Offshore in peril, says Iberdrola exec

Offshore wind risks having no future beyond 2020 unless costs are driven down, warned Iberdrola renewables chief executive Xabier Viteri.

Viteri  said the cost pressure comes amid “very tight” business conditions due to weak power demand, the need for financial partners, regulatory risks and competition from other renewable energy sources.

Unfortunately, as new offshore wind parks are increasingly moving into deeper waters, the unit cost per megawatt hour of electricity produced recently has actually been increasing instead of going down, he laments.

“My perception is that if we are not able to achieve a big cost reduction, the industry isn’t going to run beyond 2020,” Viteri told a panel of industry leaders at the EWEA 2014 conference in Barcelona.

The offshore wind industry so far has relied too much on systems coming from the offshore oil and gas supply chain – which is not driven by cost reduction, but by maximising production, the Iberdrola executive explained.

To bring costs down, the offshore wind industry now needs to invest more in research and development and has to see innovation in logistics, transport and operation, he said.

“It is difficult to foresee now a moment when offshore wind is going to be competitive with onshore,” Viteri said.

“In order to see that this industry has some chances of development post-2020, we have to achieve a reduction of 40%, or over 40%.”

Iberdrola is the world’s biggest operator of onshore wind, and currently is building up a sizeable offshore wind pipeline, including the 400MW Wikinger project in the German part of the Baltic Sea, for which it expects to take a final investment decision in the first half of 2014.