IN DEPTH: The great offshore debate
Recharge editor-in-chief Ben Backwell hosted a top-level panel of offshore wind developers and turbine manufacturers at RenewableUK’s Global Offshore Wind 2014 conference last month.
In keeping with the rest of the conference, there was an air of confidence among the participants, although one that was based on a more sober assessment of the size of the market over the next decade than in previous years.
Here are some edited highlights from the session.
JULIAN BROWN, Areva UK country manager
“We have passed the hormonal stage, leaving university and thinking of the ‘real grown-up world’. We can expect a more mature industry and I think we are now clear about what the pipeline to 2020 is.
“I would guess that the UK is capable of delivering 1.5GW a year; two years ago I would have said a much larger number than that. What we need is competition so we can drive down costs, seeing how consolidation is naturally happening.”
JONATHAN COLE, Iberdrola’s managing director for offshore wind
“I think we are in great shape as an industry, and think we always have been. We are now at 4GW in the UK; that’s going to put the UK at a 10GW market by 2020. So if you are in the UK, I think the future looks fantastic for developers, for regulators, for governments.
“We still need to be sustainable, self-funded. [We] need to be cutting costs dramatically, and I think that if we do not cut costs by 30% by 2020, there isn’t a future beyond 2020.
“I think the market is going to continue to be utility-led, because of the size of the projects. At some stage there will be other investors coming in and we will see capital coming from other sources, but I don’t see this market run by IPPs [independent power producers]. It would take more than £100m [$170m] before you even make an investment decision — that can only be stomached by big utilities.
“So that’s why I think big utilities will continue to build the markets, and supply chains will feed into that, and investors will come into that. I don’t see that changing.
“I think the turbine market is becoming more competitive; to be honest, it wasn’t until now. This is a great thing. It is getting to a stage where we have the right level of competitiveness.
“We would expect to see three or four big turbine-manufacturing players in the European market.”
MICHAEL HANNIBAL, Siemens Offshore Wind chief executive
“What we [Siemens] have seen is that predictability is an enabler for things, and uncertainty is definitely the killer of making things happen, so it is really about creating clarity and predictability, and we have said that for many years.
“Siemens is in good shape, but from the developers, there is something about the timing that has to be improved further, and what we need now is to talk about the issues with costs and how to bring them down.
“Offshore wind will be competitive in the near future — we only have to look at all the jobs it’s creating and the results it has so far. I hope the UK market will be larger than 1.5GW a year. It is still the leading market, so it just needs to be more predictable, because it is clear that the size of the turbines we have today will go up, but for that, we need further investors."
MASATO YAMADA, MHI-Vestas chief strategy officer
"My company is just ten weeks old, but I watched from the outside for a long time. Opportunities are lower than expected but the market is still attractive for us. Uncertainty is an issue, but the biggest challenge for us is the establishment of our company. We try to be a good competitor for Siemens.
“It’s not our primary business, but we have the ability to bring together finance for big offshore wind projects if we need to.
“We are looking actively at manufacturing sites in the UK, although no decision has been made.”
CHARLES HENDRY, Forewind chairman and ex-UK energy minister
“There is still some detail to be sorted out, but the [UK’s market] structure is in place and the agreement on the structure is not going to be changed for many years to come.
“I think that people can assume that it is here to stay. The level of ambition has to be linked to the ability to make it happen. And if cost comes down, then we have every reason to think that the ambition can be much greater than the 1.5GW a year.
“The scale of the projects coming forward is enormous.
“We have been taken by surprise by the way costs have come down, and we’ve seen bigger changes there than we have expected. A lot of it is about the installation time and the ability to maintain the turbines at sea in much shorter windows than was previously the case.
“[Forewind participants] Statkraft and Statoil have enormous enthusiasm for the UK market. It costs around £100m to get 4GW in the planning procedures [the size of the first phase at Forewind’s Dogger Bank project], which shows the amount of work that needs to be done at that stage. It will cost another significant amount to get it to the investment decision.
“These are companies with expertise and can show us the way to do it.”