Offshore Wind Energy

Offshore Wind Energy has been foretasted from around 3 GW to 75 GW by 2020 as countries in Europe, Asia and North America heavily support this industry. Onshore wind energy growth on the other hand is expected to  slow down as 38 GW of Wind Capacity were installed in 2010 with Western Markets showing a sharp slowdown. Offshore Wind is seeing  increasing growth as Government heavily subsidizes and supports Offshore Wind Energy. Though the costs of offshore wind parks are much higher today, they will decrease as the installed offshore wind capacity increases from around 3 GW today to around 75 GW which is being foretasted globally by 2020.

Note every industry sees costs declining with large capacity except the mature industries. For example Wind Energy has seen a 10% decline in costs for every 100% increase in installed capacity. Note offshore wind projects offer even more Wind Energy Advantages than normal Land Based Wind Farms. The only problem facing offshore wind power is high costs  as the industry still is on the learning curve.However as companies gain experience and build capacity, the prices will be cut as costs come down and volumes increase. European Wind Companies are leading the pack as almost 80% of the current global capacity has been installed in Northern Europe. The opportunity is so large that South Korea shipbuilders like Samsung, Daewoo and Hyundai  are investing heavily in this area.

How much does an Offshore Wind Farm Cost and what is the Cost Breakdown

1) Wind Turbines and Cost of Steel – Wind Turbines form the biggest cost component of a offshore wind farms. Wind Turbines make between 45-50% of the cost of a Wind Project. Note Wind Turbines are expected to go down in cost with improvement in technology and materials.Larger capacity turbines being deployed will decrease the costs further. Note Wind Turbines of 15 MW  capacity (Gamesa) are in development.

2) Logistics and Foundation Costs – The logistics of transporting Wind Turbine components is much more expensive than transporting over land. Heavy vessels are needed which are not quite mainstream yet so the cost of using heavy cranes and vessels are quite high.F oundation costs are also higher as they have to withstand not only the weight of the huge Wind Turbines but also the pressure from the wave and tidal energies. Foundation costs can range between 15-25%.

3) Electrical Infrastructure – The cables needed to transmit the electricity from the offshore wind turbines to the land based power grid  also leads to higher costs. Note this adds up to the costs and contributed to around 20% of the cost of the offshore wind project. Recently Google and Green Energies agreed to invest in a large transmission network near the eastern coast of the USA which would help in supporting wind farms being built there.

4) Project Finance, Planning Costs – This makes up the rest of the costs. For  some projects this can  be very high compared to the 7-10% as can be seen from the Cape Wind project which is fighting numerous legal battlers for over 10 years.

Total Costs of a Offshore Wind Park

The cost of an offshore wind park can range between $4.5-5.5 per MW which is much higher than land based wind at around $2 million per MW. However the load factors for offshore wind are higher so they compensate somewhat for the higher capital and operating costs for offshore wind energy. Note the PPAs being signed for offshore wind range fro 20-25c/Kwh which is much higher than the 8-10c/Kwh given for onshore wind energy.

Advantages of Offshore Wind Power

1) No Pollution and Global Warming Effects – Wind Turbines does not lead to pollution which is one of the biggest advantages of Wind Energy. Note there are costs associated with the equipment used to build and transport Wind Equipment but the running of Wind Energy leads to no pollution.

2) Low Costs – The Costs of Wind Energy has reached the level of Gas powered Energy and can be generated at extremely low rates of around 7-8c/KwH in favorable conditions.

3) Big Industrial Base – Wind Energy has become a mainstream source of energy and a large industrial base already exists. This allows a rapid deployment of Wind Power in most places in the world. The number of Wind Turbine Producers is increasing with a number of Asian firms entering the industry.

4) No Fuel Cost – Wind Energy does not require any fuel like most other sources of renewable energy. This is a huge advantage over other fossil fuels whose costs are increasing at a drastic  rate every year. Electricity prices are increasingly rapidly in most parts of  the world much faster than general inflation. Price shocks due to high fuel costs are a big risk with fossil fuel energy these days.

Advantages of Offshore Wind over Onshore Wind

1) No Noise Pollution – Wind Turbines emit a slight whirring noise which has led to problems with people living nearby. Some farmers have also complained that the livestock like sheep get affected by the moving of the Wind Blades. Offshore Wind Farms are located far off the coast cause no such noise problems for humans or wildlife.

2) No Injuries to Birds – Older Wind Farms on Land frequently cause deaths and injuries to birds though newer wind turbines don’t cause too much problems. Offshore Wind Farms do away with this problem entirely as they are located in the Ocean where birds don’t fly frequently if at all. There is research being conducted to see if there is an impact on sea life by Cowries.

3) No loss in scenery though near shore offshore wind farms have come into controversy because of this, the Cape Wind Project is attracting a lot of protests particularly from the Kennedy’s who say that it will destroy the view from their house near the ocean.

