Wednesday, May 25, 2011

Offshore Wind Future Looks Bright but Challenges & Uncertainty Remain, New Report Finds: "
offshore wind turbines coast

A report this month from PricewaterhouseCoopers LLP (PwC), Offshore Proof, delves into the challenges of offshore wind power, its shortcomings to date, and its potentially bright future. While the report finds that the “offshore wind power industry has some way to go to prove it can take its place as a sustainable part of the energy mix,” 75% of experts in the field project that it will be an important part of the mix in the next 20 years and about 60% believe that it will be economically competitive within 15 years.

Overcoming Technological & Cost Constraints

Technological constraints and, thus, costs have been the major factor limiting offshore wind’s part in the renewable energy or energy field to date. However, many are optimistic that technological breakthroughs are on the horizon.

As I’ve written about before, for the most part, onshore wind technology has just been transferred to (and modified to fit) offshore locations — not the most effective way of developing offshore wind. However, many companies and institutions are working on developing true or more efficient offshore wind technology. For example, “Energy Technologies Institute (ETI) recently brought together E.ON (a major energy company in Europe), BP, power systems and engineering experts at Rolls-Royce, and the University of Strathclyde for a project called ‘Helm Wind’” in an effort to start from scratch on developing useful offshore wind technology and it believes now that it will be able to cut offshore wind energy costs by 30% or more.

Governments Have Faith in Offshore Wind, but Also Cautious…

“Nearly two-thirds of government bodies expect technological breakthroughs to occur that will prove offshore wind power’s worth,” Offshore Proof found. Notably, however, a similar percentage admit it’s possible technological breakthrough could occur for other renewable energy options that leave offshore wind in the dust (or something like that).

Financial Institutions Also Feeling Better about Offshore Wind

Almost 2/3 of the financial institutions in Europe surveyed by PwC contend that offshore wind investment risk has decreased in the past couple of years. Only 9% say it has increased.

Next 5 Years are Important Years for Offshore Wind

“The coming five years will be a critical time for offshore wind power to turn promise into performance according to the analysis. But early experience of projects, as reported by developers, gives cause for optimism,” PwC reports. Availability and uptime of new offshore wind projects are looking good, comparable to onshore wind.

On cost, projections are mixed. 42% believe in a “real terms cost decrease” while 25% actually project a real terms cost increase and the remaining respondents project no significant change at all. On transmission, major challenges still remain, even in Europe.

“There are many issues still to be resolved,” Manfred Wiegand, PwC’s Global Utilities Leader, said. ”One significant factor is the transmission infrastructure needed to carry this source of power to large centres of consumption. It is not just a matter of grid access. In Germany for example, major expansion of transmission networks is also needed but current planning processes can take more than a decade.”

6 ‘Make or Break’ Issues for Offshore Wind

Offshore Proof identifies 6 “make or break” issues that will determine if offshore wind becomes a major player in the coming years: cost reduction, construction risk and financing, supply chain management, grid access, investment attractiveness, and regulatory certainty.

We’ll see how the industry does on these important make or break points.

For the report PwC surveyed experts in various sectors of the offshore wind industry (i.e. developers, manufacturers, and utility companies).

View & download the full report here: Global offshore windpower survey.


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