Investing Offshore

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Adam Barber
November 22, 2013
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This content is from our archive. Some formatting or links may be broken.
Investing Offshore

One hundred and twenty-three billion Euros for 40GW by 2020. It’s a lot of money to find in seven short years. And to casual observers, it might seem that cost reduction in offshore wind hasn’t quite gone far enough….

But that’s the number that the European Wind Energy Association’s chief executive gave to delegates at the organisation’s offshore wind event in Frankfurt this week.

It’s the number the lobby group estimates in its latest report that is needed to ensure the build out of offshore wind projects to meet 2020 pan-European climate targets.

So, with everybody’s mind on the money, it was of course no coincidence that German financial hub, Frankfurt, was chosen to be the host city for the biennial conference.

Investment, EWEA chief executive Thomas Becker said in his opening conference address, would only come when there was certainty in the market, and that certainty could only be achieved by binding renewable energy targets for 2030 and beyond. Indeed, this is now a central tenet of EWEA’s lobbing efforts.

It was a view backed by youthful Dong chief executive Henrik Poulsen. Poulsen noted that whilst offshore wind would have to see a cost reduction of 35% to compete with conventional power generation, the pricing of carbon has been massively undervalued. Europe needs to map its own low carbon future, he said, with a 30-year CO2 target.

Binding targets are, of course, the answer. But securing the political will at any level will be a huge task. In the largest offshore wind markets, Germany and the UK, both are on the verge of political change.

The UK will see an election in 2015, where energy prices are already emerging to be a key battleground. Germany will see Angela Merkel’s Christian Democratic Union form a coalition Government with the Social Democrats, a new regime that has already agreed to a cut in offshore wind by 3.5GW by 2020.

But, whilst the industry struggles to press for a more stable policy framework, there is a danger that its conferences can become somewhat thematic – that is, much of the discussion retreats to the same complaint.

This of course belies much of the success and innovation the industry has witnessed so far. Investment in the sector has, to be fair, seen some strong developments in the past couple of years.

After all, who would have thought that Goldman Sachs would take a bet on a major offshore wind developer that has made no secret of its ultimate aim to move away from traditional energy generation?

Japanese trading houses and conglomerates, Canadian and Danish pension investors, niche and listed funds have all lined up to dip their toes in the offshore wind market.

It’s very easy to forget these developments, and crucially, the opportunities to refinance existing projects may just enable the utilities to free up some extra capital at a time of constraint.

With a number of delegates suggesting that the European offshore wind industry will undergo a two-year hiatus until political support has been clarified, the opportunity to bring some breathing space to tight margins could be key.

It’ll also mean that industry operators will have to take the initiative in exporting their current expertise. New offshore wind markets, notably Japan, may alleviate some of the pressure on balance sheets during a slower period.

Let’s be clear, there isn’t and probably won’t be a political panacea in Europe in the next twelve months that will make things any more certain for the industry. And whilst we know that when it comes to subsidies the wind sector certainly loses out to fossil fuels, there are the burgeoning green shoots of a stable asset class that is slowly appealing to investors.

Where’s the money coming from? It’s not a question that could be answered in three days in Frankfurt, but in a young industry that’s attracting bright minds the answer will be found.

One hundred and twenty-three billion Euros for 40GW by 2020. It’s a lot of money to find in seven short years. And to casual observers, it might seem that cost reduction in offshore wind hasn’t quite gone far enough….

But that’s the number that the European Wind Energy Association’s chief executive gave to delegates at the organisation’s offshore wind event in Frankfurt this week.

It’s the number the lobby group estimates in its latest report that is needed to ensure the build out of offshore wind projects to meet 2020 pan-European climate targets.

So, with everybody’s mind on the money, it was of course no coincidence that German financial hub, Frankfurt, was chosen to be the host city for the biennial conference.

Investment, EWEA chief executive Thomas Becker said in his opening conference address, would only come when there was certainty in the market, and that certainty could only be achieved by binding renewable energy targets for 2030 and beyond. Indeed, this is now a central tenet of EWEA’s lobbing efforts.

It was a view backed by youthful Dong chief executive Henrik Poulsen. Poulsen noted that whilst offshore wind would have to see a cost reduction of 35% to compete with conventional power generation, the pricing of carbon has been massively undervalued. Europe needs to map its own low carbon future, he said, with a 30-year CO2 target.

Binding targets are, of course, the answer. But securing the political will at any level will be a huge task. In the largest offshore wind markets, Germany and the UK, both are on the verge of political change.

The UK will see an election in 2015, where energy prices are already emerging to be a key battleground. Germany will see Angela Merkel’s Christian Democratic Union form a coalition Government with the Social Democrats, a new regime that has already agreed to a cut in offshore wind by 3.5GW by 2020.

But, whilst the industry struggles to press for a more stable policy framework, there is a danger that its conferences can become somewhat thematic – that is, much of the discussion retreats to the same complaint.

This of course belies much of the success and innovation the industry has witnessed so far. Investment in the sector has, to be fair, seen some strong developments in the past couple of years.

After all, who would have thought that Goldman Sachs would take a bet on a major offshore wind developer that has made no secret of its ultimate aim to move away from traditional energy generation?

