Offshore market faces a headwind

Despite considerable enthusiasm for UK offshore wind market to grow, there are a number of challenges to overcome.

At a seminar hosted by Clyde & Co last week, attendees heard a range of high profile speakers – Birger Madsen, Director at Navigant's BTM, Mark Giulianotti of UK Green Investment, Michael Robinson of Belfast Harbour, and Matthew Yau from Charles Taylor Adjusting – debate the predicted growth and challenges facing the offshore wind market both in the UK and overseas.

Sandra Sinclair-Hughes, partner at Clyde & Co who co-chaired the seminar, commented: “While it is clear that the UK leads this sector in terms of development and that those working have a desire to see further, sustained growth over the coming years, our seminar highlighted a number of headwinds that the offshore market will have to overcome for this to happen. These include funding, construction capacity and the difficulties of maintenance – all against the backdrop of the government’s possible cuts to subsidies announced yesterday and the impact these will have”.

Birger Madsen, of Navigant’s BTM Consult division, clearly demonstrated the potential for growth in the UK and European market: “Based on current estimates, the UK – which produces 53% of the world’s output of MW from offshore wind – will continue its steady growth into the next four years, probably losing out on that number one spot to Germany, but still remaining a significant producer in the market”.

Mark Giulianotti of UK Green Investments, the government-funded precursor to the Green Investment Bank, focused on the constraints around funding: “This government has ambitious targets for green development, and a suite of policies to support their achievement but financial issues do, and will continue to, limit the potential scale and pace of plans. Longer term debt funding is scarce due to banks' capital and funding concerns, and we believe the renewable energy market needs to recycle operational capital and attract substantial new private investment”.

Michael Robinson, the commercial manager of Belfast Harbour – one of the UK’s leading offshore wind construction ports – spoke about the construction issues surrounding offshore development: “The UK target of producing 18GW of offshore wind by 2020 will be completely unrealistic unless new construction facilities are built – and if the UK does not deliver on these it will lose out to continental Europe. It took us 14 months to develop the DONG terminals in Belfast Harbour, and that was with fast track planning. We would need four of these terminals to even begin to meet this target”.

Matthew Yau of Charles Taylor Adjusting, a loss adjuster for the offshore wind and other industries, then dug deeper into the challenges involved in actually keeping turbines maintained after their construction: “As loss adjusters we see a huge amount of offshore wind claims. Fifty four per cent of all offshore incidents involve cable damage, which are in turn 75% more expensive than other offshore wind claims. Many cables are needed per turbine and not only can numerous issues go wrong with them, but the process of fixing them can be long, arduous and costly”.

Following the panel debate, contributors from the floor posed questions about the proposed cuts to government subsidies. On this point Mark Giulianotti contested: “although there are concerns surrounding  levels of government subsidies at present, pending the Renewables Obligation banding announcement,  it is paramount to note that these cuts would not be retrospective, so if there were any lessening of subsidies these  would only apply to projects from a future date, not current projects.”.

Aris Karcanias of Navigant's BTM who co-chaired the debate concluded: “Although the appetite for growth is clearly there both from the government and the industry’s point of view, it is clear that offshore wind faces funding, construction, operational and maintenance issues that must be addressed for the sector to continue to grow”.