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If anybody is looking anywhere other than at the emerging markets, please contact us at the usual address.

But seriously, take a snapshot of the biggest stories of the week. Enel is investing in Chile. Gamesa is expanding its footprint in India. And the German developer SüdWestStrom has pulled out of Bard Offshore 1, citing construction delays and shifting risk assessments in offshore wind.

In fact, many would argue that Areva and its plans for a manufacturing facility in Scotland provided the singular source of good news for the developed markets.

It’s not necessarily a surprise. In the UK, political infighting has left energy policy in a shambles, with the Government’s Energy Market Reform Bill delayed again. While all the while a vocal energy Minister with a firm anti-onshore wind agenda continues to stamp his foot.

In the US, the re-election of President Barack Obama has given hope to many that the Production Tax Credit (PTC) will be extended.

However, the President has yet to push legislation through Congress, and many in the industry anticipate that 2013 may be the last year for the initiative.

So for developers, financiers, investors, OEMs and consultants, the emerging markets offer a possibility and a scramble to preserve the balance sheet.

And whilst more mature markets find themselves in a state of flux, domestic independent power producers in these emerging geographies can start to take advantage of softer prices on equipment and the cost of capital.

As the turbine makers feel the squeeze from the reduction in large orders from big utilities in developed markets, so they must also accept reduced margins on the sale of stock if they wish to continue to win new orders.

Which, of course, isn’t a surprise. Particularly when you’re trying to build a project in a country that might not have adequate infrastructure (and where the cost of logistics are far higher) and that as a result, means that a cost saving on equipment offers a chance to free up capital for other more expensive overheads.

For the OEMs, struggling to get a foothold in these markets through some clever (and perhaps unavoidable) discounting at this stage could well pay dividends for the future.

It’s why Vestas is keen to maintain its market share in Australia and it’s why Siemens has been keen to announce its involvement in Mainstream Renewable Power’s forthcoming projects in South Africa.

Meanwhile, there seems to be little indication of how long the malaise in Western European and North American wind markets will continue. Certainly the ongoing austerity measures and shifting political sands don’t seem to offer any immediate prospects for a swift recovery.

However, if developers in emerging markets can prove not only to their own governments, but also to external investors, that they’re serious about making wind energy work, they should be able to take some very competitive first steps.

Consider this. In the next six weeks, China’s grid connected wind energy installations will exceed 60GW.

That trumps the US by a full 8GW if the latest figures from AWEA are anything to go by and it forces the EU to take a look over its shoulder too, despite its recent much celebrated 100GW European milestone.

Put simply, for what many consider to be the largest superpower in the world, it’s no mean feat. And it’s a timely reminder of what, within wind, China has already achieved.

Of course, the lack of opposition to local planning legislation certainly helps. As does the not inconsiderable local cost efficiencies, its manufacturing muscle and China’s wider geographic profile – all areas that point to future market growth.

To what extent the recent appointment of a new head of the Communist Party of China will change this perspective is of course very much up for debate and while many will speculate, the reality is that right now, nobody really knows.

What is apparent however, is that with wind now the third largest energy source within China – after thermal and hydropower – the growth of renewable energy within Asia has become increasingly difficult to ignore.

And for the global market that’s significant – not just from an international expansion perspective, but moreover in terms of future industry technological innovation and growth.

Indeed, only last year did Zheng Fangneng, the Energy Section Chief within the Ministry of Science and technology, announced that between now and 2016, the country will support the development of bigger capacity turbines, key components and supporting industrialisation technologies.

To date, this hasn’t translated into any significant developments within the offshore market. And whether this means that China will finally be getting to grips with the global challenge of energy storage is very much up for debate.

Nevertheless, with talk at China Wind Power 2012 late last week focused on tackling the intermittency challenge, surely further progress in both these areas of the market is not so very far off.

Sinovel may well be placing a percentage of its workforce on leave but to suggest that this draws immediate parallels between other major wind energy markets is still wide of the mark.

Earlier this week, the Global Wind Energy Council published the fourth edition of its Global Wind Energy Outlook.

In it, the organisation outlined three different scenarios for the wind industry – looking out to 2020, 2030 and 2050 respectively.

It’s a compelling report. And even under its least ambitious scenario, based on data and projections from the IEA, the report predicts that the annual wind energy market will remain flat through to 2015, before shrinking to 10% below 2011 levels for the second half of the decade.

In contrast, the most optimistic scenarios predict a recovery in rates during that all important 2015 to 2020 timeframe, based on a stable policy environment, continued technological improvement and a subsequent jump in capacity of either 1,600GW or 2,500GW by 2030.

The key deciding factor for much of this predictive analysis of course, is that the ability to achieve many of these targets remains steadfastly locked in policy and longer-term governmental support.

No surprise then, that while the report does a good job of talking up the prospects and potential of the market, the ability to provide investors with that all-important added political stability, remains steadfastly out of reach.

However, and as we have consistently argued, while the ability to provide a stable policy framework – both from an individual and inter-country perspective remains critical, it is by no means exclusive and unique.

Particularly since the rapid development and evolution of the wind energy market has been predicated and built on entrepreneurial spirit and drive, right from the start. Something that’s all too easy too forget.

That capitalistic zeal is important and given that the sector is still made up of a patchwork of projects located all around the world, it carries more credence than you might initially think.

After all, project delivery drives jobs, boosts local economic development and creates a series of increasingly interconnected local supply chains that with time, grow and expand overseas.

Now yes, it’s true that as the industry starts to weight into bigger energy issues such as the development of super grids, energy storage and supply and the wider challenge of long term energy security, the public policy debate does not diminish.

Nevertheless, in this age of increasingly controversial public spending cuts and the supposed shrinking of the state, let’s not forget that future finance and growth comes only from the most enterprising of markets. And within international energy, wind is surely one of them.