Japanese trading houses and conglomerates, Canadian and Danish pension investors, niche and listed funds have all lined up to dip their toes in the offshore wind market.

It’s very easy to forget these developments, and crucially, the opportunities to refinance existing projects may just enable the utilities to free up some extra capital at a time of constraint.

With a number of delegates suggesting that the European offshore wind industry will undergo a two-year hiatus until political support has been clarified, the opportunity to bring some breathing space to tight margins could be key.

It’ll also mean that industry operators will have to take the initiative in exporting their current expertise. New offshore wind markets, notably Japan, may alleviate some of the pressure on balance sheets during a slower period.

Let’s be clear, there isn’t and probably won’t be a political panacea in Europe in the next twelve months that will make things any more certain for the industry. And whilst we know that when it comes to subsidies the wind sector certainly loses out to fossil fuels, there are the burgeoning green shoots of a stable asset class that is slowly appealing to investors.

Where’s the money coming from? It’s not a question that could be answered in three days in Frankfurt, but in a young industry that’s attracting bright minds the answer will be found.

One hundred and twenty-three billion Euros for 40GW by 2020. It’s a lot of money to find in seven short years. And to casual observers, it might seem that cost reduction in offshore wind hasn’t quite gone far enough….

But that’s the number that the European Wind Energy Association’s chief executive gave to delegates at the organisation’s offshore wind event in Frankfurt this week.

It’s the number the lobby group estimates in its latest report that is needed to ensure the build out of offshore wind projects to meet 2020 pan-European climate targets.

So, with everybody’s mind on the money, it was of course no coincidence that German financial hub, Frankfurt, was chosen to be the host city for the biennial conference.

Investment, EWEA chief executive Thomas Becker said in his opening conference address, would only come when there was certainty in the market, and that certainty could only be achieved by binding renewable energy targets for 2030 and beyond. Indeed, this is now a central tenet of EWEA’s lobbing efforts.

It was a view backed by youthful Dong chief executive Henrik Poulsen. Poulsen noted that whilst offshore wind would have to see a cost reduction of 35% to compete with conventional power generation, the pricing of carbon has been massively undervalued. Europe needs to map its own low carbon future, he said, with a 30-year CO2 target.

Binding targets are, of course, the answer. But securing the political will at any level will be a huge task. In the largest offshore wind markets, Germany and the UK, both are on the verge of political change.

The UK will see an election in 2015, where energy prices are already emerging to be a key battleground. Germany will see Angela Merkel’s Christian Democratic Union form a coalition Government with the Social Democrats, a new regime that has already agreed to a cut in offshore wind by 3.5GW by 2020.

But, whilst the industry struggles to press for a more stable policy framework, there is a danger that its conferences can become somewhat thematic – that is, much of the discussion retreats to the same complaint.

This of course belies much of the success and innovation the industry has witnessed so far. Investment in the sector has, to be fair, seen some strong developments in the past couple of years.

After all, who would have thought that Goldman Sachs would take a bet on a major offshore wind developer that has made no secret of its ultimate aim to move away from traditional energy generation?

Japanese trading houses and conglomerates, Canadian and Danish pension investors, niche and listed funds have all lined up to dip their toes in the offshore wind market.

It’s very easy to forget these developments, and crucially, the opportunities to refinance existing projects may just enable the utilities to free up some extra capital at a time of constraint.

With a number of delegates suggesting that the European offshore wind industry will undergo a two-year hiatus until political support has been clarified, the opportunity to bring some breathing space to tight margins could be key.

It’ll also mean that industry operators will have to take the initiative in exporting their current expertise. New offshore wind markets, notably Japan, may alleviate some of the pressure on balance sheets during a slower period.

Let’s be clear, there isn’t and probably won’t be a political panacea in Europe in the next twelve months that will make things any more certain for the industry. And whilst we know that when it comes to subsidies the wind sector certainly loses out to fossil fuels, there are the burgeoning green shoots of a stable asset class that is slowly appealing to investors.

Where’s the money coming from? It’s not a question that could be answered in three days in Frankfurt, but in a young industry that’s attracting bright minds the answer will be found.

One hundred and twenty-three billion Euros for 40GW by 2020. It’s a lot of money to find in seven short years. And to casual observers, it might seem that cost reduction in offshore wind hasn’t quite gone far enough….

But that’s the number that the European Wind Energy Association’s chief executive gave to delegates at the organisation’s offshore wind event in Frankfurt this week.

It’s the number the lobby group estimates in its latest report that is needed to ensure the build out of offshore wind projects to meet 2020 pan-European climate targets.

So, with everybody’s mind on the money, it was of course no coincidence that German financial hub, Frankfurt, was chosen to be the host city for the biennial conference.

Investment, EWEA chief executive Thomas Becker said in his opening conference address, would only come when there was certainty in the market, and that certainty could only be achieved by binding renewable energy targets for 2030 and beyond. Indeed, this is now a central tenet of EWEA’s lobbing efforts.

