Collaboration Is Key at EWEA Offshore Wind Energy Conference

Yesterday EWEA Offshore 2011 kicked off in Amsterdam. A three day conference on offshore wind energy organized by the European Wind Energy Association (EWEA). TechTheFuture went out there to take a look.

Collaboration, collaboration, collaboration. It is the unofficial theme of Offshore 2011 and the keyword on the lips of every speaker. Collaboration is to make the relatively young offshore wind industry –presently generating 4,000 MW- a big player in the European renewable energy market.

Collaboration between politicians and the industry. The former committing to volume while the latter promise to bring costs down.

Collaboration between companies active in the industry to mitigate risk and share expertise.

Collaboration between EU member states to construct a super grid and to refrain from protectionism.

The EU has set itself the goal to bring down green house gas emissions 80% by 2050 compared to the 1990 level. At the same time it needs to make decisions about how to protect its energy security for the future. Renewable energy is a logical choice as Europe’s  domestic fossil fuel resources rapidly dwindle. The offshore wind industry sees itself as a promising candidate.

In the rapport Wind In Our Sails presented at the opening of Offshore 2011, EWEA estimates that by 2020, 40 GW of offshore wind power will produce 148 TWh annually, meeting over 4% of the EU’s total electricity demand and avoiding 87 million tonnes of CO2 emissions. Between 2020 and 2030 a further increase to 150 GW of offshore wind capacity is expected.

However, for this scenario to come true a lot is still to be done and the key lies in collaboration.

Collaboration between politicians and industry
“Offshore wind is a cost-intensive industry. It requires huge investments to build a wind farm”, says Fergus Ewing, the Energy Minister of Scotland. “That is precisely why the industry sets itself such ambitious targets. The larger the scale the lower the costs. That is why we need a EU strategy to get that leadership in wind energy. ”

Ian Marchant, CEO of SSE Renewables agrees: “We have to promise to bring the cost down and in return the politicians have to promise volume. That’s the handshake.”

Right now the industry suffers from shortages in the supply chain. For instance, nobody has subsea cables in store. So when a cable fails there is a 6 to 12 month waiting period before the cable can be replaced. All the while the wind turbines are standing idle, increasing the cost per KWh.

As more wind farms are being built the demand for cables will only increase. It will take a €40 to 60 million investment to start keeping cables in stock. But without guarantees from politicians companies are hesitant to invest.

The same goes for ships. Specialized installation vessels need to be developed to handle the increasingly difficult conditions as wind farms are being built further out to sea.

“We need an industry view of 20 years and we need a policy frame that will ensure a long term demand of wind energy”, Marchant says. “Once there is a sustained commitment to offshore wind, the supply chain will follow. People will start building those boats.”

Industrialization of the manufacturing process will also help bring the cost down to the 2020 target of €100 per MWh. But this too requires huge investments that are only feasible if the industry starts to operate at a significantly larger scale.

Anders Soe-Jensen, president of Vestas Offshore asks for centralized decision making. The European Commission should come up with a sort of a zoning plan for the North Sea. Designating the areas where off shore sites are allowed to be build and where they aren’t. This would eliminate the time-consuming discussions which occur each time a plan for a new site is proposed.

Poul Nyrup Rasmussen, President of Lindoe Offshore Renewable Centre, thinks a public-private partnership is vital to attract capital. “This cost-intensive industry needs financial backing from investment – and pension funds. But they are extremely conservative. There need to be guarantees from politicians for them to even start considering it.”

Collaboration between companies
“Parties who are active offshore need to focus more on partnerships”, Jan Kjaersgaard, CEO of Siemens Wind Power says. “Traditionally, when a wind farm was built nobody cooperated. The foundations were laid first and than the next team came in to install the turbines. That was fine because than we built in shallow water. But now that we are moving to deep sea, operation costs are high. We need to form an alliance to build the entire structure so that it can be produced cheaper. We do not intend to vertically implement the supply chain but we need to cooperate.”

Anders Soe-Jensen sees partnerships also as a form of risk mitigation. In case of the cables, for instance, companies could invest in storing cables together, so they can share the risks.

“In Scotland, the wind energy companies are working together with the off-shore oil industry”, says Fergus Ewing. “They are used to working in a hostile environment. A lot can be learned from their experience.”

Another party that needs to get involved are the grid operators. They are a naturally cautious bunch. Their main objective is to distribute power over the network without failure. Hooking up all kinds of innovative power sources to the grid definitely involves risks. So far there has been little incentive for them to play along, let alone seriously invest in a more diverse grid.

Fergus Ewing: “The grid needs to start running smart. In 40 years time it ‘s going to have to cope with multiple different power generators. From a solar panel on your roof to 10 MW offshore wind turbine. There is only one solution, increased interconnection.”

Collaboration between EU member states
“The EU allows free travel of people and now it should work towards free travel of energy”, Ewing says.

That means taking down non-cost barriers such as administrative hurdles, implementing a renewables policy and work towards standardization. “There are 42 different standards of electricity in Europe”, says Eddie O’Connor, CEO of Mainstream Renewable, “but trust me, the electricity here in Amsterdam is the same as in Ireland.”

The euro crisis could drive the individual member states to flee into a renewed reliance on protectionism, concedes Christian Kjaer, CEO of EWEA. “We’ve seen this happen before when the economy takes a downturn. But we need to prevent that, we need to get those barriers down. For such large industries as these they work counter-productive. It will have a bad effect on all the states in the long term.”

O’Connor agrees: “the entire energy industry is embarking on a transition to sustainability. National governments can’t do it on their own. Germany and Denmark have come a long way but now growth is coming to a hold. We need the mobilization of the EU to take this to the next level.”

“In fact, offshore wind power could be the ticket out of the crisis for the EU”, says Rasmussen. It generates jobs, stimulates innovation and education and the end product is sustainable energy.”

Europe needs to start building an infrastructure to transport energy flawlessly across the continent. The railroad system is an example of how not to do it. Built in the pre-EU era, the different national systems are incompatible. Causing long delays at the borders as undercarriages need to be adjusted to fit the different railroads.

All speakers agree that Europe needs to start building the supergrid. The supergrid is not simply an extension of existing or planned point to point HVDC interconnectors between particular EU states. It will involve the creation of ‘supernodes’ to collect, integrate and route the renewable energy to the best available markets. There’ll be the offshore supergrid in the North and a solar supergrid in the South. Linked together they will provide energy security throughout Europe.

When Eddie O’Connor is asked whether offshore wind energy can compete with existing energy sources, he fires back with a question. “Compete with what? Oil? If you are asking if it can compete in price, than what price do we compare it to? The $100 a barrel it is today or the $140 a barrel it may be next month? We have no idea what the price of oil may be 5 years from now. Offshore wind provides free energy. Yes, it requires huge investments up front but once the rig is up and running it will continue to produce energy at practically no cost at all.

“Or do you want to compare it to nuclear? The risks of that technology are so high that it can only be done by governments. It can never be a purely private enterprise. Think about Fukushima, that is a disaster of epic proportion.

“Shale gas? People are going ahead with it without there being a comprehensive environmental impact assessment. We’re consuming energy for which future generations will pay the price.

“So how expensive is offshore wind energy compared to that?”

More information about the conference: offshorewind2011.info