, chaired by the Public Interest Research
Centre, a not-for-profit charity based in Wales. The Group have provided
funding, direction and detailed input to the project. Boston Consulting Group
(BCG) carried out the study.

The Offshore Valuation Group comprises the following organisations: The
Department of Energy and Climate Change (DECC), the Welsh Assembly
Government, the Scottish Government, The Crown Estate, the Energy
Technologies Institute, Scottish & Southern Energy (SSE), RWE Innogy, E.ON,
DONG Energy, Statoil, Vestas, Mainstream Renewable Power (MRP), and Renewable
Energy Systems (RES). The study also received funding from the Committee on
Climate Change.

Media contact:

    The Offshore Valuation Group
    Guy Shrubsole, PIRC          +44(0)7792-932-225
    Tim Helweg-Larsen, PIRC      +44(0)7941-751929

    M:Communications
    Patrick d'Ancona             +44(0)20-7920-2347
    Elly Williamson              +44(0)20-7920-2339

The Offshore Valuation Group: Guy Shrubsole, PIRC, +44(0)7792-932-225, Tim Helweg-Larsen, PIRC, +44(0)7941-751929; M:Communications: Patrick d'Ancona, +44(0)20-7920-2347, Elly Williamson, +44(0)20-7920-2339