There’s a common line of thinking that suggests that diversification only ever spreads risk.

Papering over potentially unpalatable projects and making it easier for new market participants to take a punt on a technology, without the fear of getting their fingers burned.

Only that’s not always the case. And increasingly there’s a line of thinking that assumes that while yes, diversification can spread risk, it can also create it.

Take Siemens, as a case in point.

Announcing its annual results earlier in the month, the German manufacturing giant celebrated a 3% revenue rise, taking the firm to €78.3bn. This, combined with a longer-term ambition to return profitability to a minimum of 12% by 2014, suggests at first glance that this strategy of diversification has been paying off.

However, let’s not forget that Siemens decided to exit the solar market – a loss making business unit for the firm – in its final financial quarter.

And moreover, that the firm looks likely to take a tighter rein on its asset portfolio over the next twelve to twenty four months, with further acquisitions and sell offs inevitable.

As such, and given the increasingly strong performance of its wind energy unit, perhaps the latest set of results suggests that there’s wider market shift afoot.

After all, the world’s ninth biggest turbine manufacturer by sales hasn’t shied away from outlining the sheer size and scale of this particular market challenge.

Or indeed from committing significant investment and company resource to the development of its mammoth 6MW offshore turbine– currently undergoing early-stage project trials in the North Sea.

However, the manufacture, sales and delivery of such enormous infrastructure requires some seriously focused thinking, with deep pockets to boot. And while the division remains brimming with potential, to truly succeed it requires the ongoing backing and commitment of the wider board.

Given the exit from the nuclear and solar markets and with an increasing focus on smart grid, water and wind, for Siemens Energy this strategic shift behind the scenes may already been paying off.

However, for Siemens and for many of its industry counterparts, sector success is as much dependent on internal commercial focus as it is on the wider dynamics of the wind industry at large.

When big news dominates the headlines, it’s easy for the smaller, but perhaps equally significant, announcements to be buried under the deluge.

With Barack Obama and Mitt Romney slugging it out for the keys to the White House, and the subsequent analysis of Obama’s next four years, some interesting stories struggled to get the airtime that perhaps they deserved.

The thing is, for editors, it’s very easy to take the theme of the day and ask what it means for the particular industry they follow. And arguably in the case of energy, that’s quite correct.

As an aside, wind in the US isn’t necessarily any more ‘safe’ than it was prior to the election. The production tax credit may survive another year, if President Obama can steer the legislation through congress, but with most economists predicting that the US will fall off a ‘fiscal cliff’ in 2013, nothing can be guaranteed.

But here’s the thing. Whilst all this was going on, this particular area of the international energy markets wasn’t standing still.

ABB, the Swiss-Swedish electrical engineering firm, quietly announced that it had developed the world’s first circuit breaker for high voltage direct current (HVDC) transmissions.

According to ABB, the development removes a 100 year old barrier to the development of DC transmission grids. Which, as the firm was quick to point out, makes the concept of a renewable energy supergrid a little more tangible.

In many respects, the industry has to start with the big conceptual ideals, but if what ABB is claiming can be commercially deployed, then it means that renewables are closer to claiming a result for European energy security than they have struggled with so far.

Returning to the theme, however, perhaps it’s another instance of the industry letting good news get buried. Timing is everything and the ability to entertain really matters. A point that President Obama understands better than most.

Using ABB as a case in point, isn’t it time we started to communicate a little smarter and, in doing so, really celebrate the meaning of these incremental milestones and successes? Glitter and helium balloons aren’t always necessary, but a few well-spoken words aimed at an expectant audience can often help.

It’s very easy when, as an industry, you live and breathe renewable energy every day to become a bit inward looking. To narrow the focus too much, and not to listen to other cogent arguments from outsiders.

Of course many industry firms may only have one area of interest that keeps them focused on the minutiae, but that shouldn’t necessarily be a barrier to considering other opinions.

It’s something that was brought to mind by an announcement from Dong last week. You might have spotted it. It was the one that confirmed the firm was set to join other industry heavyweights in founding something called “The Energy Partnership – The European Coalition for Renewable Energy And Gas”. The aim of which is to create the conditions for a European energy market based upon the complementary use of renewable energy and gas.

To some in the industry, the idea of working with other energy sectors is anachronistic, particularly those based on fossil fuels. After all, the green credentials of some of these firms are a little thin.

But in the short term, it’s inevitable. Not only can the wind industry, particularly its offshore realm, learn a lot from the gas sector, but there are a number of energy firms, like Dong, which are certainly doing excellent work in wind energy, but still have feet in both camps.

In many respects, the sector needs to be a little less ideological and a little more commercially focused.

Realistically, nobody in the wind industry should expect 100% wind energy generation, or even 100% renewable energy generation. The energy mix will always be exactly that, a mix. In some countries it will involve nuclear and coal, in others it will involve shale gas. It is better, surely, to have a realistic focus on what is achievable. Otherwise it is all too easy for critics to dismiss the industry as populated by pipe-dreamers.

Indeed, a strength that the wind industry could really foster, and one that isn’t normally found in its traditional energy counterparts, is a spirit of collaboration.

It’s a sign of maturity that should demonstrate confidence and the self-belief that it is around to stay.

What a mess.

Once again the UK energy markets have spent the past few days dominating the headlines and generating yet more column inches, for all the wrong reasons.

Little wonder then, that for those stuck in the Glasgow conference and exhibition halls, the unfolding drama played out like the latest episode of The Thick Of It.

For those that missed it, energy minister John Hayes seemingly sounded the death knell for UK onshore wind, following candid ill-considered comments to a major UK daily.

Comments of course, that were made right after he stepped from the stage at a RenewableUK drinks reception, where he’d delivered a series of anodyne, and frankly rather vanilla remarks, to an already sceptical conference crowd.

