Europe update: First half year gives mixed image for offshore wind

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A report from the European wind agency EWEA shows mixed statistics for the offshore wind industry so far this year. The first six months of 2013 saw a record high for installed and grid-connected turbines. Newly installed capacity doubled compared to last year, with 1,045MW. But investment and financing options are in sharp contrast with these figures. Only one wind farm reached a financial close. Offshore WIND presents a European overview and highlights two important offshore countries: Germany and the Netherlands.

There are plenty of encouraging figures for the first half of 2013. For example: in seven wind farms in Germany, Denmark and the UK a total of 277 turbines – with an average of 3.8MW – were installed and connected to the grid. This adds up to a half year total of 1,045MW. In the same period in 2012 a total of only 522MW had been installed, and at the time this was a record. Another 130 turbines have been erected in the first half of 2013 but were still waiting for grid connection.

The UK installed the most capacity, at 513MW. Denmark comes in second with almost 353MW, produced by Anholt farm.

Also in the first 6 months of 2013 throughout Europe, 268 new foundations have been installed in 10 wind farms, this is the same as in the same period of 2012. Preparatory work has begun for the German wind farms Amrunbank and EnBWBaltic 2 and the British wind farm Methil.

A total of 1939 turbines across Europe are now fully operational, producing 6,040MW in 48 wind farms in ten European countries.

Financial close

In stark contrast to these encouraging figures are some less positive signals. Only one wind farm saw a financial close, the 288MW German Butendiek wind farm.

The Butendiek offshore wind project is located in the German section of the North Sea about 32 kilometres west of the island of Sylt. The plan is to install 80 wind turbines with a total capacity of 288MW by 2015. The total investment amounts to 1.3 billion euros.

EWEA has expressed its concern with regard to these financial developments. “Uncertainty about regulations scares potential investors”, says Pierre Tardieu, policy advisor of EWEA. Mr Tardieu says these uncertainties are a Europe-wide phenomenon. He starts the tour in the UK, where investors are waiting for the results of the reforms of the electricity market. “These reforms, and therefore the uncertainty, can last until 2017.”

His tour continues to Sweden. “This Scandinavian country uses a technology-neutral subsidy system, which means that the cheapest form of renewable energy wins. This is not good for offshore wind energy. Costs of offshore wind will fall eventually, but it will take some time for the industry to reach this stage. In the meantime, countries should support these technologies.”

“In France, development of wind energy is being held up by a case in court that was brought forward by an anti-wind group. They argued that the feed-in tariff is a form of illegal state aid. Whether this matters is not really the question. But until the judge decides, investors will remain uncertain. The fact is: the first turbine has yet to be installed in French waters.”

Mr Tardieu: “A worst case scenario can be found in Spain, where the feed-in system has been retroactively altered. That is deadly for the investment climate. These measures raise risks, and thus financing costs, to a point where it isn’t lucrative anymore.”

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In the Netherlands, a new agreement on energy, the ‘Energieakkoord’, was reached in July, stating that an additional 3.5GW in offshore wind energy will be installed in the coming decade. Finances have been secured by government, but on the premise of falling building costs. “Not smart”, says Mr Tardieu, “Do not wait until costs are lower. This will hurt your own economy since the industry will leave you and go to better countries.”

Positive signals

But Mr Tardieu has also found hopeful signals in Europe. “I expect that the range of investors will diversify the coming years. There will be more investment coming from Pension funds and infrastructure funds , for example.”

EWEA recently called on the European Commission to set a binding renewable energy target at the EU level for 2030, giving long-term clarity for the next round of investments in the energy sector. The European Commission is due to come out with a proposal by the end of the year.

Tijdo van der Zee