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30/09/2016

European offshore wind sector faces make-or-break 2020, EY says

Energy

European offshore wind sector faces make-or-break 2020, EY says

Wind power. Bunkeflostrand, Skane, Sweden, 2010.

[Håkan Dahlström/Flickr]

Wind power companies such as Vestas, Siemens and Dong need Europe’s installed offshore capacity to more than double and costs to be cut by a fifth within five years to compete with other fuels, an industry report said on Tuesday (10 March).

The Ernst & Young report described 2020 as a make-or-break year for the offshore wind power industry, which must install more than 20 gigawatts (GW) of capacity generating electricity for about 100 euros per megawatt-hour (MWh), against 140 euros now

“Failure to meet both these criteria will not see the offshore wind industry advance into 2030 and beyond,” said the report issued on the first day of Europe’s largest offshore wind conference in Copenhagen.

That may prove a tall order, given the cost of installing and maintaining giant turbines that can stand 164 metres high in often inhospitable waters.

Nevertheless, offshore is viewed as the new front for wind power, with even larger turbines being made by operators seeking to place them further out to sea to allay concerns of coastline communities.

Stronger winds at sea, meanwhile, turn blades about 39% of the time, the report said, compared with 22% onshore.

Despite fierce competition in the sector, leading players said on Tuesday that the targets set out by the report are achievable.

Claus Hviid-Christensen, senior vice president of Dong Energy Wind, told conference attendees that the business expects to lower spending on its logistics and maintenance by switching to larger but fewer turbines.

Markus Tacke, the head of Siemens’ wind power business, said his company aims to improve production of turbine foundations, which have to be tailored for each installation.

The chief executive of MHI Vestas Offshore Wind, meanwhile, said that variations in design and technology could hamper future growth.

“We cannot have different technological platforms if we want to work together towards these common goals,” Jens Thommerup said.

A study issued by a consultancy group underscored the competition in this industry, which is still underpinned by state subsidies and subject to political uncertainties around state funding.

MAKE Consulting said that Siemens, General Electric and Vestas each hold between 10.8% and 10.1% of the global market.

Background

Last October, European leaders set an EU-level target of increasing renewable energy by 27%, compared to 1990 levels, as part of a binding commitment to reduce greenhouse gas emissions by 40% by 2030.

Critics have argued that the non-binding renewables target will rob investors of the certainty they need to back the technology. The EU’s 20% renewables target for 2020 was binding.

This December, UN Climate Change talks will take place in Paris aiming to determine legally-binding greenhouse gas emissions at the global level.