Offshore wind faces challenge to cut costs fast

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Richard Heap
June 24, 2016
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Offshore wind faces challenge to cut costs fast

“Get cheap fast.”

That was the resounding message from Michael Liebreich, chairman of Bloomberg New Energy Finance, at the Global Offshore Wind conference in Manchester this week. He said that fast cost-cutting is key if the offshore wind sector is to grow out of Europe and make a major contribution to reducing global carbon emissions by 2040. But how can it be done?

Increasing the size of turbines and improving their efficiency is only part of the answer.

Michael Hannibal, chief executive of offshore wind at Siemens, said during a ‘business leaders debate’ on Wednesday that developers needed to see optimisation across the supply chain, including in cabling and in operations and maintenance.

Meanwhile, GE’s chief executive of offshore wind, Anders Soe Jensen, said that data on the performance of turbines and future weather patterns was key, as this information can help developers actively manage the operations of, and output from, their project.

He said it would also be increasingly important for energy firms, including wind operators, to track and predicts the movements of electric cars energy can be supplied where it is needed.

Liebreich said that working with ‘unconventional friends’ in sectors including technology, logistics, telecoms, data and finance would also help to promote innovation. For example, telecoms firms can be vital in helping companies move large amounts of wind data.

And Piers Guy, head of offshore wind and UK country manager at Vattenfall, said that he expected to see “quite spectacular” reductions in the cost of projects. This summer, the Dutch government is due to reveal the result of its tender for 700MW of new capacity in the Borssele 1 and 2 projects in its waters. The projects have attracted a total of 38 bids, and the government’s main focus has been on driving down the cost of energy.

Guy said his informal target was to reach £50/MWh-£60MWh for new offshore wind from 2030, which looks ambitious compared to the industry’s current target of £100/MWh by 2020 but should be achievable with technological innovation and cost-cutting in the supply chain. Siemens has signed up to a target of €80/MWh (or around £61.50/MWh) by 2025.

This all sounds good and is what the industry needs to aim for. As Liebreich said, offshore wind will have to compete with cheap natural gas, cheap coal and potentially even cheap nuclear in the coming decades. Wind is not the only sector seeing innovation.

But this cost-cutting and global expansion will only happen with support from investors.

Carol Gould, managing director and head of power and renewables at Mitsubishi UFJ Financial Group, said there is a wealth of interest in the sector from financial investors. This is largely because of interest rates that are still as historic low levels and the experience that major players have gained about building and wind farms at sea. This has decreased risks in the sector to a level where many investors are keen to take them on.

However, technological innovation can bring risks that could be off-putting for investors. She said: “Practically every project that comes across our desk has a new turbine… There is a lot of need for banks to be educated. We need to understand the differences.”

But Gould said this has not been an issue so far. Offshore wind is becoming more mature and industrialised, which is giving investors the confidence to keep backing schemes.

That is just as well. If offshore wind is to meet its long-term financial aims then it needs to keep cutting costs, and it will only be able to do this if there is a strong pipeline of new projects.

And there will only be that strong pipeline if developers, manufacturers, technology firms and financiers are all playing their part. Everyone has to play a role if offshore wind is to meet its ultimate goal: getting cheap fast.

“Get cheap fast.”

That was the resounding message from Michael Liebreich, chairman of Bloomberg New Energy Finance, at the Global Offshore Wind conference in Manchester this week. He said that fast cost-cutting is key if the offshore wind sector is to grow out of Europe and make a major contribution to reducing global carbon emissions by 2040. But how can it be done?

Increasing the size of turbines and improving their efficiency is only part of the answer.

Michael Hannibal, chief executive of offshore wind at Siemens, said during a ‘business leaders debate’ on Wednesday that developers needed to see optimisation across the supply chain, including in cabling and in operations and maintenance.

Meanwhile, GE’s chief executive of offshore wind, Anders Soe Jensen, said that data on the performance of turbines and future weather patterns was key, as this information can help developers actively manage the operations of, and output from, their project.

He said it would also be increasingly important for energy firms, including wind operators, to track and predicts the movements of electric cars energy can be supplied where it is needed.

Liebreich said that working with ‘unconventional friends’ in sectors including technology, logistics, telecoms, data and finance would also help to promote innovation. For example, telecoms firms can be vital in helping companies move large amounts of wind data.

And Piers Guy, head of offshore wind and UK country manager at Vattenfall, said that he expected to see “quite spectacular” reductions in the cost of projects. This summer, the Dutch government is due to reveal the result of its tender for 700MW of new capacity in the Borssele 1 and 2 projects in its waters. The projects have attracted a total of 38 bids, and the government’s main focus has been on driving down the cost of energy.

Guy said his informal target was to reach £50/MWh-£60MWh for new offshore wind from 2030, which looks ambitious compared to the industry’s current target of £100/MWh by 2020 but should be achievable with technological innovation and cost-cutting in the supply chain. Siemens has signed up to a target of €80/MWh (or around £61.50/MWh) by 2025.

This all sounds good and is what the industry needs to aim for. As Liebreich said, offshore wind will have to compete with cheap natural gas, cheap coal and potentially even cheap nuclear in the coming decades. Wind is not the only sector seeing innovation.