Queue fireworks in Westminster and the start of a day of attacks and counter attacks, as politicians and personalities added fuel to the fire, rolled up their sleeves and drew lines in the sand.

And to think that we’d moved beyond all of this.

Now, political wrangling over the future of the wind energy markets is not new to the UK. And the ability to win over the electorate and to use this area of the energy sector as a campaigning tactic is a much-loved and proven, media tool.

However, in the week in which the UK finally found a buyer for Horizon, Britain’s beleaguered nuclear project, surely if there’s one lesson to be learnt, it’s that while petty politics might elevate individual ambitions, it’s hardly conducive to the wider need to instil greater levels of certainty, confidence and trust.

Yes, onshore wind gets a tough press and yes, the margins within the market have become increasingly thin. However, with an established and relatively diverse installation base, profitability within this area of the market remains.

And that’s significant. Profitable businesses create jobs, encourage greater sector diversity and perhaps most significantly, free up cash for future investment. Investment that, between now and 2020, is more often than not set for new ventures, located in deep water, offshore.

In the run up to the forthcoming UK energy bill and with the reformation of the electricity markets around the corner this latest public spat is ill-judged and badly timed.

What’s more, given the UK government’s wider desire to attract and retain overseas investment in large-scale public infrastructure, this sort of market wrangling, confused rhetoric and ongoing uncertainty, will hardly help

There’s a growing body of opinion that suggests that onshore wind energy has had its day and that the only genuine growth at any real scale sits offshore.

Those that table the argument, particularly when working within the European markets, suggest that the cost of construction and the operational economics are still simply too high. Often adding in the additional and increasingly complex planning, approval and permitting challenges – factors that have only served to increase the time during which a project sits within development.

This, when added to wider issues associated with the market move towards bigger turbines, offering the potential of bigger returns and a set of bigger logistical demands, inevitably tips the scales in offshore wind’s favour.

Or at least, so says the current thinking.

However, to dismiss the onshore wind energy market out of hand is perhaps to miss the point. A conclusion recently best identified by the team at PWC, who suggest that despite the summer deal-making lull, the coming months could see an unprecedented flow of deals for onshore European wind generation assets.

According to the report, there are 11 hope-for sales due to convert within the next six to eight weeks, with the firm estimating that there’s approximately $4 - $5bn having been left on the deal table in October alone.

That’s no small fry. The question however, is whether this onshore asset sale surge is something that’s about to become a permanent industry fixture, or whether it’s an attractive, if not entirely unforeseen market blip.

Naturally, understanding seller motivations plays an important role in getting to the bottom of this and provides an important insight into whether this is the start of a significant new trend.

For the most part, seller motivations are typically driven by the need to free up capital for future investment and more broadly, by a reappraisal of existing wind portfolios within established and proven market fields.

This then offers the added benefit of introducing (and educating) new industry investors and in widening the current spread of active industry participants.

All positive stuff then?

For the most part, yes. However, as the European onshore wind markets continue to evolve and as developers, manufacturers and early-stage investors look to new areas of the market to repeat the trick, the offshore opportunity looms large. And it’s these subsequent re-investment decisions that are perhaps just as important as the headline grabbing asset sales themselves.

TenneT has again found itself at the sharp end of further industry criticism in the German offshore market this week after DONG Energy halted construction on its Borkum Riffgrund 2 project. The development followed failure to secure an electricity connection contract to the German grid.

Unfortunately, for the wider industry, the move couldn’t come at a worse time.

Increasingly, political debates in Germany are starting to focus on the cost of installing and connecting renewable energy projects, despite the fact that the country now sees an increasing amount of its energy supply secured from renewable sources.

This cost debate, coupled with pressure to get projects up and running, is starting to cause a bit of an impasse. TenneT, a Dutch-owned business, has said that it is unreasonable to expect it to pay for the entire cost of offshore wind connection to the German grid.

And, in the rush to get projects up and running, it was assumed that the gird operator would be able to swallow the investment. Not so. Now TenneT should, perhaps, have flagged its problems a little earlier, or scaled down its ambitions all the way back in 2009 when it bought the German grid from E.ON.

However, it didn't. And the longer the saga continues, the more delays Germany faces - and that's not just in its ability to achieve renewable energy targets.

Indeed, in this respect, there's arguably an even more pressing concern as the country continues to decommission its nuclear power stations at an unprecedented pace. As this decommissioning continues, there's a very real risk Germany will face an energy supply deficit that has the potential to cause crippling damage to Europe’s strongest economy.

And yet despite this growing concern, for all the while that Chancellor Angela Merkel’s bill proposal that consumers, investors and operators swallow the cost is scrutinised, the delays continue to mount up.

Evidently then, Germany is need of answers - fast. Particularly since persuading the investment community to get involved will be difficult, as working with transmission lines and cabling is still considered to be a relatively high risk asset.

And that of course, is the crux of the matter. For if Germany can demonstrate that it can develop and adapt to truly capitalise on the long term industrial benefits of renewable energy sources, then it won't just become the poster child of Europe but moreover will avoid the very real risk of undermining its own much-sought after manufacturing supply chain.

Recently the US president took the unusual step of blocking the first domestic transaction, based entirely on national security grounds, in 22 years.

When he did, the construction machinery-maker behind the deal quickly branded the move as a political stunt and complete bureaucratic nonsense.

However, that wasn’t the really surprising part.

The most surprising element was that the firm in question – that was supplying the kit and that was set to co-own and develop the power initiative – was Chinese.

So, that’s a major Chinese company lecturing the US government (or more specifically, the Committee on Foreign Investment), on bureaucracy and free thinking entrepreneurialism. In this regard, you’ve really got it hand it to them.

Or more specifically, you’ve got to hand it to Xiang Wenbo, a founding member of Sany Group and one of China’s richest men.

