10Q: Vestas Seeks Wind 'on Par' With Gas
Anders Soe-Jensen is the founding president of the offshore division of Vestas Wind Systems A/S, the world's biggest turbine maker. He spoke recently with Alex Morales, renewable energy and climate change reporter for Bloomberg News in London.
Q: What’s most difficult about planting a turbine in the sea?
A: The sea. You cannot predict the sea, but you can plan for any eventuality.
Q: Can you predict when the industry might be able to survive without subsidy or government incentives?
A: If the oil and gas industries did not get subsidies, or if we received half of what they get, then we could have this discussion. Look at nuclear. Will nuclear be built without a support system? I would like to play on par. Just on par.
Q: What are the big markets that you’re focusing on?
A: The big markets are in northern Europe. That is, the U.K., Germany, Belgium, and Holland. Spain just killed off its wind market, so I don’t think that they are going to go offshore in the next couple of years. France is a difficult market. France is going for local production.
Things are going to happen in Korea, but they will have a lot of domestic companies, too. China is by far the biggest offshore opportunity in Asia. They have, as I recall, 720 gigawatts of potential for offshore wind. Perhaps 10 percent of that will be developed. But the Chinese market has not taken off as fast as we had expected.
Q: What about the Americas?
A: We have interest from America. Offshore will be interesting in American waters mainly off the northeastern coast. There are huge ambitions and expectations. But if you go to a state like Texas, I cannot see offshore being built. It’s a vast landmass and you can get a much better cost of energy building onshore.
Q: Vestas unveiled this year its 7-megawatt offshore turbine. By 2030 could you see yourself developing a 10-megawatt or a 15-megawatt turbine?
A: Easily. One step at a time. The blade on our V80 2 MW turbine is already longer than the wingspan of an Airbus 380. Let's get confidence about the 7-megawatt turbine and then move on from there.
Q: Siemens is delivering quite a lot of offshore wind this year, and has a solid pipeline of orders. [Vestas CEO] Ditlev Engel told me in June that you won’t have any offshore projects in 2011. That means you’re going from number one last year to nowhere this year. Does that worry you?
A: We have a number of orders coming our way. 2011 is not closed yet, but it’s true we will not install anything offshore this year. That was foreseen one and a half years ago, so it’s not like it’s scary. Your next question should be, ‘Shouldn’t you have been there faster with the new turbine model?’ Yes. We landed ourselves in this situation.
Q: The U.K. sketched out a plan this summer that would boost its offshore wind goal nearly 40 percent above an already ambitious target. Is that doable?
A: We welcome the U.K.’s offshore ambitions, by all means. But it’s just a framework. Compare it to a sports game. The playing field is laid out, but there are some things missing, without which you cannot play the game. How many points do you get every time you score? (How much is the utility being paid?) Who will referee? (We don’t know whether the government or an NGO may administer the system.) How long is each game? (They have not resolved how long the system should be in place.)
Q: Can the cost of offshore wind drop as far as the U.K. would like?
A: It will not happen tomorrow, or the day after tomorrow. Building wind at £100 per megawatt-hour is doable, but under the right conditions: If you’re at a site in very deep water, with no winds, then it’s not.
The industry is saying today the price is somewhere between £140 and £150 (about $220 and $240). Costs will drop as the industry ‘industrializes.’ It needs a sufficient order backlog that gives confidence to the ship providers, the cable installers, the turbine manufacturers, the foundation manufacturers -- all of these guys.
You can only industrialize if the ‘pipeline’ of turbine orders is there. And that brings us back to the government and the rules of the game. It’s a matter of building up the entire supply chain: cables, ships, skillsets, people.
Q: What’s a reasonable timeframe for that to happen?
A: The official expectation is to bring the price down by 2020, as I recall. But my own expectation is that we're going to get there earlier. I can tell you one thing that is for sure. In 10 years, fossil fuels are going to be more expensive. The wind is going to be the same price as today.
Q: How do you respond to anxieties that wind turbines are a hazard to birds or bats?
A: Some progress has to be made. But put things in perspective. How many birds have been killed by wind turbines? Would you say 5,000 birds? The U.K.’s population of cats has probably killed 50 million of them.