It was a view backed by youthful Dong chief executive Henrik Poulsen. Poulsen noted that whilst offshore wind would have to see a cost reduction of 35% to compete with conventional power generation, the pricing of carbon has been massively undervalued. Europe needs to map its own low carbon future, he said, with a 30-year CO2 target.

Binding targets are, of course, the answer. But securing the political will at any level will be a huge task. In the largest offshore wind markets, Germany and the UK, both are on the verge of political change.

The UK will see an election in 2015, where energy prices are already emerging to be a key battleground. Germany will see Angela Merkel’s Christian Democratic Union form a coalition Government with the Social Democrats, a new regime that has already agreed to a cut in offshore wind by 3.5GW by 2020.

But, whilst the industry struggles to press for a more stable policy framework, there is a danger that its conferences can become somewhat thematic – that is, much of the discussion retreats to the same complaint.

This of course belies much of the success and innovation the industry has witnessed so far. Investment in the sector has, to be fair, seen some strong developments in the past couple of years.

After all, who would have thought that Goldman Sachs would take a bet on a major offshore wind developer that has made no secret of its ultimate aim to move away from traditional energy generation?

Japanese trading houses and conglomerates, Canadian and Danish pension investors, niche and listed funds have all lined up to dip their toes in the offshore wind market.

It’s very easy to forget these developments, and crucially, the opportunities to refinance existing projects may just enable the utilities to free up some extra capital at a time of constraint.

With a number of delegates suggesting that the European offshore wind industry will undergo a two-year hiatus until political support has been clarified, the opportunity to bring some breathing space to tight margins could be key.

It’ll also mean that industry operators will have to take the initiative in exporting their current expertise. New offshore wind markets, notably Japan, may alleviate some of the pressure on balance sheets during a slower period.

Let’s be clear, there isn’t and probably won’t be a political panacea in Europe in the next twelve months that will make things any more certain for the industry. And whilst we know that when it comes to subsidies the wind sector certainly loses out to fossil fuels, there are the burgeoning green shoots of a stable asset class that is slowly appealing to investors.

Where’s the money coming from? It’s not a question that could be answered in three days in Frankfurt, but in a young industry that’s attracting bright minds the answer will be found.

One hundred and twenty-three billion Euros for 40GW by 2020. It’s a lot of money to find in seven short years. And to casual observers, it might seem that cost reduction in offshore wind hasn’t quite gone far enough….

But that’s the number that the European Wind Energy Association’s chief executive gave to delegates at the organisation’s offshore wind event in Frankfurt this week.

It’s the number the lobby group estimates in its latest report that is needed to ensure the build out of offshore wind projects to meet 2020 pan-European climate targets.

So, with everybody’s mind on the money, it was of course no coincidence that German financial hub, Frankfurt, was chosen to be the host city for the biennial conference.

Investment, EWEA chief executive Thomas Becker said in his opening conference address, would only come when there was certainty in the market, and that certainty could only be achieved by binding renewable energy targets for 2030 and beyond. Indeed, this is now a central tenet of EWEA’s lobbing efforts.

It was a view backed by youthful Dong chief executive Henrik Poulsen. Poulsen noted that whilst offshore wind would have to see a cost reduction of 35% to compete with conventional power generation, the pricing of carbon has been massively undervalued. Europe needs to map its own low carbon future, he said, with a 30-year CO2 target.

Binding targets are, of course, the answer. But securing the political will at any level will be a huge task. In the largest offshore wind markets, Germany and the UK, both are on the verge of political change.

The UK will see an election in 2015, where energy prices are already emerging to be a key battleground. Germany will see Angela Merkel’s Christian Democratic Union form a coalition Government with the Social Democrats, a new regime that has already agreed to a cut in offshore wind by 3.5GW by 2020.

But, whilst the industry struggles to press for a more stable policy framework, there is a danger that its conferences can become somewhat thematic – that is, much of the discussion retreats to the same complaint.

This of course belies much of the success and innovation the industry has witnessed so far. Investment in the sector has, to be fair, seen some strong developments in the past couple of years.

After all, who would have thought that Goldman Sachs would take a bet on a major offshore wind developer that has made no secret of its ultimate aim to move away from traditional energy generation?

Japanese trading houses and conglomerates, Canadian and Danish pension investors, niche and listed funds have all lined up to dip their toes in the offshore wind market.

It’s very easy to forget these developments, and crucially, the opportunities to refinance existing projects may just enable the utilities to free up some extra capital at a time of constraint.

With a number of delegates suggesting that the European offshore wind industry will undergo a two-year hiatus until political support has been clarified, the opportunity to bring some breathing space to tight margins could be key.

It’ll also mean that industry operators will have to take the initiative in exporting their current expertise. New offshore wind markets, notably Japan, may alleviate some of the pressure on balance sheets during a slower period.

Let’s be clear, there isn’t and probably won’t be a political panacea in Europe in the next twelve months that will make things any more certain for the industry. And whilst we know that when it comes to subsidies the wind sector certainly loses out to fossil fuels, there are the burgeoning green shoots of a stable asset class that is slowly appealing to investors.

Where’s the money coming from? It’s not a question that could be answered in three days in Frankfurt, but in a young industry that’s attracting bright minds the answer will be found.

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Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.