But this cost-cutting and global expansion will only happen with support from investors.

Carol Gould, managing director and head of power and renewables at Mitsubishi UFJ Financial Group, said there is a wealth of interest in the sector from financial investors. This is largely because of interest rates that are still as historic low levels and the experience that major players have gained about building and wind farms at sea. This has decreased risks in the sector to a level where many investors are keen to take them on.

However, technological innovation can bring risks that could be off-putting for investors. She said: “Practically every project that comes across our desk has a new turbine… There is a lot of need for banks to be educated. We need to understand the differences.”

But Gould said this has not been an issue so far. Offshore wind is becoming more mature and industrialised, which is giving investors the confidence to keep backing schemes.

That is just as well. If offshore wind is to meet its long-term financial aims then it needs to keep cutting costs, and it will only be able to do this if there is a strong pipeline of new projects.

And there will only be that strong pipeline if developers, manufacturers, technology firms and financiers are all playing their part. Everyone has to play a role if offshore wind is to meet its ultimate goal: getting cheap fast.

“Get cheap fast.”

That was the resounding message from Michael Liebreich, chairman of Bloomberg New Energy Finance, at the Global Offshore Wind conference in Manchester this week. He said that fast cost-cutting is key if the offshore wind sector is to grow out of Europe and make a major contribution to reducing global carbon emissions by 2040. But how can it be done?

Increasing the size of turbines and improving their efficiency is only part of the answer.

Michael Hannibal, chief executive of offshore wind at Siemens, said during a ‘business leaders debate’ on Wednesday that developers needed to see optimisation across the supply chain, including in cabling and in operations and maintenance.

Meanwhile, GE’s chief executive of offshore wind, Anders Soe Jensen, said that data on the performance of turbines and future weather patterns was key, as this information can help developers actively manage the operations of, and output from, their project.

He said it would also be increasingly important for energy firms, including wind operators, to track and predicts the movements of electric cars energy can be supplied where it is needed.

Liebreich said that working with ‘unconventional friends’ in sectors including technology, logistics, telecoms, data and finance would also help to promote innovation. For example, telecoms firms can be vital in helping companies move large amounts of wind data.

And Piers Guy, head of offshore wind and UK country manager at Vattenfall, said that he expected to see “quite spectacular” reductions in the cost of projects. This summer, the Dutch government is due to reveal the result of its tender for 700MW of new capacity in the Borssele 1 and 2 projects in its waters. The projects have attracted a total of 38 bids, and the government’s main focus has been on driving down the cost of energy.

Guy said his informal target was to reach £50/MWh-£60MWh for new offshore wind from 2030, which looks ambitious compared to the industry’s current target of £100/MWh by 2020 but should be achievable with technological innovation and cost-cutting in the supply chain. Siemens has signed up to a target of €80/MWh (or around £61.50/MWh) by 2025.

This all sounds good and is what the industry needs to aim for. As Liebreich said, offshore wind will have to compete with cheap natural gas, cheap coal and potentially even cheap nuclear in the coming decades. Wind is not the only sector seeing innovation.

But this cost-cutting and global expansion will only happen with support from investors.

Carol Gould, managing director and head of power and renewables at Mitsubishi UFJ Financial Group, said there is a wealth of interest in the sector from financial investors. This is largely because of interest rates that are still as historic low levels and the experience that major players have gained about building and wind farms at sea. This has decreased risks in the sector to a level where many investors are keen to take them on.

However, technological innovation can bring risks that could be off-putting for investors. She said: “Practically every project that comes across our desk has a new turbine… There is a lot of need for banks to be educated. We need to understand the differences.”

But Gould said this has not been an issue so far. Offshore wind is becoming more mature and industrialised, which is giving investors the confidence to keep backing schemes.

That is just as well. If offshore wind is to meet its long-term financial aims then it needs to keep cutting costs, and it will only be able to do this if there is a strong pipeline of new projects.

And there will only be that strong pipeline if developers, manufacturers, technology firms and financiers are all playing their part. Everyone has to play a role if offshore wind is to meet its ultimate goal: getting cheap fast.

“Get cheap fast.”

That was the resounding message from Michael Liebreich, chairman of Bloomberg New Energy Finance, at the Global Offshore Wind conference in Manchester this week. He said that fast cost-cutting is key if the offshore wind sector is to grow out of Europe and make a major contribution to reducing global carbon emissions by 2040. But how can it be done?

Increasing the size of turbines and improving their efficiency is only part of the answer.

Michael Hannibal, chief executive of offshore wind at Siemens, said during a ‘business leaders debate’ on Wednesday that developers needed to see optimisation across the supply chain, including in cabling and in operations and maintenance.

Meanwhile, GE’s chief executive of offshore wind, Anders Soe Jensen, said that data on the performance of turbines and future weather patterns was key, as this information can help developers actively manage the operations of, and output from, their project.

He said it would also be increasingly important for energy firms, including wind operators, to track and predicts the movements of electric cars energy can be supplied where it is needed.

