Britain's offshore renewable energy worth a billion barrels of oil and 145,000 new jobs

The offshore renewable energy industry could generate the same amount of electricity a year by 2050 as one billion barrels of oil, using less than a third of the available space, according to a new report.

The Offshore Valuation Group (OVG) published a full economic study of the UK's offshore renewable resources for the first time yesterday; industry experts have labelled it "groundbreaking".

The study found that harnessing 29 per cent of the UK's practical wind, wave and tidal resources would match the electricity generated by North Sea oil and gas production. The move would be a huge boost in cutting emissions, saving a cumulative total of 1.1 billion tonnes of carbon dioxide over the next 40 years.

The report said harnessing the full potential for offshore renewables would generate enough for the UK to power itself six times over at current levels of demand, making it a net energy exporter to continental Europe.

A spokesman for industry association RenewableUK backed the report, saying: "This really is groundbreaking. We are not talking about something in the far future. It has already started."

The comparison with the North Sea reserves was important as OVG pointed out that the stock of hydrocarbon reserves is running out. "Our second offshore asset, or renewable energy, could be just as valuable. Britain's extensive offshore experience could now unlock an energy flow that will never run out," the study said. The growth of the industry could create an additional 145,000 jobs in the UK, it added. This would help pick up the slack from the North Sea, the spokesman for RenewableUK said.

The study estimated that it would cost £443bn to harness 29 per cent of the offshore resources, but that the scheme would generate £62bn in annual exports. Lifting the investment to £993bn – or 76 per cent of available resources – would generate £164bn.

Currently the lion's share of renewable capacity is allocated to fixed wind turbines, with small amounts allocated to tidal stream and wave power. The study predicts that floating wind turbines have the most potential, possibly being able to generate 1,533 terawatt hours a year; 2,100 terawatt hours would have been enough to power the UK six times over in 2009.

In 2007, the UK signed up to the EU target to generate 15 per cent of its energy supply from renewables by 2020. The next year the government pushed through the Climate Change Act, which pledged an 80 per cent reduction in greenhouse gas emissions by 2050. Yesterday's report added that the UK's existing electricity generating plants are ageing, with 80 per cent needing to be replaced by 2030. This includes 8.5GW of coal power facing closure in seven years time.

The future of renewable energy will be determined "by the level of the UK's ambition; by the level of demand for the UK's renewable electricity in the wider European market and by the evolving technology costs," the study said. While RenewableUK said building offshore was quicker than onshore, there are huge challenges to hit the levels outlined in the report. There are issues of capacity in the industry for the big builds, especially with some of the projects further offshore, at a time when finance is tough to come by.

The vast investment in offshore renewables needed "is similar in scale to that of oil and gas in recent decades. The major expansion of the supply chain this needs will not happen on its own, however, but will take strong and continuing support from government and industry in the coming years," OVG said.

Generating interest

Fixed wind The offshore wind turbines are expected to remain the cheapest of the five technologies as they were commercialised earlier than the others and shared components and expertise with onshore wind. The current allocated capacity would generate 165 terawatt hours.

Floating wind There is currently no capacity allocated to floating wind power as the technology is relatively new. Yet, the report found the total practical resource could be as high as 1,533 terawatt hours. There are several designs with one full-scale device deployed in the North Sea.

Tidal range The devices extract the energy associated with the difference between high and low tides, but it is the most expensive of the five technologies. The most promising UK site is in the Severn estuary, which has the second largest tidal range in the world.

Tidal stream The devices have been described as "underwater wind turbines". The technology is currently allocated 2 terawatt hours, although the total practical resource would see that rise to 116 terawatt hours. Expected to be the most cost-effective behind fixed wind.

Wave power First UK commercial sites to harness energy from waves to be in Scotland's Pentland Firth and Orkney waters. There is just one terawatt hour of allocated capacity, while the total practical resource is 40.