For Xiang, the case exemplifies a growing sense among Chinese businesses that they face discrimination in their efforts to expand into the US – a situation that is made worse by the impending presidential elections.

What’s more, there’s a growing body of opinion that suggests that the man has a point.

As Romney and Obama move towards the third and final instalment of their televised presidential debates, and as they both take an increasingly closer look at foreign policy and investment, much of this can be boiled down to one specific market question. Namely, who can be tougher on China?

For the two candidates, this is an area in which they remain confident that they can win votes and as such, it’s an election issue that’s quickly set to escalate.

However, from a wider energy perspective, there’s a need for these actions to be more carefully considered and perhaps crucially, to be set in perspective.

While flooding Western markets with cheap Chinese kit is never going to exactly curry favour with local manufacturers and regional construction firms, imposing import tariffs isn’t exactly the stuff of the future either.

As such, the ability to be able to find a way in which to navigate this complex pricing challenge is paramount. Developers and investors are always going to aim for the best possible kit at the best possible price. While the introduction of international tariffs and duties smacks of maintaining short-term domestic interests.

A compromise needs to be reached and given the recent well-publicised German spat, the US must once again look overseas and further afield, and take heed, fast.

There’s nothing like uncertainty to shake confidence.

It’s something that was again brought home to the UK Coalition Government this week as Prime Minister David Cameron was accused of making energy policy on the spot, during a Parliamentary Questions debate, as he promised to force energy providers to place all customers on the lowest available tariff.

Often it seems like a barely a week goes by when we don’t touch on this subject. Yet, incomprehensibly, after two years in power, the UK Government still seems to be schizophrenic in its messaging as to future energy supplies, and crucially, costs.

Admittedly, the backdrop provides a perfect storm: emissions legislation spells the end for traditional coal-fired generation in the UK by 2015, nobody can be found to take on the costs of building new nuclear generation privately, and the Treasury seems to have separate ideas to the rest of the Government on the future needs of energy in the UK.

But there’s a real lack of cohesion about how to address these challenges. And this lack of clarity isn’t just evidential in the abstract. When the mechanics of Government policy come to be discussed, Ministers seem happy to contradict each other.

The draft Energy Bill published in May proposed a move for renewable generation to be supported under new Contracts for Difference, rather than the current Renewable Obligation Certificates mechanism, from 2017. The ROC system will continue until 2037, but will have been closed to new joiners.

The Bill will be unveiled before Christmas – setting policy for generations to come.

However, perhaps the problem lies at the feet of the politicians and not the policy makers. By the date of the next election in 2015, there’s a fair chance that domestic energy bills could be rather high. If it is to fight for successful re-election, the Government knows it has to tackle this elephant in the room.

Except, if anything it’s imported gas that is keeping these costs high, not subsidy support for renewables. And experts in some quarters predict that even with shale and North Sea exploitation the UK will still have to import gas to meet future energy needs. Prices therefore are unlikely to fall and the UK will have invested in a gas dependent infrastructure.

And whilst moves to renewable transition to more flexible forms of support should be welcomed, political spats over the detail continue to unsettle investors.
Arguing over what makes domestic fuel bills high isn’t going to secure renewable energy investment.

International politicians often state ‘let me be clear…’ when discussing national policy and in this regard the UK is no exception. However, perhaps it’s time this mantra was genuinely applied to the economics of energy.

In a week that saw the UK Government being told to get its renewable house in order by some industry heavyweights, on the grounds that investor confidence was seriously rattled, an announcement from UK Private equity firm, Terra Firma, quietly slipped under the radar.

The business is to partner with the China Development Bank to launch a $5billion fund for renewable energy investments.

Older readers may remember Terra Firma, and its founder Guy Hands, as having disastrously overpaid for record label, EMI, before facing prolonged legal wrangling to offload the business to Citigroup.
So, is the announcement good news, or a drop in the ocean?

Well Terra Firma actually already plays in renewable energy under the auspices of Infinis, a renewable developer which operates 10 onshore wind farms. That’s separate from its ownership of US wind develop EverPower and Italian solar business Rete Rinnovabile.

It’s not exactly indicative of a flood of new investment for the sector, and Terra Firma, hasn’t shied away from investments that the wider industry may baulk at. Nevertheless, the news might just encourage the alternative investment community to reconsider renewables.

And if that happens, it’s exactly the kind of move that may add some much needed additional momentum to the investment process. After all, there’s only so long you can continue knocking on the same doors.

Some may worry that encouraging the private equity community into the renewable energy space invites a reputational issue.

And in days of old, prior to the financial crisis, there may have been some truth in the assertion. Particularly given the amounts of leverage the private equity funds have used to acquire their targets.
But times have changed, and the industry now approaches its investments much more carefully.

Perhaps then, Terra Firma’s Guy Hands can encourage his colleagues in the fund community to take some bolder steps.

On Monday, the wet weather and storm-like conditions reflected the mood of many, as delegates arrived in Virginia Beach for AWEA Offshore 2012.

Twelve months since the Baltimore gathering, and even before the start of the opening sessions, industry insiders were questioning how far the market has really moved on.

Sure, state and federal permitting has been ticking along and for others, there’s been some early stage met mast and LIDAR work that’s showing real promise. However, the inescapable fact remains that despite all the investment and all the talk to date, the US still hasn’t set an offshore turbine spinning.

Of course, the recent developments within shale gas haven’t helped. And neither has an impending US election that pulls politicians away from Senate and puts a focus on the polls, as opposed to the true long-term issues of energy and power.

However, for any emerging energy market, these issues should by no means be unexpected. As they’ve been on the horizon for sometime. And as such, for those players committed to the American markets, the power politics should present less of a surprise than many would like to think.