Disadvantages of Offshore Wind over Onshore Wind

Cost – This is  the biggest disadvantage of offshore wind power over onshore wind energy. Note it can cost between 2.5-3.5 times more to generate electricity from offshore wind turbines than the wind farms built on land. There are a number of factors that determine the price such as wind speeds etc. However offshore wind industry is still in a novice state compared to the relatively mature level of the land based wind industry.

List of Top Offshore Turbine Companies

1) Vestas – Vestas the largest Wind Turbine Company in the World has been facing one setback after another. Stiff competition from China, slowdown in Wind Energy Farms in the West and now Wind Blade Problems have formed a perfect storm for this company. However the company is the leading supplier of Offshore Wind Turbines and recently introduced a 5 MW offshore wind turbine with leading offshore wind Danish developer Dong Energy.

2)Siemens – The largest Green Company in the world, Siemens has a strong presence in the Wind Turbine Segment. Along with Vestas, Siemens has supplied more than 80% of the Offshore Wind Turbine to the European offshore wind market till date. Given its huge technological strengths in electrical equipment, power transmission and large project construction, Siemens is looking for a dominant role in the growing offshore wind market.

3) Gamesa (Spain) – Gamesa the Spanish Wind Turbine Producer and Wind Farm Operator has faced the worst year of its history in 2010. Like Vestas and Suzlon, 2010 has been a cruel year for the Wind Industry in the Western Markets and the WTG Players dependent on those markets. Gamesa is leading a massive Spanish Research Effort to develop a colossal 15 MW Turbine meant for the fast growing offshore wind sector. But this is a long term plan with 2020 set as the target for the complete development of this new Turbine. The company has also tied up with Northrop Grumman to target the North American offshore wind market which has massive potential which is zero as of today.

4) Suzlon Energy is the biggest Indian Wind Energy Company by far with 4-5 Gigawatts of WTG Capacity per year. However Suzlon has languished in red ink since the beginning of the Global Financial Crisis in 2008. However things seem to be turning with a slew of orders particularly by Repower. Suzlon is looking to completely buy out its European Wind Turbine producer Repower. Repower Systems has won a contract from Belgian project development company C-Power to supply 48 turbines of the 6M type for the Thornton Bank offshore wind farm.T he turbines have a total rated power generating capacity of approximately 295MW. Note Suzlon is also targeting the Indian offshore wind market which needs to install lots of wind energy to meet its RPS target of 15% by 2020.

Note other major wind turbine makers like Nordex, GE, Sinovel, Goldwind are also developing wind power equipment to target the growing offshore wind farm market.

Offshore Wind Farm Developers

Before we look at the major developers here is a very good interactive map of major global offshore wind farms from 4coffshore. Note Europe is leading  in offshore wind energy so it is not a surprise that most of the big developers are giant European utilities.

1. Centrica – Centrica is a British company that was formed in 1997 after the demerger from British Gas. The company has a number of energy projects which it owns and operates. Centrica is involved in the operation and building of a number of offshore wind farms like Barrow etc.
2. DONG Energy is one of the leading energy groups in Northern Europe  headquartered in Denmark. They have 1,035 MW of on- and offshore wind power in operation and 1,316 MW under construction. They are the top wind farm developers along with Vattenfall and E.ON. Dong has built the Barbo Flat, Gunfleet and Barrow offshore wind farms. They are also building the London Array and Walney Offshore Projects in the UK which will take their offshore wind portfolio to over 1 GW in the near future.
3. Airtricity – This Irish Gas and Electricity Utility has won a couple of contracts to build big offshore wind farms in Scotland in Crown Estate bidding Round 2.
4. EDF Group is one of the biggest power utilities in Europe and one of the biggest operators of nuclear power in the world. The company is also the largest producer of power in the UK which has the strongest growth plans in offshore wind energy. The company has won contracts to build offshore wind energy installations in UK.
5. ScottishPower Renewables is part of Iberdrola Renovables, the world’s largest developer of renewable energy based out of Spain. They are UK’s leading developer of onshore wind, with over 30 wind farms fully operational, under construction or in planning.
6. E.ON the German powerhouse is one of the world’s largest power and gas companies.with  EUR93 billion in sales in 2010. The company is developing offshore wind farms in Germany and UK. It has a long experience in operating wind farms as well.
7. RWE is another major German utility that is developing big offshore wind farms in Europe taking advantage its expertise after operating a large portfolio of land based wind farms.
8. Vattenfall – It is a Swedish company and  one of Europe’s largest utilities. Vattenfall operates close to 900 wind power turbines in Sweden, Denmark, Germany, Poland, the Netherlands, Belgium and the UK. The world’s largest offshore wind farm, Thanet Wind Farm off the coast of the UK, came into operation in September 2010. In partnership with Scottish Power Renewables, Vattenfall has also been awarded one of the zones in the UK’s Round Three for the development of offshore wind power.
9. SeaEnergy PLC (formerly Ramco Energy plc) is the UK’s only quoted pure play offshore wind development company. Based in Aberdeen, Scotland.SeaEnergy PLC, through its 80% subsidiary SeaEnergy Renewables Limited, has interests in three UK offshore wind farm sites, Beatrice in a joint venture with SSE Renewables, Moray Firth with EDPR and Inch Cape. The Group has also signed a heads of terms agreement to access offshore wind farm projects in Taiwan.

