The status of the European offshore wind energy market
By the end of 2009, a total of 830 wind turbines were installed and grid connected in European waters, bringing the total installed capacity offshore in Europe to 2,063 MW.
These are spread across 39 wind farms in nine European countries. In terms of size they range from 2 MW (Lely, Netherlands, built in 1994) to 209 MW (Horns Rev 2, Denmark, built in 2009).
The main offshore markets in Europe are the United Kingdom (883 MW) and Denmark (646 MW), followed by the Netherlands (247 MW), Sweden (164 MW), Germany (42 MW), Belgium (30 MW) and Ireland (25 MW).
Finland has a functioning near shore wind farm (24 MW) and Norway a fully grid connected experimental floating wind turbine (2.3 MW). In 2009, 201 wind turbines in nine separate offshore wind farms were installed in European waters, totalling 584 MW of new capacity – a 56% increase on 2008 installations.
Of the €13 billion invested in new wind farms in the EU in 2009, €1.5 billion went towards offshore wind farms. This figure is expected to double to €3 billion in 2010.
The European offshore industry and technology
There are currently nine wind turbine manufacturers supplying the European offshore market: Siemens, Vestas, WinWind, Multibrid, Repower, Nordex, GE, BARD and Enercon.
Of the 199 wind turbines installed and grid connected during 2009, 146 were Siemens wind turbines (2.3 MW and 3.6 MW), 37 were Vestas wind turbines (3 MW), 10 were WinWind wind turbines (3 MW) and six were Multibrid wind turbines (5 MW).
In addition, six REpower wind turbines (5 MW) were installed but not grid connected. The Danish utility DONG Energy was the leading developer during 2009, installing 313 MW of the 577 MW, followed by E.ON Climate & Renewables and RWE Innogy.
Water depth and distance to shore
The average water depth of the offshore wind farms installed during 2009 was 10.6m, 0.9m less deep than in 2008. The average water depth of wind farms remains below 20m. However, offshore wind farms under construction have an average water depth of 27.2m.
The average distance to shore of the offshore wind farms installed during 2009 was 12.8 km, 2.3 km further than in 2008. Most projects are still closer than 20 km, and the vast majority are less than 40 km.
However, a noticeable increase is expected in the coming years, with offshore wind farms under construction averaging a distance to shore of 28.3km.
Connecting offshore wind farms
Connecting offshore wind farms to national electricity grids continues to present a challenge, and the ambitious plans outlined below require a dedicated offshore electricity system to provide grid access for the more remote offshore wind farms.
A future transnational offshore grid will have many functions, each benefitting Europe in different ways. Not only will it provide grid access to offshore wind farms and smooth the variability of their output on the markets, but it will also improve the ability to trade electricity within Europe, thereby contributing dramatically to Europe’s energy security.
Various models for such a European ‘super grid’ have been proposed, and the European Commission and national governments agreed in 2009 to provide political direction and a strategic plan for an offshore super grid.
In 2010, the European Commission will publish a ‘Blueprint for a North Sea Grid’ and the European Network of Transmission System Operators (ENTSO-E) will publish its first 10 Year Network Development Plan.
The industry hopes that by 2020, the initial stages of a pan-European offshore grid should be constructed and operating with an agreed plan developed for its expansion to accommodate 150 GW by 2030.
The year 2009 already saw significant steps on planning and financing specific offshore cables that would contribute to the North Sea grid, including the UK/Norway interconnector, a planned link between Norway and Germany (NorGer), an undersea electricity cable to be installed on the seabed between the Netherlands and Denmark (Cobra cable), an East-West Interconnector linking Ireland and north Wales, BritNed linking the UK and the Netherlands and Kriegers Flak, a combination of three wind farms of 600 MW each linking Denmark, Sweden and Germany.
Financing offshore wind farms
The financial crisis is constraining the growth of the offshore wind energy sector, disproportionally affecting independent project developers, which have been severely affected by the lack of availability of project finance.
The second half of the year, however, saw some innovative financing deals, including the Belwind and Boreas transactions, which involved different sponsors, technologies, bank groups (including the European Investment Bank EIB) and authorities.
These deals created two high profile precedents for the sector, which will hopefully open the door to similar financing options in the future.
In June 2009, the EIB for the first time assumed project finance risk for an offshore wind farm by granting €300 million of finance to the Belwind wind farm project, situated 46 km off the Belgian coast. In addition to this, the EIB, in cooperation with five other leading public financial institutions, launched a pan-European equity fund called “Marguerite 2020 Fund”, which will have an initial capital of €600 million intended to finance large infrastructure projects, and it announced its support for several offshore wind farms.
The offshore wind industry was also buoyed during 2009 by the European Union’s European Economic Recovery Plan which already injected €255 million into the offshore wind sector, out of the total €565 million allocated to offshore wind.
This stimulus injection was vital, and it remains crucial that this financing is released as soon as feasible and that the Commission’s review in 2010 of the European Economic Recovery Plan, or any further stimulus package, continues to target the offshore wind industry as a strategic European sector.
To ensure that the market growth expected for 2010 is not blown off course the European institutions, particularly the EIB, must continue to increase their involvement in the offshore wind energy industry.
Outlook for 2010 and beyond –over 100 GW already proposed
2010 will be a defining year for the offshore wind power market in Europe. The economic crisis permitting, 2010 will see around 1,000 MW installed offshore in European waters with more than ten wind farms being completed.
This would amount to a growth of 71% compared to 2009.Europe’s 2010 offshore market could make up approximately 10% of Europe’s total annual market for wind power capacity, and more than 20% of capital investments, making the offshore industry a significant mainstream energy player in its own right.
Looking beyond 2010, there is a significant pipeline of offshore projects at varying stages of development. Currently 16 wind farms are under construction in European waters, totalling more than 3,500 MW. In addition, a further 52 offshore wind farms have been fully consented, totalling more than 16,000 MW.
In 2020, EWEA expects between 40 GW and 55 GW of offshore wind farms to be feeding electricity to the grid in the EU, producing between 145 and 198 TWh of electricity.
EWEA has identified proposals for over 100 GW of offshore wind projects in European waters – either under construction, consented, in the consenting phase or proposed by project developers or implied in development zones proposed by governments.
These 100 GW of offshore wind projects will be spread over 15 European countries, and it shows tremendous developer interest. It also provides a good indication that EWEA’s expectation that 150 GW of offshore wind power will be operating by 2030 is feasible.
However, in order to achieve this target, coordinated action is required from the European Commission, EU governments, regulators, transmission system operators and the wind industry. Key issues in this respect include the development of the offshore industry supply chain, maritime spatial planning and the establishment of an offshore electricity grid based on the industry’s needs.