Vestas Offshore Wind President: Costs May Kill Industry

Dec 13, 2011


Vestas Offshore Wind President: Costs May Kill Industry

By Felicity Carus

Published: December 13, 2011

The founding president of the offshore division of the world's largest wind turbine manufacturer said that if the industry does not drive down costs, then it risks killing itself off in its nascent phase.

"Offshore wind is a higher cost energy because we are where we are in the learning curve," said Anders Søe-Jensen, president of the offshore division at Vestas. "We are at risk but we all have to commit to bringing down costs otherwise we're going to kill our industry."

Søe-Jensen told the Energy Institute's Countdown to 2020 conference in London last week that the UK market was the "most mature and interesting" for offshore opportunities. Despite widespread political support from the British government, the public would not support the technology if consumers were left with large bills to fund the development of the industry, he said.

"We have some real champions in government and we have to repay that confidence in us. The politicians are under fierce pressure from the public from the media," he said.

I'm not revealing any state secrets by saying that the [economic] environment has been better. We're under fire, but we're easy to aim at. We need to win public support.

The UK government set a target to reduce the costs of offshore wind, from development, construction and operations to £100/MWh by 2020 in itsRenewables Roadmap.

Calculating Offshore Costs

But offshore consultant Enventi have said that as cost of energy from offshore wind are currently around £180-£205/MWh reaching a target of £150/MWh would represent huge progress.

Vestas installed 100 turbines in 100 days at the world's largest wind farm at Thanet, Kent, owned by Vattenfall.

He said that when Vestas began installing offshore turbines, it would take three to seven days to install one turbine. That figure is now reduced to three to seven hours a turbine.

"Shorter installation times bring down the cost of energy, adds certainty to the business case and reduces risk," he said.

He also said that advances in technology would help reduce costs. Vestas is currently developing a 164m-high 7.0MW turbine for offshore deployment.

Turbine manufacture costs were a much smaller part of total installed costs in offshore wind as compared with onshore wind, he said in later comments to AOL Energy.

"It's a bit like buying an old crappy car. It's starts cheap, but spends most of the time in the workshop costing you a fortune, so you didn't drive much, and your cost per driven mile is staggeringly high. It's the same with the cost of energy when you look at capital expense and operating costs with overall production."

Matthew Knight, director of business development at Siemens Energy, said that industrialization of the supply chain including manufacturing, barges to ship units out to sea, standardisation of marine substations and grid connections would all help to drive down costs.

Thinning The Competition

Søe-Jensen said that the field of players should be kept small to accelerate industrialization and standardization.

"The pie is only so big. We only have so many GW to deal with. Utilities would like to see a lot competition but the fact is that you cannot get an industrialized experienced, optimized production process if you have 20 manufacturers dividing the same market."

Last month, AOL Energy reported on Asian companies making a play for the offshore market in debt-stricken EU countries.

Søe-Jensen said that although he expected to see competition from companies in China, Korea and Japan, experience and a proven track record at Vestas would be an advantage.

"We have experience and we have a proven track record and we want to bring down the cost through industrialization and it will be a supply chain," he said. "Yes, we will get competition and I welcome that."

I still think we have an advantage with the experience that we have here.

"Competition from Asian companies is good and will drive down the costs of offshore," said Maria McCaffery, CEO of RenewableUK.