OWE 2017: Reflections on the second day

The walking has taken its toll on our feet. The booze at the Green Giraffe party on Tuesday has taken its toll on our brains. But there were still plenty of reasons to get back to business at the second day of the Offshore Wind Energy 2017 conference in London on Wednesday. Here are a few of our highlights.

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A Word About Wind
June 9, 2017
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This content is from our archive. Some formatting or links may be broken.
OWE 2017: Reflections on the second day

The walking has taken its toll on our feet. The booze at the Green Giraffe party on Tuesday has taken its toll on our brains. But there were still plenty of reasons to get back to business at the second day of the Offshore Wind Energy 2017 conference in London on Wednesday. Here are a few of our highlights.

Taiwan: We started by attending a session on the emerging markets of Taiwan and the US. In particular, there has been a great deal of excitement about Taiwan this week, and there are 29 offshore projects in the early stages of development in the Asian nation’s waters. It has also succeeded in attracting the likes of Dong Energy, Macquarie and Northland Power.

But Lucas Lin, president of Taiwan’s Swancor Renewable Energy, said it would not be plain sailing for overseas firms in this market. The Taiwanese government wants to ensure that local firms benefit from any offshore wind boom, which means that experienced overseas players have to link up with local companies that lack experience in the wind market.

Lin also said there could be challenges with the legal system. Specially, he highlighted that last year the government needed to award special authorisation for imports of steel from China for a project of only two turbines. Taiwan has ambitious offshore targets, but it also needs its legal system to catch up and local content rules could give firms headaches.

None of this should be insurmountable, though. You can read a comment piece from K2 Management’s Per Melgaard in our Emerging Markets report, which goes into more detail.

Cost of capital: After that, we joined some of the industry’s leading financial experts to talk about the cost of capital for offshore wind projects, and whether there are steps that those in the sector could take to reduce it further. The result is that there might be ways to make small savings, but these would rely on developers continuing to de-risk their developments.

Christina Sorensen, senior partner at Copenhagen Infrastructure Partners, said that making further reductions to the cost of capital would be “very challenging” as a major reason that the cost of capital is so low at present is because of historic low interest rates.

Jerome Guillet, managing partner at Green Giraffe, said that the experience developers and contractors are gaining in building offshore wind farms would help to cut the cost of capital, as it would mean less money needed to be set aside in contingency budgets. He added that the level of experience among the major players is already good: “They know what they’re doing. They know what it takes to bring projects to completion,” he said.

But Ranjan Moulik, head of power and renewables at French bank Natixis, said he hoped the cost of capital that banks lend to investors would stay where they are – an understandable response given that this would affect banks’ returns. He added that support from banks had brought in new types of investors into offshore wind, who still looked at the returns they could get from offshore wind farms as opposed to dry investments like government bonds.

“What is really important to them is not the price – they are also investing in government bonds – but the perception of risk… The more you can de-risk, the easier it will be to attract these people,” he said. The overall message from the session was there was no shortage of money in the sector, but that reducing risk would help developers get it at cheaper levels.

Zero-subsidy risks: Risk was the theme of the second of the event’s two finance sessions, on Wednesday. The discussion here revolved around the risks facing ‘zero-subsidy’ projects.

Lars Meckenstock, director of asset commercialisation at E.On Climate & Renewables, said the reliance of those projects on changes in prices was out of the industry’s control, and so greater exposure to power prices on the open market would affect risks facing projects. But merchant risk is one of the issues discussed in many of the sessions this week, and we look at more of the thoughts on this topic in our Wind Watch column on Monday.

Thanks for reading – and, if you have any thoughts on any of the above, please get in touch.

The walking has taken its toll on our feet. The booze at the Green Giraffe party on Tuesday has taken its toll on our brains. But there were still plenty of reasons to get back to business at the second day of the Offshore Wind Energy 2017 conference in London on Wednesday. Here are a few of our highlights.

Taiwan: We started by attending a session on the emerging markets of Taiwan and the US. In particular, there has been a great deal of excitement about Taiwan this week, and there are 29 offshore projects in the early stages of development in the Asian nation’s waters. It has also succeeded in attracting the likes of Dong Energy, Macquarie and Northland Power.