Indeed, industry insiders estimate that over the past ten years, US offshore wind developers have invested over $150m of their own money into getting the market up and running and off the ground. That’s no small change.

And yet despite that investment, there’s still little in the way of tangible operation and construction to show for it.

Yes, the development of a set of much-needed new standards helps and yes, there’s the constant carrot of the next big step waiting around the corner. A fact that Bill Bolling, Lieutenant Governor of Virginia made clear when he repeatedly referenced a series of announcements that are due out between now and the Spring.

However, while all the positive talk keeps on coming, for many, as the months tick by, the bills are mounting up – and as a result, executives are having to ask the question of when that level of commitment will simply have to end.

Within the US offshore market then, the next six months will be watched with interest and will become a growing test of nerve. At the evening receptions and on the conference floor, those players with cards on the table remained bullish and confident.

That’s a level of confidence that is critical to safeguarding the industry’s future success. And is almost as important as any regulatory developments and future permitting and policy approval. If the market is to work, the ambition must remain.

Saying sorry isn’t easy. It’s an admission of fault. And it can be pretty humbling too.

However, in recent weeks, that hasn’t stopped politicians stepping forwards and professing mea culpa. Something that when positioned properly, can win votes and curry favour.

Shrewd? Yes. Genuine? Who knows. Whatever the case, for the politician backed into a corner, it’s an effective way in which to call a halt to the scrutiny and to wipe the slate clean.

If only things were that easy within the energy markets. A place where an apology is the exception as opposed to the rule.

Take Trafigura for instance. A multinational oil trader that only apologised for the dumping of toxic waste in West Africa after a damaging report came to light.

Or take BP, a firm that took a painfully long time to finally hold its hand up and apologise after the Gulf of Mexico spill a couple of years back.

However, just because big business – particularly within the more traditional energy markets – continues to take such a cautionary approach to saying sorry, it doesn’t mean everyone else has to follow suit. Wind included.

Let’s make this a little more specific.

In the past fourteen days, a major Chinese manufacturer has struggled to hold its hand up, communicate and empathise following yet another tragic loss of life.

While on the other side of the planet in Northern Europe, an established manufacturer faced similar communication challenges following revelations that its former CFO has lost the firm anywhere between €4m and €18m. Ouch.

Neither scenario is pretty. After all, who really wants to be the bearer of bad news? Particularly when talking to shareholders, partners, prospects and peers.

Nevertheless, the message has to be shared. And the way in which it’s shared says more about a business, its ethos, ambitions and goals, than you’d think.

As we have consistently argued, effective positioning is critical for aspirational businesses operating within the wind energy market. In fact, it’s fundamental to any firm seeking to establish credibility and commercial relevance.

Make no mistake, saying sorry isn’t easy. However, as ambitious businesses within the wind energy market look to expand overseas and make their mark, they’d do well to take heed.

And in doing so, they’d uncover the hidden benefits and opportunities associated with that very human touch.

Yesterday saw the first meeting of Norstec, an alliance of offshore wind energy manufacturers that aims to reduce offshore costs and promote investment in the sector. The formation of the group was announced by UK Prime Minister, David Cameron, in April and has grown steadily in members since.

It will be interesting to see if, and how, the group ties into the work of the Offshore Wind Cost Reduction Taskforce, a DECC body that published its first report and recommendations in June 2012.

That report made a number of key recommendations that included a developers programme board to monitor for supply chain bottle necks and share responses to common industry problems, a re-evaluation of contracting structures, a route to fast-track the installation of polymeric HVDC cables and a simplification of deal structures in the financing realm.

So it will be interesting to see how the members of Norstec approach the issue, and their thoughts on reaching the holy grail of £100 MW/h for offshore wind.

Early Norstec members include Vestas and Siemens, a good portent for the success of the group given that manufacturers are not only able to innovate to reduce costs, but can encourage the supply chain to do so too, through bulk ordering and long term agreements.

Dong’s announcement that it will also be an active member of the community also bodes well. As an offshore developer with real clout, and arguably one the firms that is doing most to champion offshore wind as a viable future energy source, Dong can add weight and influence to cost reduction efforts.

There is little doubt that over time, offshore wind costs will fall. And perhaps it’s somewhat short-termist of political powers to pressure the industry when the costs of low carbon energy security are very difficult to price.

Regardless, as the oil and gas sector was able to reduce its costs under CRINE (Cost Reduction Initiative for the Next Era), so too will offshore wind. The challenge will be whether it can move as quickly as its political paymasters demand.

When Fuhrländer filed for insolvency last week, it was another painful reminder that in a rapidly emerging economy, things go down as well as up.

Moreover, it was a lesson that in any ambitious business, there’s a significant difference between consistently talking a good game and actually delivering one.

Fuhrländer AG was an established and internationally diverse manufacturer that sold a range of high quality units throughout its twenty-five year history.

The company developed and built a reputation for selling high quality, class-leading turbines that varied in power output from 1.5 to 3MW.

This focus, combined with some quality engineering and some smart drive train technology, ensured that its kit could be quickly and easily transported and installed in notoriously remote and difficult to reach locations. This was a key benefit. A differentiator that provided a strong level of reliability and a demonstrated a good potential return on a developer’s investment.

Heck, it even gave them the chance to meet with Premier Wen Jiabao and Angela Merkel.

So with such a positive and promising outlook, what went wrong?

Well, as the company files for insolvency and undertakes the painful task of assessing what happens next, the answer is not yet entirely clear.

Earlier in 2012, the business had already undertaken an extensive cost cutting programme, laying off 70 staff and stripping back costs to all but the essentials.

Then in May, it won investment from a Ukranian business – a country in which the firm already had an established production plant and that, according to reports, could produce and shift 15 to 18 turbines every month. Since then, a new head of sales was also appointed, who has developed an impressive track record.

And yet despite all this, it evidently wasn’t enough. The orders, it appears, simply weren’t coming in fast enough.

