WINDFORCE: Financing a big test

Financing is the biggest challenge facing the European offshore wind industry in the coming two to three years.

That verdict is according to a snapshot poll of about 150 sector participants during the Windforce 2014 opening session in Bremen.

The offshore wind conference and fair starts today and ends Thursday.

Of those polled, 28% named financing as the biggest challenge, followed by 25%, who said e build-up of the accompanying electricity grid structures was the Nr. 1 challenge.

"A relatively young industry such as offshore wind energy that also is very capital intensive, of course reacts very sensitively to insecurities created in the political sphere," says Hildegard Müller, head of the German Association of Energy and Water Industries, the country's main energy lobby group.

"This insecurity has been very large in the past," she adds, noting that offshore wind needs clear and reliable framework conditions.

A discussion about price caps for renewables support, ongoing offshore grid link problems and insecurity about the future of the feed-in tariff system for offshore during the past two years have unsettled the industry in Germany to a degree that almost no new final investment decisions have come forward.

Ronny Meyer, managing director of the wind energy agency WAB, told participants that the political class needs to understand that investment cycles in offshore wind, unlike in other renewable energies, are rather lengthy.

German Energy Minister Sigmar Gabriel in a plan to reform the country's Renewable Energies Act (EEG) has granted offshore wind a two year extension to the so-called "compression model" for feed-in tariffs until the end of 2019.

The model grants operators a higher FIT during the first eight years of operation in order to meet high upfront investment costs. Its extension has been a long-standing demand of WAB and other offshore groups.

With the EEG reform that is expected to be passed by Germany's parliament before its summer recess, new final investment decisions can be expected in coming months, Meyer estimates.

Despite some positive developments from the government, a majority of those polled at the Windforce opening judged the German government's support for offshore wind energy only as only "satisfactory" (28%) or even "bad" (24%).

In the poll, 41% said in order to carry out more offshore projects, the government needs to raise its offshore wind target.

As part of the EEG reform, the government is slashing Germany's 2020 offshore wind target to 6.5GW, and to 15GW in 2030. Germany previously had aimed for 10GW in 2020 and 25GW in 2030.