News of an impending joint venture between Areva and Gamesa is a sign of further consolidation to come in European offshore wind, said the director of the new Recharge Insight analysis service.
Recharge Insight had already
predicted in its “Ten Surprises for 2014”, published in January, that further
consolidation in the offshore sector would be necessary – and today it emerged
that the French and Spanish groups are set to announce their JV on Monday.
Insight believes that there are not currently sufficient unallocated
megawatts in the offshore pipeline to make proceeding with manufacturing
investments an economic decision for all existing incumbents.
Additionally not all the incumbents
have sufficient balance sheet strength to support their ambitions in offshore,
nor necessarily the financial capability to provide the appropriate warranty
guarantees needed to secure orders.
“Based on our analysis of the
offshore industry, the scene has been set for further partnerships and
collaborations,” said Robert Clover, director of Recharge Insight.
“Obviously the precise details of
the JV have yet to be announced, and the financial arrangements are, as ever
critical to the success of any such JV,” added Clover.
“However, from a strategic and a
cost perspective, there is no doubt that such a JV would strengthen the
prospects for both companies, and will certainly make two Tier 2 players in the
offshore market a more formidable presence, potentially enhancing their ability
to jointly secure orders and importantly reduce costs to secure a profitable
future for the combined entity.”
Clover noted that the offshore market is poised to be one of
the key growth drivers in the European wind market out to 2020 with industry
analysts predicting on average annual growth of 15-20% per annum over that
period and between 20-25GW of installations.
This growth has attracted at least eight serious wind OEMs to
the market each with their own turbine offerings, two of which merged their
businesses in the MHI and Vestas deal.
R&D costs in the offshore market are significantly higher
than onshore wind due to the complexities of the offshore environment and the
large size of the turbines, said Clover.
Almost all new entrants into this fast-growing market are
expected also to invest in new purpose-built manufacturing facilities to
service this growing market.
Recharge Insight is a new
analytical service that will be launched in early 2014.