Add to this the increased competition from Asian manufacturers that have dragged down prices, the increasing challenge of securing project finance and extended development cycle delays and the bubble simply had to burst.

For Fuhrländer, this then appears to strike at the heart of the frustration. Since, as cash flow – the lifeblood of any business – dried up, the available options also evaporated.

Running a manufacturing business at any real scale will always require a significant ongoing investment in overheads and requires a steady stream of cash. If this isn’t coming through unit sales, then the role of the service and maintenance arm of the business quickly needs to plug the gap. A challenge that, as we highlighted only a couple of weeks back, is by no means exclusive to Europe.

Baseloads. Traditionally always the stick used to beat the wind industry. But as EWEA announces that Europe has now surpassed 100GW of operating wind capacity, this argument against the technology needs further scrutiny.

And in particular, an assessment of whether it’s actually as important a factor in energy capacity as is traditionally made out.

Two pieces of editorial slugged it out over the issue earlier in the week. Christopher Booker, writing in Saturday’s Telegraph, and a Guardian blog posting from climate change authors Chris Goodall and Mark Lynas.

The latter refuted claims by the former that wind energy will ‘require fossil-fuel power plants to run much of the time very inefficiently and expensively’, using recently published data from the National Grid.

And as a DECC announcement highlighted yesterday, energy production from renewable sources, notably offshore wind, continues to rise, increasing its overall share in the energy mix.

The same announcement also demonstrated that ‘final’ energy consumption fluctuates significantly, dictated mostly by weather conditions.

The idea, therefore, that base demand will continue to rise exponentially doesn’t necessarily always hold water.

But without wishing to become diverted by additional debates surrounding carbon reduction, it seems that to become obsessed by ‘baseloads’ is to miss the point.

And this is without even beginning to explore demand side management policies. This is 50% of the energy debate that is rarely examined, most likely because of craven political attitudes to forcing businesses and domestic users to reduce their energy use.

It will take time before renewable technology can prove its case for an increased share in the energy mix, and it will have to do so in conjunction with other policies that encourage future generations to think more carefully about the way in which they use energy.

But in the long-term, inexorable data, such as that released earlier this week by National Grid, will eventually prove the case for wind beyond doubt.

Okay, so picture this. You’re a traditional oil and gas based support service business that has, over the past twenty or so years done rather well for yourself.

You’ve grown your market share and you’ve developed a solid and steady customer base. You’ve diversified the business so that you’ve got operations and officers located all over the world and you’re selling your services and experience into one of the most profitable and dependable markets on the planet.

All in all, it’s not bad work. And yes, while you’ve been watching the oil price rise with some element of caution, you remain pretty confident that in the grand scheme of things, a price hike isn’t about to upset the status quo.

Nevertheless, there’s this new energy economy that’s arrived on the scene.

A market that at first was very easy to ignore. Particularly with all the diligent talk of sustainability and climate change. Issues that, while noble causes, aren’t exactly going to start generating the base electricity load and power that the western world has come to depend on so fundamentally. At least, they’re not going to be able to do so overnight.

And so because of this – and despite all the greenwash – as a support service business focused on what have always been traditionally stable and growing markets, you’ve turned your back on renewable energy. And you’ve left it to the die-hard fans and to those truly committed individuals.

But here’s the thing. Suddenly those individuals have switched from baggy trousers to sharp suits. And they’ve changed their tune too.

For the truly ambitious, no longer are they talking up the benefits that such power generating technology has on climate change and the planet. Instead, that’s become a secondary benefit.

And it’s become secondary to two fundamental issues – energy security and economic independence.

Big issues. And issues that have caught the oil and gas markets napping.

Particularly when it comes to the increasingly delicate matter of intercontinental energy transmission, future fuel imports and a steadily rising cost, to boot.

So it’s with this in mind, that these businesses begin to take a second look. And begin to see the world of renewable energy in a new light.

In Husum last week, there was a growing exhibitor presence of companies that have already made their mark within oil and gas and are now looking to repeat the trick.

However, contrary to popular belief, their success is as much dependent on the ability to listen and learn from this emerging market, as it is to educate and teach.

Success then for these firms, is first and foremost about finding a credible and commercially relevant position, from which to pitch, not preach.

The opening address at any conference, when positioned properly, always provides an indication of what is foremost in the mind of the industry.

In Copenhagen, Felix Ferlemann wanted the sector to address regulatory, infrastructural and planning uncertainty.

Contrast that with the opening address from Peter Becker, managing director at Husum WindEnergy, where, to the bemused audience members, things couldn’t have been more different.

What was played out in front of the industry was essentially a political spat between two North German states. Husum, a small town in Schleswig-Holstein, and the host for the conference since 1989, is riled that Hamburg is set to launch a competing conference.

The trouble is, the argument for maintaining the conference in Husum grows ever thinner.

Yes, on the one hand, the area was an onshore wind pioneer. Its geography of flat coastal plains meant a rich wind resource and an excellent proving ground for the major turbine manufacturers.

Maybe without Husum and its environs the wind industry wouldn’t be where it is today. Maybe.

Conversely, Hamburg is a booming city, and rapidly becoming an in-vogue destination. And if you’re a developer or an investor, who will only be able to devote one day to attending a conference, being able to fly in and fly out within 12 hours is a significant plus point. Husum is just too far away from a major hub to be able to offer that.

But political in-fighting aside, it’s an indication of a wider industry dichotomy.

Sustainable energy began with a local and regional focus that had its ideological roots in the mantra of Rio in 1992 – ‘think global, act local’.
This allowed the industry to start small and become a pioneer.

But times have changed, and arguably an overwhelmingly regional focus detracts from the wider aims of a sector that is trying to become the next big global industry.

It’s a challenge that is also seriously testing the minds of the politicians.

