Europe’s offshore wind facing €50bn shortfall – study

Europe’s plans for offshore wind power up to 2020 could be as much as €50 billion short of funding, the Boston Consulting Group (BCG) said in a study released last Thursday.

Energy utilities are leading protagonists but will hit capital bottlenecks before they can reach their targets for 2020

European governments are looking to the technology to play a major role in their move away from fossil fuels to lower climate-harming CO2 emissions.

“We expect that some €50 billion are lacking to build the politically desired wind power plants up to the year 2020,” said BCG energy expert Gunar Hering.

“Energy utilities are the leading protagonists but will hit capital bottlenecks before they can reach their targets for 2020,” he said, noting the challenge of funding a relatively new and unproven industry given the euro zone’s current economic troubles.

Europe’s 15 leading utilities over the past three years invested an average €12 billion per annum in renewable energy, BCG calculated.

If this volume was to be sustained up to 2020 and half the total annual sum was used for offshore wind parks each year, this would amount to €40 billion of capital expenditure.

Another €20 billion would be provided by private and state banks over the described period, if they committed to the sector, given scepticism about its short track record.

Yet BCG said a total €110 billion must be available to reach targets within the EU bloc’s action plan for renewable energy of 40 gigawatts (GW) of installed capacity by 2020.

Even under the assumption of sustained investment volumes BCG believed that the sector would likely only arrive at 25 GW of offshore capacity in the target year.

Currently, there are some 4.9 GW up and running offshore, according to the European Wind Energy Association (EWEA).

Britain in its island position and Germany, which has over two decades of experience with onshore wind, are the leading offshore nations, with plans for 13 GW and 10 GW respectively.

Others are France, Denmark, Belgium and the Netherlands. The main protagonists are companies such as Denmark’s Dong and Germany’s E.ON or RWE.

The sector has encountered red tape and operational problems especially in Germany, where the new units are placed further out at sea than those elsewhere in the world because of big natural protection areas.

Germany has removed legal hurdles over liabilities for delayed links to the mainland.

But only on Wednesday, engineering firm Siemens had to concede it must postpone the link-up to another wind power park off the North Sea Coast.

BCG said it was important that producers start standardising products, in order to help cut costs.