USA

1. Deepwater Wind is a U.S. based offshore wind developer which is developing the Block Island Offshore Wind Farm.
2. NRG Bluewater Wind is another US based developer that is building offshore wind projects in the North East of United States. The company is developing offshore wind farms in the states of Delaware, Maryland, New Jersey, and New York. NRG Bluewater Wind was acquired by NRG Energy one of the biggest independent electricity suppliers in the USA with a huge portfolio of solar and wind projects.
3. Energy Managment Inc. (EMI) is a small developer based in New England which has been fighting for over 10 years to build the Cape Wind Project off Massachussets which has managed to get most of its approvals done though there are still a number of lawsuits against them.

Biggest Current and Future Offshore Wind Farms

First Wind Farm in the World was built at  Vindeby in Denmark in 1991 with a capacity of around 5 MW

United Kingdom has the the largest offshore wind capacity in the world at around 1300 MW and is also home to the biggest offshore wind farm at Thanet.

1. Thanet     300 MW  100 × Vestas V90-3MW
2. Lynn and Inner Dowsing     194MW     54 × Siemens 3.6-107
3. Robin Rigg (Solway Firth)   180MW          60 × Vestas V90-3MW
4. Gunfleet Sands                         172MW         48 × Siemens 3.6-107
5. Kentish Flats     90MW   30 × Vestas V90-3MW
6. Barrow     90 MW   30 × Vestas V90-3MW
7. Burbo Bank     90  MW   25 × Siemens 3.6-107
8. Rhyl Flats     90 MW    25 × Siemens 3.6-107
9. North Hoyle     60  MW 30 × Vestas V80-2MW
10. Scroby Sands     60  MW    30 × Vestas V80-2MW

Denmark

Denmark which is the home base of the largest Wind Turbine Manufacturer in the world Vestas and also draws the largest amount of electricity from Wind Power also holds the distinction of building the first offshore wind farm in 1991. The country has the second largest offshore wind capacity at 850 MW.The main offshore wind farms in Denmark are:

1. Horns Rev I     160 MW 80 × Vestas V80-2MW
2. Horns Rev II     209  MW 91 × Siemens 2.3-93
3. Rødsand II     207   MW  90 × Siemens 2.3-93
4. Nysted (Rødsand I)     166 MW  72 × Siemens 2.3
5. Middelgrunden     40 MW  20 × Bonus (Siemens) 2MW

Europe (except UK and Denmark)

Northern Europe has most of the offshore wind farms in the world with 39 Offshore Wind Projects constructed with around 2.4 GW of capacity which makes up 80% of the world’s total offshore wind capacity. Note tremendous growth has been planned with 100 GW of offshore wind farms to be installed by 2020 with Europe having a 40% global capacity target. Note Vestas and Siemens are the leading provider of offshore wind turbines accounting for majority of the shipments till date. Vestas has further strengthened its leadership by introducing a 5 MW offshore wind turbine. Most of the wind turbines installed have been 3 MW turbines.

European Countries

1. Bligh Bank (Belwind)     165 MW      Belgium     55 × Vestas V90-3MW
2. Thornton Bank I     30  MW    Belgium     6 × REpower 5 MWLillgrund     110  MW     Sweden     48 × Siemens 2.3
3. Egmond aan Zee     108  MW   Netherlands     36 × Vestas V90-3MW
4. Alpha Ventus     60 MW     Germany     6 × REpower 5M,6 × AREVA Wind M5000-5M
5. Kemi Ajos I + II     30  MW    Finland     10 × WinWinD 3MW
6. Vänern (Gässlingegrund)     30 MW     Sweden     10 × WinWinD WWD-3-100

China

Asia has only one offshore wind farm built till date at 102-megawatt Donghai Bridge Wind Farm  located 5 to 8 miles off the coast of the East China Sea in China. Note China plans to build a number of offshore wind farms and the Chinese Wind Turbines companies are already developing large 5 MW or higher capacity turbines targeting this market.

Future Offshore Wind Projects

Most of the big Offshore Wind Projects are being built in Europe in the leading offshore wind country UK with Germany following close behind.

UK

1. London Array     630 MW        175 × Siemens 3.6-120
2. Bard 1     400   MW  80 × BARD 5.0
3. Sheringham Shoal     315   MW  88 × Siemens 3.6-107
4. Lincs     270 MW 75 x 3.6MW
5. Walney Phase 1     183.6    MW     51 x Siemens 3.6Walney Phase 2     183.6    MW  51 x Siemens 3.6
6. Ormonde     150 MW     30 × REpower 5M

Italy

1. Tricase     90  MW   38 × 2.4 MW

Germany

1. Greater Gabbard     504  MW140 × Siemens 3.6-107
2. Baltic 1     48   MW    21 × Siemens 2.3-93

USA

Cape Wind Project Nantucket Sound in Massachusetts.