As policy makers started to turn to the renewable energy industry to try and fix the post-industrial malaise in Western Europe, and to become a new source of fiscal security following the failure of the banking community, it seemed logical to conflate green energy targets with economic growth.

It’s why here in Germany, and back in the UK, that so much is put in store by developing local supply chains or encouraging manufacturers to build new facilities.

On the balance sheet though, this drive to support local economies doesn’t always stack-up.

Asia still offers the lowest overheads, and over time, it will soon start to compete on quality.

Nobody is dismissing the aims of local economic growth as anything but laudable, yet the wind industry can’t solve every post-industrial problem or prop up entire city regions. The industry is still too fragile for that, and at the whim of infirm political commitments to green energy.

Over time, it may well be the case that the industry can support industrial growth on a larger scale, but forcing it into regional hubs may stifle the search for a lower cost base that in the short term the industry needs to remain competitive and sadly prove its case to the politicians.

Husum 2012 has undoubtedly been a success, but the industry can’t stand still and maybe, just maybe, it’s time to move on.

For Northern Europe, September marks the end of summer and a return to the desk, as holidays fade into memories and as to do lists once again begin to grow.

However, while executives and their teams have taken time off for a break, it’s been business as usual for the project management, operations and construction personnel, who have been keen to take advantage of the weather window.

Of course, getting the kit on the ground, up and operational is an incessant challenge. However, for the Europeans, this year it’s been more so than most; given the temperamental summer and the unseasonal wet and windy weather.

For the already stretched support teams, that’s led to a huge ramp up in the hours worked and a situation in which resources are pushed to the limit.

But this situation need not always be the case. Moreover, it’s perhaps more a telling indictment of the state of the market and its growing pains, than a true indicator of things to come.

Nevertheless, with the hours worked continuing to ramp up, for the aspiring consultancies and the project teams rising up through the ranks, it’s easy to see this new world order as the new normal. Particularly when for these small, specialist units, the hours worked all too often equates into revenue earned.

However, while that might solve short-term cash concerns, in the medium to longer term, that’s a potentially dangerous scenario. Since while profitability is inevitably only one motivating element, for any emerging enterprise it can quickly cloud wider commercial judgement.

More worrying still, is that as the reliance from developers, utilities on these smaller support service operations grows, it’s difficult for all parties to make the switch.

Teams working on the ground find themselves with less and less time to take a step back from the daily operations and get a clearer steer on where the market is headed, while those firms that have come to rely on their support find themselves increasingly at risk.

And that’s a risk not just from an operational and delivery standpoint but moreover from a wider commercial growth perspective too.

Put bluntly, as developer ambitions grow, it’s a concern if the only limiting factor is the available resource of the partners working alongside them.

However, there’s a final twist. Since for all the while that this scenario holds court, there’s little room for other market players to win work and enter the room. Players that might have plenty more market muscle but that might lack the specifics of operational experience.

At some stage, this divide has to be bridged. Particularly as the industry continues to rapidly mature.

For the teams on the coalface, that means investing time now, in better understanding this switch and making plans to address it.

For developers meanwhile, it’s a timely reminder that longer term risk and resource planning, is paramount to future success.

The news from France this week that the country is to provide a further two tenders for new offshore wind farms on Sunday, has been greeted with little more than a Gallic shrug.

And yet the two projects are in no way small beer. The first is the Le Treport project off the North French coast (705MW), whilst the second is to be located off the island of Noirmoutier on the West coast (600MW).

In most other markets, these tenders would possibly have aroused a bit more interest than they have so far. So why not here?

Perhaps it's because there’s a suspicion the main winners will be the French. They did pretty well out of the first tender, outlined for four offshore wind developments back in April.

For that tender, the only outside winner was Spain’s Iberdrola, which still found itself partnering with French firm Areva.

Of course on the one hand, you can argue the French have merely been the better executors of a European industrial policy that has sought to create domestic jobs in flatlining economies by embracing the deployment of offshore wind.

But there are EU regulations that try and set a balance, and whilst the UK still struggles with seeing circa 80% of project capital expenditure going overseas, the tenders have, more often than not, seen the most cost competitive firms, if perhaps controversially, not always the best, win the contracts.

And it’s this balance that is crucial to managing future success. The French tender winner may not always be the most cost effective; which keeps industry costs high and doesn’t encourage the market to adjust to tighter margins.

Witness an example in another renewable industry: solar. German panel manufacturer SolarWorld is doing its utmost to encourage a pan-European tariff on imported Chinese solar equipment.

Unfortunately in trying to regulate against the Chinese solar boom and protect domestic markets, governments will artificially keep panel prices higher than the market rate.

This, in turn, slows the global panel price fall that has enabled the industry to reduce its cost base. And by slowing this fall in costs, governments are forced to slow planned subsidy reductions, if domestic solar industries are to survive.

It’s a worrying trend and one that sadly doesn’t always cross the minds of the policy makers.

Planned state support doesn’t always equal secure employment – a fact that President Hollande is now only beginning to realise as mass redundancies in the French motor industry simply cannot be avoided. And it doesn’t encourage the offshore wind sector to innovate on price, either. Furthermore, the same firms doing very well will eventually be seen as politically unsupportable.

When this happens, the industry will have blundered into handing its critics a stick with which to be beaten. Beware the law of unintended consequences.

Clipboards, hard hats and fluorescent jackets. Three pieces of kit that are so fundamentally linked with the construction and the energy markets that they’re easy to overlook.

However, for the offshore wind developer and the utilities, they’re the sorts of thing that send shivers down the spine; since they’re intrinsically linked with rules, regulations and officialdom.

And perhaps most pertinently, with independent authorities asking uncomfortable (but necessary) questions that could quickly upset the status quo.

So why the worry?