But Lucas Lin, president of Taiwan’s Swancor Renewable Energy, said it would not be plain sailing for overseas firms in this market. The Taiwanese government wants to ensure that local firms benefit from any offshore wind boom, which means that experienced overseas players have to link up with local companies that lack experience in the wind market.

Lin also said there could be challenges with the legal system. Specially, he highlighted that last year the government needed to award special authorisation for imports of steel from China for a project of only two turbines. Taiwan has ambitious offshore targets, but it also needs its legal system to catch up and local content rules could give firms headaches.

None of this should be insurmountable, though. You can read a comment piece from K2 Management’s Per Melgaard in our Emerging Markets report, which goes into more detail.

Cost of capital: After that, we joined some of the industry’s leading financial experts to talk about the cost of capital for offshore wind projects, and whether there are steps that those in the sector could take to reduce it further. The result is that there might be ways to make small savings, but these would rely on developers continuing to de-risk their developments.

Christina Sorensen, senior partner at Copenhagen Infrastructure Partners, said that making further reductions to the cost of capital would be “very challenging” as a major reason that the cost of capital is so low at present is because of historic low interest rates.

Jerome Guillet, managing partner at Green Giraffe, said that the experience developers and contractors are gaining in building offshore wind farms would help to cut the cost of capital, as it would mean less money needed to be set aside in contingency budgets. He added that the level of experience among the major players is already good: “They know what they’re doing. They know what it takes to bring projects to completion,” he said.

But Ranjan Moulik, head of power and renewables at French bank Natixis, said he hoped the cost of capital that banks lend to investors would stay where they are – an understandable response given that this would affect banks’ returns. He added that support from banks had brought in new types of investors into offshore wind, who still looked at the returns they could get from offshore wind farms as opposed to dry investments like government bonds.

“What is really important to them is not the price – they are also investing in government bonds – but the perception of risk… The more you can de-risk, the easier it will be to attract these people,” he said. The overall message from the session was there was no shortage of money in the sector, but that reducing risk would help developers get it at cheaper levels.

Zero-subsidy risks: Risk was the theme of the second of the event’s two finance sessions, on Wednesday. The discussion here revolved around the risks facing ‘zero-subsidy’ projects.

Lars Meckenstock, director of asset commercialisation at E.On Climate & Renewables, said the reliance of those projects on changes in prices was out of the industry’s control, and so greater exposure to power prices on the open market would affect risks facing projects. But merchant risk is one of the issues discussed in many of the sessions this week, and we look at more of the thoughts on this topic in our Wind Watch column on Monday.

Thanks for reading – and, if you have any thoughts on any of the above, please get in touch.

The walking has taken its toll on our feet. The booze at the Green Giraffe party on Tuesday has taken its toll on our brains. But there were still plenty of reasons to get back to business at the second day of the Offshore Wind Energy 2017 conference in London on Wednesday. Here are a few of our highlights.

Taiwan: We started by attending a session on the emerging markets of Taiwan and the US. In particular, there has been a great deal of excitement about Taiwan this week, and there are 29 offshore projects in the early stages of development in the Asian nation’s waters. It has also succeeded in attracting the likes of Dong Energy, Macquarie and Northland Power.

But Lucas Lin, president of Taiwan’s Swancor Renewable Energy, said it would not be plain sailing for overseas firms in this market. The Taiwanese government wants to ensure that local firms benefit from any offshore wind boom, which means that experienced overseas players have to link up with local companies that lack experience in the wind market.

Lin also said there could be challenges with the legal system. Specially, he highlighted that last year the government needed to award special authorisation for imports of steel from China for a project of only two turbines. Taiwan has ambitious offshore targets, but it also needs its legal system to catch up and local content rules could give firms headaches.

None of this should be insurmountable, though. You can read a comment piece from K2 Management’s Per Melgaard in our Emerging Markets report, which goes into more detail.

Cost of capital: After that, we joined some of the industry’s leading financial experts to talk about the cost of capital for offshore wind projects, and whether there are steps that those in the sector could take to reduce it further. The result is that there might be ways to make small savings, but these would rely on developers continuing to de-risk their developments.

