Dong 'more confident' in UK offshore

The CEO of Denmark’s Dong Energy said the offshore wind giant has seen its confidence in the UK regulatory regime “increase quite considerably” in recent months.

Henrik Poulsen told financial analysts the UK is a market where Dong believes it can continue to “invest quite considerably” following recent policy developments.

Poulsen was asked if Dong’s decision to sell a 25% share of the operating first phase of the London Array offshore wind farm – halving its stake – reflected a lower confidence in the UK as an investment opportunity.

The Dong CEO said the two were unconnected. “I would actually say our confidence in the UK regime has improved quite considerably in the last four or five months.”

Dong has been in a “close dialogue” with the UK government over the impact of its power market reforms. “This is a market where we can continue to invest quite significantly,” said Poulsen.

The London Array stake sale reflected a case-by-case approach to its analysis of its asset base, he said. It was just one part of a major divestment programme the proceeds of which, together with a controversial $2bn cash injection by Goldman Sachs and others, Poulsen insists has put Dong on a sound financial footing.

Dong has emerged as a stalwart of the British offshore wind market at a time when some other major players – not least the UK-based utility SSE – have scaled back their ambitions or expressed doubts.

Poulsen – speaking as the company released its full-year results – said Dong has“good visibility” over how to reach its offshore wind target of 6.5GW by 2020.

“We quite frankly believe we can do this [offshore wind] better than anyone else in the world,” Poulsen said.

Dong’s offshore wind pipeline will see work begin in the first half of this year on the UK’s 210MW Westermost Rough, due to be fully-operational in the first half of 2015.

Germany’s Gode Wind 1 and 2, totalling 582MW, are expected to be fully operating in the second half of 2016.

Poulsen was asked if he could quantify progress made towards Dong’s goal of reducing the costs of offshore wind power by 35-40% by 2020, to hit €100/MWh.

The Dong boss said he could not give a specific number but deemed the ambition central to all its activities in the offshore wind sector.

Poulsen said the company is developing “roadmaps” for cost cutting in every sub-section of an offshore wind development – foundations, cabling, turbines etc.

He said he was “encouraged” by progress made so far and said cost-reductions and “a meaningful price" on carbon could help make offshore wind competitive with other technologies for the long term.