Despite the improvement in risk outlook, the survey, Offshore Proof, finds the industry is facing a ‘make or break time’ period with respondents pointing to increasing costs and a chequered technological track record as wind power’s biggest challenges.
Nearly two-thirds of European financial institutions questioned for the Offshore Proof survey say industry investment risk has reduced in the past two years. Only a small percentage (9 per cent) thought that risks had increased.
The survey of industry developers, manufacturers and utilities firms, which has been commissioned by accountancy firm PwC, also finds three-quarters of respondents say they are ‘reasonably confident’ that wind power will play an ‘enduring part’ in the energy mix in the coming 20 years.
Notably, the majority (60 per cent) expect wind power to be economically viable without government subsidies within 15 years.
Offshore Proof reports the six issues that will determine whether offshore wind power will be successful are cost reduction, construction risk and financing, supply chain management, grid access, investment attractiveness and regulatory certainty.
Nearly two-thirds of government bodies expect technological breakthroughs to occur that will prove offshore wind power’s worth, but the same number of survey respondents also see a possibility that advancements could work in favour of other renewable energies, leaving offshore wind power behind, the survey finds.
The survey points out that the biggest challenge facing the industry is to bring costs down to a range where offshore wind power can compete in the energy mix with little or no subsidy. On this point, the outlook among European contractors and original equipment manufacturers (OEM) on construction and turbine costs is positive but mixed.
Most of the contractors and OEM respondents (42 per cent) expect costs to come down, but many do not foresee any reduction and a quarter (25 per cent) actually say they believe the industry will suffer cost increases.
PwC global utilities leader Manfred Wiegand comments, ‘The coming few years will be make or break time in deciding whether offshore wind power will be able to get on track to prove its place as a source of large-scale power generation. There are many issues still to be resolved.’