Christina Sorensen, senior partner at Copenhagen Infrastructure Partners, said that making further reductions to the cost of capital would be “very challenging” as a major reason that the cost of capital is so low at present is because of historic low interest rates.

Jerome Guillet, managing partner at Green Giraffe, said that the experience developers and contractors are gaining in building offshore wind farms would help to cut the cost of capital, as it would mean less money needed to be set aside in contingency budgets. He added that the level of experience among the major players is already good: “They know what they’re doing. They know what it takes to bring projects to completion,” he said.

But Ranjan Moulik, head of power and renewables at French bank Natixis, said he hoped the cost of capital that banks lend to investors would stay where they are – an understandable response given that this would affect banks’ returns. He added that support from banks had brought in new types of investors into offshore wind, who still looked at the returns they could get from offshore wind farms as opposed to dry investments like government bonds.

“What is really important to them is not the price – they are also investing in government bonds – but the perception of risk… The more you can de-risk, the easier it will be to attract these people,” he said. The overall message from the session was there was no shortage of money in the sector, but that reducing risk would help developers get it at cheaper levels.

Zero-subsidy risks: Risk was the theme of the second of the event’s two finance sessions, on Wednesday. The discussion here revolved around the risks facing ‘zero-subsidy’ projects.

Lars Meckenstock, director of asset commercialisation at E.On Climate & Renewables, said the reliance of those projects on changes in prices was out of the industry’s control, and so greater exposure to power prices on the open market would affect risks facing projects. But merchant risk is one of the issues discussed in many of the sessions this week, and we look at more of the thoughts on this topic in our Wind Watch column on Monday.

Thanks for reading – and, if you have any thoughts on any of the above, please get in touch.

The walking has taken its toll on our feet. The booze at the Green Giraffe party on Tuesday has taken its toll on our brains. But there were still plenty of reasons to get back to business at the second day of the Offshore Wind Energy 2017 conference in London on Wednesday. Here are a few of our highlights.

Taiwan: We started by attending a session on the emerging markets of Taiwan and the US. In particular, there has been a great deal of excitement about Taiwan this week, and there are 29 offshore projects in the early stages of development in the Asian nation’s waters. It has also succeeded in attracting the likes of Dong Energy, Macquarie and Northland Power.

But Lucas Lin, president of Taiwan’s Swancor Renewable Energy, said it would not be plain sailing for overseas firms in this market. The Taiwanese government wants to ensure that local firms benefit from any offshore wind boom, which means that experienced overseas players have to link up with local companies that lack experience in the wind market.

Lin also said there could be challenges with the legal system. Specially, he highlighted that last year the government needed to award special authorisation for imports of steel from China for a project of only two turbines. Taiwan has ambitious offshore targets, but it also needs its legal system to catch up and local content rules could give firms headaches.

None of this should be insurmountable, though. You can read a comment piece from K2 Management’s Per Melgaard in our Emerging Markets report, which goes into more detail.

Cost of capital: After that, we joined some of the industry’s leading financial experts to talk about the cost of capital for offshore wind projects, and whether there are steps that those in the sector could take to reduce it further. The result is that there might be ways to make small savings, but these would rely on developers continuing to de-risk their developments.

Christina Sorensen, senior partner at Copenhagen Infrastructure Partners, said that making further reductions to the cost of capital would be “very challenging” as a major reason that the cost of capital is so low at present is because of historic low interest rates.

Jerome Guillet, managing partner at Green Giraffe, said that the experience developers and contractors are gaining in building offshore wind farms would help to cut the cost of capital, as it would mean less money needed to be set aside in contingency budgets. He added that the level of experience among the major players is already good: “They know what they’re doing. They know what it takes to bring projects to completion,” he said.

But Ranjan Moulik, head of power and renewables at French bank Natixis, said he hoped the cost of capital that banks lend to investors would stay where they are – an understandable response given that this would affect banks’ returns. He added that support from banks had brought in new types of investors into offshore wind, who still looked at the returns they could get from offshore wind farms as opposed to dry investments like government bonds.

