Integration of the Banking Sector into the Offshore Wind Industry Figure 1: Major Challenges for the Offshore Wind Industry


Supply chain needs to be enabled to avoid a shortage of components and large-capacity wind turbines.


Existing grids need to be extended closer to the offshore wind development zones; offshore supergrids need to be constructed.


Applicattion process, often taking several years to complete, has to become straightforward.


Supporting infrastructure for the offshore wind industry needs a boost – ports, installation vessels, etc.


Risk profile of the industry has to become lower Source: Frost & Sullivan. Long-distance Grid Connection


community at large remains largely unfamiliar with offshore wind and continues to perceive it as a highly risky sector. There are a few leaders in the banking community, notably Dexia and Rabobank, which were involved in early transactions and had developed a thorough understanding of the sector and associated risks by the end of 2008. Table 2 lists commercial banks and their current roles in the offshore wind industry. The major risks that have made banks cautious about offshore wind industry include:


• high capital costs and a need for stronger support; • long-distance grid connection;


• complexity of projects and associated construction risk; and • technology risk and long-term uncertainty about O&M costs.


The cost of a long-distance connection to the grid has become a major obstacle as it increases the project costs significantly. Connection concerns are increasingly being resolved by passing on the obligation to a network operator.


There are a number of pan-European strategic initiatives to develop several offshore supergrid projects that will enable offshore wind development. A few examples include:


•


The NorGer project, a first transmission line between Germany and Norway with a capacity of 1,400GW. A consortium of the Norwegian utilities Agder Energi and Lyse Produksjon and the Swiss company Elektrizitäts-Gesellschaft Laufenburg is now


There is a


number of major challenges capping the offshore wind industry growth rates; however, they are being addressed by wind turbine manufacturers, project developers, and governments at various levels.


High Capital Costs and the Need for Stronger Support Offshore wind capital costs are still higher than those for onshore wind. The regulatory framework that supports onshore wind is usually not sufficient to support this additional cost. Lately, there have been encouraging developments in regulations supporting offshore wind in several major European countries. For example, the UK has one of the biggest offshore wind markets with by far the largest potential. Here, the extension of renewables obligation certificates and introduction of renewable energy certificate banding in 2009 were of great importance in providing lenders with the stability they need to develop offshore wind projects. However, it remains to be seen how the new government will take financial incentive schemes forward.


 


 


  





 


  


                                              





 


 


   





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