Liebreich said that working with ‘unconventional friends’ in sectors including technology, logistics, telecoms, data and finance would also help to promote innovation. For example, telecoms firms can be vital in helping companies move large amounts of wind data.

And Piers Guy, head of offshore wind and UK country manager at Vattenfall, said that he expected to see “quite spectacular” reductions in the cost of projects. This summer, the Dutch government is due to reveal the result of its tender for 700MW of new capacity in the Borssele 1 and 2 projects in its waters. The projects have attracted a total of 38 bids, and the government’s main focus has been on driving down the cost of energy.

Guy said his informal target was to reach £50/MWh-£60MWh for new offshore wind from 2030, which looks ambitious compared to the industry’s current target of £100/MWh by 2020 but should be achievable with technological innovation and cost-cutting in the supply chain. Siemens has signed up to a target of €80/MWh (or around £61.50/MWh) by 2025.

This all sounds good and is what the industry needs to aim for. As Liebreich said, offshore wind will have to compete with cheap natural gas, cheap coal and potentially even cheap nuclear in the coming decades. Wind is not the only sector seeing innovation.

But this cost-cutting and global expansion will only happen with support from investors.

Carol Gould, managing director and head of power and renewables at Mitsubishi UFJ Financial Group, said there is a wealth of interest in the sector from financial investors. This is largely because of interest rates that are still as historic low levels and the experience that major players have gained about building and wind farms at sea. This has decreased risks in the sector to a level where many investors are keen to take them on.

However, technological innovation can bring risks that could be off-putting for investors. She said: “Practically every project that comes across our desk has a new turbine… There is a lot of need for banks to be educated. We need to understand the differences.”

But Gould said this has not been an issue so far. Offshore wind is becoming more mature and industrialised, which is giving investors the confidence to keep backing schemes.

That is just as well. If offshore wind is to meet its long-term financial aims then it needs to keep cutting costs, and it will only be able to do this if there is a strong pipeline of new projects.

And there will only be that strong pipeline if developers, manufacturers, technology firms and financiers are all playing their part. Everyone has to play a role if offshore wind is to meet its ultimate goal: getting cheap fast.

“Get cheap fast.”

That was the resounding message from Michael Liebreich, chairman of Bloomberg New Energy Finance, at the Global Offshore Wind conference in Manchester this week. He said that fast cost-cutting is key if the offshore wind sector is to grow out of Europe and make a major contribution to reducing global carbon emissions by 2040. But how can it be done?

Increasing the size of turbines and improving their efficiency is only part of the answer.

Michael Hannibal, chief executive of offshore wind at Siemens, said during a ‘business leaders debate’ on Wednesday that developers needed to see optimisation across the supply chain, including in cabling and in operations and maintenance.

Meanwhile, GE’s chief executive of offshore wind, Anders Soe Jensen, said that data on the performance of turbines and future weather patterns was key, as this information can help developers actively manage the operations of, and output from, their project.

He said it would also be increasingly important for energy firms, including wind operators, to track and predicts the movements of electric cars energy can be supplied where it is needed.

Liebreich said that working with ‘unconventional friends’ in sectors including technology, logistics, telecoms, data and finance would also help to promote innovation. For example, telecoms firms can be vital in helping companies move large amounts of wind data.

And Piers Guy, head of offshore wind and UK country manager at Vattenfall, said that he expected to see “quite spectacular” reductions in the cost of projects. This summer, the Dutch government is due to reveal the result of its tender for 700MW of new capacity in the Borssele 1 and 2 projects in its waters. The projects have attracted a total of 38 bids, and the government’s main focus has been on driving down the cost of energy.

Guy said his informal target was to reach £50/MWh-£60MWh for new offshore wind from 2030, which looks ambitious compared to the industry’s current target of £100/MWh by 2020 but should be achievable with technological innovation and cost-cutting in the supply chain. Siemens has signed up to a target of €80/MWh (or around £61.50/MWh) by 2025.

This all sounds good and is what the industry needs to aim for. As Liebreich said, offshore wind will have to compete with cheap natural gas, cheap coal and potentially even cheap nuclear in the coming decades. Wind is not the only sector seeing innovation.

But this cost-cutting and global expansion will only happen with support from investors.

Carol Gould, managing director and head of power and renewables at Mitsubishi UFJ Financial Group, said there is a wealth of interest in the sector from financial investors. This is largely because of interest rates that are still as historic low levels and the experience that major players have gained about building and wind farms at sea. This has decreased risks in the sector to a level where many investors are keen to take them on.

However, technological innovation can bring risks that could be off-putting for investors. She said: “Practically every project that comes across our desk has a new turbine… There is a lot of need for banks to be educated. We need to understand the differences.”

But Gould said this has not been an issue so far. Offshore wind is becoming more mature and industrialised, which is giving investors the confidence to keep backing schemes.

That is just as well. If offshore wind is to meet its long-term financial aims then it needs to keep cutting costs, and it will only be able to do this if there is a strong pipeline of new projects.

And there will only be that strong pipeline if developers, manufacturers, technology firms and financiers are all playing their part. Everyone has to play a role if offshore wind is to meet its ultimate goal: getting cheap fast.

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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.