The Blog - Wind energy market analysis

Posted 06/06/2017



OWE 2017: Reflections on the first day

In our newsletter on Monday we highlighted five of the major talking points we expected to see at the Offshore Wind Energy 2017 conference, run by WindEurope and RenewableUK, in London this week. And, at the end of the first day, all have featured heavily. 

Here are our thoughts on what we have heard on these topics so far:

Zero-subsidy developments: These were always going to be a big talking point, and it was great to hear Dong Energy’s offshore CEO Samuel Leupold give more rationale on how its three winning projects in Germany’s offshore wind auction were possible.

In short, it is a combination of faith in the evolution of turbines; long-term support offered by the German government; and the direction of power prices across Europe.

However, it is clear that, for the time being, zero-subsidy projects in Germany are the result of a unique set of circumstances and we should not expect them to be a general feature of the market by 2020. There will need to be more innovation across the supply chain if these projects are to be financially viable – and the industry’s plan to build 60GW of offshore wind farms in Europe in the 2020s would help with that.

Ever-increasing turbine sizes: The big launch of the day was MHI Vestas’s 9.5MW turbine, which is an improved version of its 8MW model, though we have also seen interesting launches from the likes of Seawind with a 6.2MW two-bladed concept; and Aerodyn’s ‘double-headed’ two-rotor design, which could get up to 15MW. It is clear that more innovative turbines could be as important as just getting bigger.

But we have so far not seen any bold predictions attaching a date to when we can expect 15MW turbines. With zero-subsidy schemes and plans for 60GW of offshore projects in Europe in the 2020s, the industry already has some big dates to aim for.

Evolution in the refinancing market: Developers are seeking to recycle their capital and this is opening up new opportunities for investors, which is something to which experts have alluded including the Crown Estate’s Offshore Wind Operational report yesterday, and this comment piece from UK Green Investment Bank’s Nick Gardiner.

The main finance tracks are tomorrow so we expect to have more to report at the end of day two. But one key trend as the industry moves away from subsidies is that the offshore wind sector could be even more the domain of big utilities. The firms, such as oil and gas giants, have the strong balance sheets that let them to take a risk on market power prices.

North American momentum: There is momentum in the North American market but its future success depends in large part on policies coming out of Massachusetts and New York – moreso than the whims of President Trump.

At a session this afternoon with Gardiner and Jonathan Cole from Scottish Power Renewables, the overwhelming message was that Europe would dominate the offshore development market for the next decade, and that the US would be the next big offshore market as long as we see supportive policies at state level. If we see these policies by the end of this decade then the US will be the next leader.

But Taiwan coming up strong: With the US reliant on state policies, other speakers argued there is a great opportunity for Taiwan to establish itself as an offshore wind leader. Sebastien Brunel, commercial operations leader at GE Renewable Energy said he saw “strong potential in Taiwan and, more and more, Japan and Korea”. 

This growth partly relies on the evolution of floating offshore turbines, a topic that Irene Rummelhoff from Statoil discussed in her keynote speech. This technology could open up all of the world’s coastlines to new developments. It is a thought that will get many in the industry salivating if it can be made commercially viable.

That would also prove right the speakers who raved about the exciting prospects in offshore wind in the next ten years. It has certainly left us keen to get stuck in again tomorrow – after some networking, of course! Thanks for reading.

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