Time is Money

Time is money, as they say. And it’s never a truer mantra than when dealing with offshore wind.

Be it weather windows, supply chains or unforeseen development issues – overruns can get very expensive, very quickly.

So it’s easy to understand RWE’s unease regarding delays to its offshore wind farms by German grid operator TenneT.

RWE’s Nordse Ost project, due to be connected to the German grid next year, is estimated by the company to have delays of fifteen months. And whilst the project is unable to export power to the grid, developers and investors are losing money.

The trouble is, under the German system, the grid operator takes on the liability for connections made to offshore projects. If export cables are damaged or run into problems, it is the grid operator who must stump up for the repairs.

There isn’t a huge natural incentive, therefore, to add the liability of projects built by a host of different developers, possibly with differing standards.

As RWE pointed out in a letter to Germany's economy and environment ministries, whilst there is a regulatory deficit in developing and connecting offshore projects, investors will have little interest in becoming involved in the sector.

That’s particularly bad for a country that has ruled out nuclear generation entirely and, perhaps more than ever, needs private investors to get involved.

It is also perhaps the tip of the iceberg with the German offshore market – a sector that, as one industry insider notes, is trying to achieve in 10 years what Denmark took 25 years to do.

Chancellor’s Merkel’s response has been characteristically cool, dismissing the likelihood of substantial delays.

But as the German offshore build-out continues, investors will want more than a few calming words to secure their interest.