Which direction is the wind blowing? Current trends and future strategies for Offshore Wind

Flying kites, floating turbines, bubble screens, bird detection radars… Many innovations are transforming the offshore wind industry. In recent years, cost reductions have led to a breakthrough in offshore wind. This energy source once considered as risky, unreliable, and costly has gained major attention and support from investors, energy providers, public authorities and society at large. Could the wind off our shores be a solution to our growing electricity needs? Will offshore wind farms free the world from its dependency to fossil fuel energies? Maarten de Vries has some exciting news for the future of the industry…

Before looking at the future of Offshore Wind Power, can you tell us how the industry started?

Since the creation of the first offshore wind farm in 1991 along the coast of Denmark, offshore wind power has always been considered as a potential source of renewable energy, but people had many doubts. The major concern was that the cost was far too high. In 2010, the cost of offshore wind energy was around €200/MWh (electricity from fossil fuels was around €40/MWh).

The reason for such a high cost was that a whole new industry had to be built. To develop the offshore wind sector, two industries had to start working together: on the one hand, onshore wind, and on the other hand, the offshore oil and gas industry. In the beginning, this new collaboration was very painful and many mistakes were made. For example, gearboxes started rusting with salt, and there were problems with foundations. Due to these challenges, people saw offshore wind as very risky and therefore investors asked for very high returns. This was the main reason why this energy source was so expensive.

What happened in recent years for offshore wind power to develop so fast?

Since then, the cost of offshore wind power has dropped dramatically. The first indication of this cost decrease came two years ago, in 2016: the strike price for the Borssele I + II wind farm was €73/MWh. This was an enormous breakthrough. There were two reasons for such a drop: 1) experience and 2) technology. First the build up of experience in the industry and therefore the risk perception and financing cost went down. Secondly, the technology was developed and had a huge impact on cost reduction: turbines are much larger, and installation vessels are now tailor-made, and no longer adapted from the oil and gas industry.

This massive cost reduction has now almost made offshore wind power competitive compared to fossil powered electricity plants and will lead to a rapid further development of the industry.

In which countries did offshore wind mostly develop and what are their future ambitions?

In Europe, the main countries investing in offshore wind were UK, Germany, Netherlands, Denmark. All these countries have strong ambitions and will grow their offshore wind capacity in the upcoming years. Netherlands, for example has committed to install 11,5 GW of offshore wind power by 2030.

In the rest of the world, China is the leader in offshore wind in Asia. Japan and South Korea are also moving towards this renewable energy source.

In the US, even though the federal government has decided to withdraw from the Paris agreement, State governments have strong ambitions: New York and Massachusetts, for example are currently developing offshore wind.

How do you think offshore wind power will compete with other renewable energy solutions in the future?

It really will depend on where you are on the planet. In broad terms, countries that are closer to the equator will mainly depend on solar energy rather than wind. However, countries in Europe will depend on a mix of both sun and wind. Actually, these two sources of energy combine very well because summer provides lots of sun whereas winter provides lots of wind, therefore there is a great synergy between them.

Just to give you an idea, in the Netherlands, research institutions ECN and PBL project that in the 95% CO2 abatement scenario in 2050, 50-80% (35-75 GW) of all electricity in the Netherland will be produced with offshore wind. The rest will most likely be solar, biomass and onshore wind. This makes sense as Holland has a large part of the shallow North Sea, where winds blow very strongly.

What are the current innovations that could contribute to the development of offshore wind?

Currently, one of the big challenges is to develop floating wind turbines. A lot of money is being invested in this innovation, as many countries in the world have too deep coasts to install wind turbines on the seabed. I expect this technology to be mature in 10 years’ time. First, this will help many more countries to have access to offshore wind. Then, this could open the way to offshore wind farms in the middle of the ocean, combined with FPSO units (Floating Production Storage and Offloading, which are huge floating vessels used in the offshore oil and gas industry) to convert the electricity to hydrogen and transport the hydrogen to the shore. This might seem like a dream, but it’s very real. Many companies are already working on it.

Floating wind turbines could also be combined with another innovation: kites. They allow us to harvest the even stronger winds at very high altitude, up to 3 km. On land, they are difficult to install because of air traffic, whereas offshore, they could prove to be a brilliant solution>

So, in the long term, if we associate floating structures, kites and FPSOs, huge amounts of energy could be made out of the ocean.

Currently, what are the main challenges to the development of offshore wind?

The main argument against the development of wind energy is its impact on the landscape. For now, offshore wind turbines are usually installed in shallow waters close to the coast so they are visible from the shores and that brings lots of resistance. The solution to that problem is quite simple as you can move the farms further from the coast, even though this means longer cables, deeper seabeds and a higher cost.

Another challenge is the impact on sea life, both above and below the water. The first danger is for birds, as they can hit turbines. To avoid this problem wind farms, especially in Holland, are pioneering radar systems that detect flights of birds. If the birds fly in the direction of the wind farm, you can switch turbines off temporarily. 

Secondly, offshore wind farms can be dangerous for dolphins and other sea mammals, especially during the construction phase. When building a wind farm, piles have to be hammered into the seabed, which can disturb marine life. The solution to this problem is quite clever: bubble screens have been installed around the piling machine and mitigate the noise.

Another solution which is being tested to help offshore wind farms have a positive impact on the environment is to place oyster beds around the foundations to prevent the sand of the seabed being taken away by currents.

The societal support for offshore wind is something which is looked at very carefully by the industry. It is absolutely crucial that the support remains strong if governments want to meet their renewable energy targets. It is therefore very important to include local communities and to make sure they benefit from the employment opportunities. Good initiatives for local support can be found in Normandy, France, where a new blade factory will be installed, which will provide many jobs.

Overall, looking at how offshore wind power developed in the past years, what can we learn that could be useful to the development of other renewable industries and technologies?

Indeed, I believe there are two great lessons to be learned here.

First, offshore wind is a fantastic example of how governments can help to develop such industries. At first, when the cost of offshore wind power was too high, there was no payback on investing on it, so the market was reluctant to develop it. The government subsidies were instrumental in helping the industry grow. Now, several years later, wind farms are being developed without any subsidies. The role of the government, in this case, was just to kickstart it.

Secondly, it shows the importance of innovation for an industry to become competitive. Over the years, we have seen a massive development of the size of turbines, some of which now have a capacity of 9MW. GE is currently developing the biggest wind turbine, Haliade-X. It has a 12MW capacity, and its total height is close to the Eiffel Tower’s. By innovating, some companies have gained huge knowledge and it is now very difficult for others to catch up.

Maarten de Vries is a Senior associate with the Amsterdam office of Roland Berger. Maarten advises industrial companies on developing general and R&D strategies. He is also involved in the development of public-private co-operations in the fields of technological innovation and renewable energy. Maarten holds a MSc degree in Civil Engineering of Delft University of Technology, and an MBA degree from INSEAD, Fontainebleau.