Wind farm developers are worried that the hiatus in the industry will last several years, which could result in large-scale job losses if other related work cannot be found. One said this gap would cause "huge problems" for the supply chain and it would be hard for manufacturers to invest in new facilities in Britain without a steady stream of work.
Britain recently overtook Denmark to become the world’s largest offshore wind farm player, implying the tripling of capacity in the next two years. But new projects will dry up in 2013. Only 90 megawatts (MW) of newly installed wind energy capacity, which is enough to supply 30,000 homes when the wind blows, is being forecast by energy experts at Douglas-Westwood, compared with 1,368 MW the year before.
Energy companies are expected to spend the next two years planning bids to build huge "Round 3" projects and these may not become operational much before the end of the decade.
There are other extra projects on the drawing board which are supposed to fill this gap. But planning problems, difficulties securing finance and cost overruns on existing projects mean that these plans could be scaled back. Swedish firm Vattenfall said last month that it would not take up the option of expanding its Thanet windfarm – the largest offshore project in the world – blaming problems securing access to the grid.
Analysts at Douglas-Westwood are forecasting a pick-up in activity in 2014, estimating 774 MW of new capacity, and bigger increases beyond that, but this assumes that developers build these extra projects.
One offshore wind farm developer said: "The industry faces a gap mid-decade whilst it waits for Round 3 and this will cause huge problems for the supply chain. Projects such as Thanet have kicked off the programme after the Round 1 demonstrator projects but without a steady build-up of work the investments needed, for example in new manufacturing facilities, may be difficult to justify."
The industry received a huge boost last month when Siemens, General Electric and Gamesa said they would go ahead with plans to build new turbine manufacturing facilities in Britain. But the factories may not ramp up production until towards the end of the decade for Round 3 projects.
The availability of bank finance for offshore projects – at least twice as costly as onshore windfarms – has still not returned to pre-credit crunchlevels. Now there are only 10-14 banks actively lending, compared with almost 40 before 2008, each lending about half what they were lending before. Andy Cox, head of KPMG’s energy practice, said: "It takes more time to get their credit committees comfortable with the risks associated with these projects, particularly as they get bigger and bigger. A huge financing gap in the market is looming with Round 3."
Middle East funds such as Masdar, which took a stake in the London Array project when Shell pulled out, are in talks with cash-strapped utility firms about making further investments.
The government will outline this month how it will overhaul the energy market to make it more attractive to invest in low-carbon forms of generation such as gigantic offshore windfarms.
This article was amended on 8 November 2010. The original sub-heading read: Wind power capacity to slump from 1,368 MW to 90 MW in 2013. This has been corrected.
Source: Guardian.co.uk, www.guardian.co.uk