Offshore Wind in Europe Seen Needing $11 Billion in Next Year

Europe’s offshore wind energy industry needs 10 billion euros ($11.02 billion) by the end of 2016 to expand installations by about 20 percent, the industry’s trade association estimated.

The European Wind Energy Association said developers connected 2.3 gigawatts of offshore projects to the grid in the first half of the year, bringing the industry’s capacity to 10.4 gigawatts. About 1.7 gigawatts of that was in Germany, according to a report by the Brussels-based group.

The findings indicate the scale of growth in offshore wind, which is most advanced in Europe. China, Japan and the U.S. also are stepping up work to place turbines offshore where winds are usually stronger and more reliable than on land. The technology also is among the most expensive for clean energy.

“To attract the 10 billion in question, EU member states should set out roadmaps on support for offshore wind to drive down risk premium and the cost of capital,” said Oliver Joy, a spokesman for the association. “Abrupt changes to support schemes and stop-start policies can blindside investors.”

Investment in offshore wind in Europe totaled 7.1 billion euros ($7.85 billion) for the first half of the year.

Europe has more than 91 percent of the world’s offshore turbine installations. The region’s growth rate probably will drop next year because of the phasing of new projects, which can take years to build, according to Joy.

Siemens Leads

The U.K. government recently announced a series of cuts to subsidies for onshore wind, solar, and biomass industries, which may affect investor confidence in the U.K.’s renewable energy sector as a whole.

Fifteen wind farms in waters off the U.K., the Netherlands and Germany were installed and connected to the grid in the first half of this year, with a generation capacity of 2.34 gigawatts of power. For the first time in three years, Germany installed more turbines than the U.K.

Siemens AG was the main provider of machines for the new installations, with a 57.2 percent market share, followed by Adwen, a joint venture by Gamesa Corp. Tecnologica SA and Areva SA, which had 19.4 percent. MHI Vestas Offshore Wind A/S, a venture of the Danish manufacturer Vestas Wind Systems A/S and Mitsubishi Heavy Industries Ltd., had 14.2 percent.

Key projects such as the Nordergrunde wind farm and the Veja Mate wind farm, both in Germany, were financed by the European Investment Bank and KfW IPEX Bank, Siemens Financial Services GmbH, Highland Group Holdings, and Copenhagen Infrastructure Partners.

Institutional investors are playing an increasingly important role in the financing of offshore wind projects. Macquarie Capital and Dutch pension fund Stichting Pensioenfonds PGGM have acquired stakes in offshore wind farms.

A total of 3,072 offshore wind turbines were generating electricity in Europe as of June 30.

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