“What is really important to them is not the price – they are also investing in government bonds – but the perception of risk… The more you can de-risk, the easier it will be to attract these people,” he said. The overall message from the session was there was no shortage of money in the sector, but that reducing risk would help developers get it at cheaper levels.

Zero-subsidy risks: Risk was the theme of the second of the event’s two finance sessions, on Wednesday. The discussion here revolved around the risks facing ‘zero-subsidy’ projects.

Lars Meckenstock, director of asset commercialisation at E.On Climate & Renewables, said the reliance of those projects on changes in prices was out of the industry’s control, and so greater exposure to power prices on the open market would affect risks facing projects. But merchant risk is one of the issues discussed in many of the sessions this week, and we look at more of the thoughts on this topic in our Wind Watch column on Monday.

Thanks for reading – and, if you have any thoughts on any of the above, please get in touch.

The walking has taken its toll on our feet. The booze at the Green Giraffe party on Tuesday has taken its toll on our brains. But there were still plenty of reasons to get back to business at the second day of the Offshore Wind Energy 2017 conference in London on Wednesday. Here are a few of our highlights.

Taiwan: We started by attending a session on the emerging markets of Taiwan and the US. In particular, there has been a great deal of excitement about Taiwan this week, and there are 29 offshore projects in the early stages of development in the Asian nation’s waters. It has also succeeded in attracting the likes of Dong Energy, Macquarie and Northland Power.

But Lucas Lin, president of Taiwan’s Swancor Renewable Energy, said it would not be plain sailing for overseas firms in this market. The Taiwanese government wants to ensure that local firms benefit from any offshore wind boom, which means that experienced overseas players have to link up with local companies that lack experience in the wind market.

Lin also said there could be challenges with the legal system. Specially, he highlighted that last year the government needed to award special authorisation for imports of steel from China for a project of only two turbines. Taiwan has ambitious offshore targets, but it also needs its legal system to catch up and local content rules could give firms headaches.

None of this should be insurmountable, though. You can read a comment piece from K2 Management’s Per Melgaard in our Emerging Markets report, which goes into more detail.

Cost of capital: After that, we joined some of the industry’s leading financial experts to talk about the cost of capital for offshore wind projects, and whether there are steps that those in the sector could take to reduce it further. The result is that there might be ways to make small savings, but these would rely on developers continuing to de-risk their developments.

Christina Sorensen, senior partner at Copenhagen Infrastructure Partners, said that making further reductions to the cost of capital would be “very challenging” as a major reason that the cost of capital is so low at present is because of historic low interest rates.

Jerome Guillet, managing partner at Green Giraffe, said that the experience developers and contractors are gaining in building offshore wind farms would help to cut the cost of capital, as it would mean less money needed to be set aside in contingency budgets. He added that the level of experience among the major players is already good: “They know what they’re doing. They know what it takes to bring projects to completion,” he said.

But Ranjan Moulik, head of power and renewables at French bank Natixis, said he hoped the cost of capital that banks lend to investors would stay where they are – an understandable response given that this would affect banks’ returns. He added that support from banks had brought in new types of investors into offshore wind, who still looked at the returns they could get from offshore wind farms as opposed to dry investments like government bonds.

“What is really important to them is not the price – they are also investing in government bonds – but the perception of risk… The more you can de-risk, the easier it will be to attract these people,” he said. The overall message from the session was there was no shortage of money in the sector, but that reducing risk would help developers get it at cheaper levels.

Zero-subsidy risks: Risk was the theme of the second of the event’s two finance sessions, on Wednesday. The discussion here revolved around the risks facing ‘zero-subsidy’ projects.

Lars Meckenstock, director of asset commercialisation at E.On Climate & Renewables, said the reliance of those projects on changes in prices was out of the industry’s control, and so greater exposure to power prices on the open market would affect risks facing projects. But merchant risk is one of the issues discussed in many of the sessions this week, and we look at more of the thoughts on this topic in our Wind Watch column on Monday.

Thanks for reading – and, if you have any thoughts on any of the above, please get in touch.

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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.