In short, because despite the headway that’s already been made, utilities and developers alike remain terrified of losing their permits. A decision that, while they can to some extent help influence and steer, remains steadfastly outside of their control.

And that’s significant. Since it holds the key to not just the future of the individual project success, but more often than not, to the success of the wider business too. These then, are big bets.

Within the UK, it’s for precisely this reason that those at the top have signed up to the Offshore Wind Developers Forum, as wellagreeing to guidelines for onshore and offshore wind developments. These are both significant initiatives, since they help reduce this risk and to instil greater clarity, consistency and control.

However, to date, establishing this level of common consensus is unique to the UK.

That means that the governance is focused exclusively on one territory – albeit the one that is, for now at least, the largest and most established. A fact that raises important questions about international commonality and consensus, and that underlines the longer-term requirement for a more inclusive set of standards.

For their part, continental Europe has already raised questions about how effectively the existing UK guidelines can be monitored and policed. While in its extreme this can be achieved through permit revoke, it might be a little ham-fisted if it were the only way to make the point.

Time then, to take a fresh look at this area of the market and in doing so, to establish a more comprehensive set of guidelines that begin to bridge territorial borders.

In doing so, the market will be pushed to consider different scales of governance and to find commonality at a global, national and local level. Such a task may seem daunting and may be beyond the ambitions of the opportunistic developer. However, such standardisation can only help the future permitting process and more broadly, drive down cost.

The changing of the guard often ushers in a new era. For those on the outside, the first few weeks of these new appointments can prove to be a tense, speculation-fuelled, time.

So this week’s Cabinet reshuffle in the UK Government, and the replacement of Energy Minister Charles Henry, and Environment Secretary Caroline Spelman by unknown faces caused some intense conjecture as to the future of the wind energy industry.

The reason for much of the hand-wringing? Charles Hendry’s replacement, John Hayes, has been in the past quoted as saying unfavourable things about the wind industry.

And Owen Paterson, Caroline Spelman’s successor, has commented previously on his preference for shale gas exploitation and the suspension of green energy subsidies.

This has meant that most commentators have decided both are firmly anti-wind.

But before we decide that both appointments are looking to systematically destroy the industry, its important to bear a few things in mind.

Ed Davey, as Secretary of State, still sits at the top of the tree. And whilst he can’t act unilaterally without the support of his junior ministers, he still backs the over-arching pro-renewable stance of his Liberal Democrat party.

We don’t as yet know how John Hayes will adapt to his role. And whilst he might not be the strongest proponent of wind energy, he will have to work within a policy framework that has already committed to the technology.

And of course there is the bigger picture. Such a move may eclipsed by the wider global wind energy landscape.

The UK is currently the global leader in the offshore wind industry, but how long this will continue is very much open to debate, as the German market starts to catch up, and Asian businesses start to gear up for an offshore wind boom.

And in the US, in an election year, a decision will be made that will have far greater consequences for the global wind industry.

Mitt Romney will in all likelihood suspend the PTC for wind energy, if elected. This will overnight cause mass redundancies at the global turbine makers and a capital flight from the industry worldwide. Asia will eventually pick up the slack in domestic developments, but not for quite a while yet.

Viewed in this light, knee-jerk reactions to as yet unknown outcomes at a domestic UK level seem rather extreme. As the market matures the dynamics are simply more complex than the parlous state of individual country politics, and the institutional frameworks should be robust enough to cope.

Chinese manufacturers have had a tough ten days.

Not convinced? Consider Goldwind’s recently reported 83% fall in net profits. Or Ming Yang’s quarterly loss and its subsequent 43% year-on-year revenue drop.

Or worse, consider Sinovel’s profits – that have taken an 96% dip in the first six months alone.

Grim reading. Particularly given that however the Chinese manufacturers choose to talk up future prospects, right now the interim results tell a different tale.

All three manufacturers cite varying reasons for the current commercial blues, although in the main the thinking boils down to three core challenges.

Namely; competition, project delays and a lack of demand.

All three areas present not insignificant headaches that evidently need to be overcome and addressed. However, more broadly the thinking and rationale presents an insight into Chinese commercial strategy and future market thinking that underlines a clear divide between East and West.

As a manufacturing powerhouse, China has gained ground over recent years through its ability to be able to compete both on volume and price. This in turn has helped drive down the cost of construction and supply and in doing so, has created healthy competition that improves developer margins and reduces the reliance on government subsidies and incentives.

However, as the market evolves, so too do the battles being fought within it.

The complexities of supply and demand (and to some extent individual unit price) are no longer the challenges that they once were. And while the issue has by no means disappeared, it’s increasingly evident that it now plays second fiddle to longer-term issues associated with operations and maintenance, peak performance, and engineering longevity.

Or put another way, it’s a move away from pure play manufacturing (quantity) and a step towards a more integrated service based approach.

In many respects, this is just one of the reasons why western manufacturers – who have traditionally sold units across multiple territories and have struggled to compete on price alone - have been faster in making the switch.

An ‘innovate or die’ line of thinking that was undoubtedly front of mind at when Vestas made it increasingly clear that the business was no longer in the market for simply selling turbines.

For Chinese manufacturers this strategic shift presents a problem.

Particularly during a time when they are battling high profile international court cases, are faced with escalating import duties and are under pressure to build new and existing relationships with key overseas developers and prospects.

Sure, there’s no doubt that the Chinese have the manufacturing muscle to compete. However, the ability to strong-arm opponents won’t wash with every western would-be suitor. Much to the frustration of the likes of Han Jan Oiang, the current chairman and former chief executive of Sinovel – a man who was ranked 879thin the 2011 Forbes billionaires list and a man who, according to industry insiders, has quite the temper, to boot.

For now, the results can be explained away and fingers can be pointed. But as investor pressure escalates, don’t expect these giants to stand still for long.