Allocation: Belgian offshore wind zone blessing in disguise
When the Belgian government allocated the zones for offshore wind farms, it heralded an unexpected boost for the sector. Yet success can turn into decline when the concession expires after twenty years of operation. The Brussels government not only made this stipulation but also that the offshore wind farm in question will have to be dismantled after the concession has expired. The sea is to be left in its former natural state. “Utter nonsense”, comments Belwind and Northwind CEO Frank Coenen.
Politicians and equipment suppliers alike can contribute to the success of wind energy, provided they are aware of the impact of their respective policies and actions. When Offshore WIND talked to Belwind and Northwind CEO Frank Coenen he warned that equipment suppliers are too expensive. “The industry is better served when solutions provided become cheaper and more simplified. Focusing on short term high earnings only damage their own cause in the long run.”
To his mind politicians should realise that it is hard to gain return from investments in offshore wind farms when they are only allowed to be operational for twenty years. Permits oblige Offshore Power Operators to make provision for the dismantling of the offshore installations after the 20 year concession. This provision alone is expected to cost the operators at least €70m. In the meantime Coenen raises the question why governments and the offshore wind sector do not develop a program covering 30 or even 40 years. “In other industries, nobody would venture to set up an industrial business for only twenty years, especially when they are compelled to demolish it afterwards”, he added.
Coenen himself believes in the future of offshore wind energy, for the simple reason that there is a growing need of additional energy, preferably from renewable energy sources. The fact that he has not only entrepreneurial expertise, but also a financial background may also indicate that investment in offshore wind energy cannot be other than sound. Practice shows that banks and private investors have the same opinion. They make all the plans for the installation of 55 Belgian offshore wind turbines viable.
They have partly done so based on the knowledge that Belgium has a shortage of energy supplies, which is likely to result in guaranteed sales for the output of the turbines. The energy produced currently comes from electricity plants which were built by the former Belgian monopoly, Electrabel, thirty years ago. Coenen observes that Belgium’s electricity production is too small and imports and exports are not enough.
The country’s grid is sufficient, but the electric wiring has mostly been done ’round the church tower’ as Coenen compares it to the structure of a village. “That is why the Belgian industry has to increase its transportation technology. We need to work more efficiently with our grid, and so a smart grid is bound to be introduced, because of our international transportation capacity and the introduction of new power plants, part of it from the future supply of new renewable energy.”
He added that, in general, society tends to forget why renewable energy has developed to become a supportive source to current supplies. The wind energy sector, including the first three offshore wind farms developed by him and his team, helps to support further the development of new advanced technology which will be applied in the future. The construction of the first, Belwind, costing €650m, started in 2009 and began producing electricity in October 2010, the second, Northwind,- needing €900m investment – will start in 2013, and the third, the Belwind phase 2 with an amount of €6 50m after that. In total Belgium will have seven large offshore wind farms eventually.
Coenen expects that within fifteen years it will become evident that society cannot do without both onshore and offshore wind energy. The current capacity of electricity plants and the seven offshore wind farms which will be operational in the near future, will be insufficient to meet the demand of Belgian consumers. Coenen added that the Netherlands appears to be waiting for further developments in the energy supplying sector. Germany is in the process of closing nuclear energy plants and is busy developing more and more offshore wind farms. “The question is what the future will bring if more and more plants will be closed?”, he said adding that he expected that it will be in favour of offshore wind energy.
As far as he knows, Belgium was in the forefront of development of wind farms. The allocation of a dedicated zone off the Belgian coast helped to speed up legal procedures for obtaining the necessary permits to set up wind farms at sea. Onshore wind farms construction are still hampered by the NIMBY syndrome.
Concrete development plans started as early as in 1998. “They were slowed down by lack of political understanding about the new energy source”, says Coenen. “In fact those involved in wind energy were too early and found no home market for it. In 2004, advanced judgement about need and necessity of this source helped create a better understanding.”
Yet, when lawyer, financial and management expert Coenen stepped into the world of wind energy end 2005, he found a very immature market with equipment which was not initially intended for use with offshore wind farms.
“Only today, because the market has become large enough for businesses to invest in it, dedicated vessels are being deployed to serve offshore wind farms and other specialised equipment is produced. Besides, the industry believes in viable profitability of wind energy.”
The more the industry, including the research establishments, believes in the viability of the industry, the more advanced and cost-effective wind energy will become. Coenen talks about an industrial and scientific web spreading beyond Belgian borders.
“I could show you round tens of businesses and research establishments pushing the development of the sector even further. There is indeed a future for offshore wind energy.”