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More collaboration needed to keep cutting offshore wind costs

OPINION | The offshore wind sector has amazed the renewables industry with its downwards cost curve but more needs to be done, says MHI Vestas co-CEO Tetsushi Mizuno

Subsidy-free bids at the recent German offshore wind auction sent shockwaves through the renewable-energy sector. Could it be that the business case for wind energy, and offshore wind in particular, is that much stronger than industry analysts predicted it would be at this stage?

Offshore wind power is undeniably maturing as a sustainable renewable-energy technology. But we see these results as a continuation of the downward trajectory in levelised cost of energy (LCOE) and, therefore, more needs to be done. The truth is, everyone in the offshore wind supply chain must continue to optimise operations, drive down cost, and increase collaboration where possible if we’re going to have a truly sustainable, global market for decades to come. The LCOE challenge remains a daunting one regardless of steep reductions over the past 24 months.

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To solidify our place in the energy mix, offshore wind suppliers would be well served to embrace a truly collaborative paradigm. From the turbine manufacturer’s standpoint, we believe it’s imperative to work actively in a collaborative spirit with both customers and sub-contractors.

As evidenced by the mammoth turbines spinning in European waters today, offshore wind has some of the best technical and engineering minds in the world. Harnessing this expertise will continue to drive innovation forward, not only in the manufacturing and installation of giant turbines, but up and down the entire supply chain.

Beyond the positive effect on innovation, another outgrowth of a collaborative approach is the collective expertise the industry gains as we stand on the threshold of global expansion. The next ten years will see expansion into new markets and the establishment of regional supply chains. Inevitably, we will also see the growing pains that will accompany growth in these new regions.

It’s worth noting that the US market took a major step forward during 2016 after the legislature in Massachusetts passed a bill mandating the state’s utilities to procure 400MW of offshore wind power in 2017 with 1.6GW installed by 2027. It is expected that the US will commission its first large-scale offshore wind power plant around 2020. Increasingly, forecasters are also expecting Asia-Pacific to grow its offshore wind power installations. New offshore wind markets such as Taiwan and Japan are currently exploring opportunities to install large-scale offshore wind plants.

"Our dynamic and complex sector is entering a new era"

Expansion of the industry will also require a level of customisation that we do not see in the water today. New markets mean an increase in environmental diversity, including wind patterns and seabeds, new regulatory requirements for both manufacturing and supply chain infrastructure, and advanced R&D in the establishment of grid architecture that can support offshore wind and an increasingly diverse energy mix.

Our dynamic and complex sector is entering a new era — one that hopefully will see us secure an indispensable place in the energy mix. But our drive towards that goal must be characterized not only by competition, but also by collaboration. Moving forward together will lead offshore wind to new levels of innovation, shared expertise and best practices, customisation, and the sustainable expansion of the sector to new markets across the globe.

Tetsushi Mizuno is co-chief executive at MHI Vestas Offshore Wind, one of the event ambassador companies at the Offshore Wind Energy conference in London on 6-8 June

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