Offshore Wind Energy is at a Turning Point: Next Comes Innovation

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This April Germany’s Bundesnetzagentur selected four offshore wind projects–three by Danish firm DONG Energy, one by German EnBW–at an auction some have earmarked as a turning point for the industry.

The reason? The auction was subsidy-free, the first of its kind anywhere on earth. Until then, green-minded politicians and state bodies had offered big incentives to build offshore wind farms, for their commitment to environmentally friendly energy.

But since the first offshore wind farm began operating in 1991, at Vindeby in Denmark, the sector has experienced huge growth. Vindeby’s output was 4.95 Megawatts. Today’s wind farms can achieve outputs of 12.6 Gigawatts.

Europe still represents by far the largest market for offshore wind farms in the world, with 73% of projects based in the North Sea between Britain, northwest Europe and Scandinavia. Total installed offshore wind capacity in Europe now stands at 11,538 MW across 82 wind farms in 11 countries.

European offshore wind investments reached a record €18.2 billion ($20.4m) in 2016, financing 5.9GW of new capacity. Wind energy overtook coal as the UK’s second-biggest source of electricity behind gas.

Elsewhere, offshore wind is getting recognition. The Taiwanese government has set a 3GW offshore target for 2025 (as of 2013 the total installed capacity of the country was 41.18GW). China has committed to sizable projects while India now has 28,700MW, and is the fourth largest market in the world.

Japan, whose seas drop sharply in depth off its coasts, and whose commitment to nuclear has been shaken by the Fukushima nuclear disaster, has been earmarked as a potentially huge market by industry insiders.

Offshore wind power is in its infancy in the United States: the Block Island Wind Farm, located off the coast of Rhode Island, spun into life last December. It will supply a small island community in the state. Scottish Power has already won two contracts in the US. Its first construction will be the Vineyard Wind project, located 14 miles south of Martha’s Vineyard, Massachusetts. It will begin producing energy in five years’ time at a capacity of 1,500-2,500MW.

However President Trump is known to hold a dim view of wind energy, telling the New York Times last November that “the wind is a deceiving thing.” And judging by his recent dropping out of the Paris accords, and commitment to fossil fuel, it seems unlikely to find the most exciting offshore news in the US.

The three biggest offshore wind developers in 2016 were DONG Energy, Northand Power and Westermeerwind. But as the cost of installation plummets, a path is being cleared for innovative startups to enter the fray.

The average distance to shore of an offshore turbine is 42km, with an average oceanic depth of 25m. By H1 of last year, every installed wind turbine was a monopile, i.e. one that rests on the seabed. Not for long. Several companies are developing floating turbines, which would make the establishment of farms in countries surrounded by deep water far easier.

Ideol is a Marseille, France-headquartered company that has won several engineering and design awards with its triple-patented floating offshore model. It has raised €31m ($35m) across four funding rounds, from public and private investors, including an €8m ($9m) round yesterday led by Germans Siem Offshore contractors, and Japan’s Hitachi Zosen.

60-80% of the world’s best wind resources lie in waters “not compatible with bottom-fixed solutions,” Ideol marketing officer Bruno Geschier tells Red Herring. “Ideol’s unique shallow-draft solution enables us to be the only floating technology in a position to tap into shallow-water areas where challenging sea bottom conditions render bottom-fixed solutions economically not viable.”

Esteyco, a Spanish company, has also won admirers for its concrete telescopic tower design. The energy sector is notoriously difficult for small businesses to navigate. But as public bodies continue to pump money into green initiatives to fulfill carbon directives, SMBs can continue to grow.

“It’s a good time right now,” says Joël Meggelaars, head of advocacy at WindEurope, a Brussels-based lobby group. “Offshore wind’s been at the center of discussions on the future of the wind industry, and the level of support governments need to give developers is decreasing today.”

Countries are now relying on outputs of 13-15GW for future projects, which will require plenty of imminent innovation, adds Meggelaars. In the past ten years it has leapt from 1.1GW to 12.6GW, which should allay fears of stagnation.

Geschier warns that the recent zero-subsidy tenders in Germany came before its time. They “were the result of very unique conditions that cannot necessarily be duplicated elsewhere: harsh competition between two key players vying for leadership, a hungry supply-chain, reassuring permitting and grid-connection parameters.”

Meggelaars also worries about a “lack of clarity” over future volumes. “Currently we know where projects will be based,” he says. “700MW will come from Germany. There’s not much from Britain, maybe 1GW. The Dutch will put perhaps 2GW to tender. But post-2020 there is a lot of clarity missing.”

These worries aside, offshore wind is reaching a potentially golden period in its development. The race is on to innovate in time for the riches available in future tenders.

  • Eleftherios Pavlides

    “the Block Island Wind Farm, located off the coast of Rhode Island, spun into life last December. It will supply a small island community in the state.”

    In fact the 30 MW wind farm will generate a lot more than the needs of Block Island that the winter population shrinks to under a 1000. Most of the electricity is exported to the mainland through an underwater cable.

    On May 1 2017 they shut down the oil PowerPlant on the island because the cable that exports the electricity to the mainland also acts as backup in the rare event that there is no wind. The cost after shutting down the dirty fossil fuel Power Plant that had gone as high as 60 cents/KWh shrunk to 24 cent/KWh. Over the 20 year life of the turbines the cost of the Block Island wind electricity is expected to go lower than the anticipated cost of the mainland electricity.

    Clean and less expensive than the disease causing dirty fossil fuels! Way to go.