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It’s often assumed that plenty of M&A activity is an inherently healthy market indicator. And, by and large, it’s something that holds true.

However, as the economic activity increases, is it possible to have too much?

There is, after all, a natural limit to how many deals can be done before one company starts to eat up its competition.

And when one business comes to dominate all others, there’s a danger that future market dynamism is lost.

A topical case in point can be found in the commodities sector, where Glencore towers above the pack.

In fact, it looms large to such a significant degree that Citigroup’s managing director once famously commented that, “…Glencore isthe global economy”.

Quite the testimonial.

For those of you unfamiliar with the business, this is the same company that started off as three traders in a flat in a Swiss town back in 1974.

Less than forty years later, Glencore announced first half revenues of $108bn. Impressive stuff.

However, what’s not clear is whether this is a good thing for the wider industry and its associated economy.

Glencore has a virtual monopoly on a number of commodities. For instance, it controls 60% of the world’s zinc trade.

Okay, so it’s not a complete monopoly, but then again, it’s about as close as you’d really be able to get away with these days.

Glencore is already a behemoth, and if its protracted merger with Xstrata (currently being held up by shareholders) were to come off, the financial press would run out of adjectives as they attempt to articulate its sheer size and scale.

The blasé attitude of the CEO, Ivan Glasenberg, towards the merger is emblematic of the power and control he holds. There are, after all, plenty more deals to be done. For the moment, at least.

For many, the commodities trader and the wind energy markets are miles apart. And certainly when it comes to the financial resource and potential firepower, then that certainly holds true.

Nevertheless there are lessons to be learnt, and the saga currently being played out in Switzerland offers an opportunity to reflect and to learn.

Let’s be clear. This is not simply a cautionary tale. Moreover, it’s a chance to assess and extol the virtues of a young, dynamic industry where competition is rife and monopolies are sought but far from certain.

There remain many market niches to be filled. Competition is healthy, and that makes for market innovation and dynamism, rather than one at the mercy of an omnipotent player.

The recent, well-documented struggles of Vestas should serve as a warning that the futures of even the biggest protagonists are not etched in stone. So too should the poor recent financial results from oft-lauded Chinese competitors, including Goldwind, Sinovel and Ming Yang.

Will one company emerge to become the Glencore of wind? Or will, perhaps companies come to dominate only certain parts of the growing supply chain?

For many, either scenario may seem the stuff of pipe dreams. But then again, as those three traders demonstrated, for aspiring souls, the only limit is ambition.

As an emerging market expands, so too does the multitude of businesses that have grown with it. It’s not rocket science, but then again, it’s not child’s play either.

What’s more, as industry ambitions escalate, some of the more entrepreneurial companies gain an early leader advantage and, in the subsequent feeding frenzy, forget to keep one eye on the road ahead.

Staff get hired. Teams get built. And new briefs roll in.

Great news for business and great news for senior management too – who all too quickly become focused on margins, efficiencies and incremental refinements – while product innovation and expansion into new territories is left to play second fiddle.

It’s a familiar pattern. And it’s one in which the wind energy sector has been by no means immune.

Only that’s not where the story ends, because as the market begins to self-regulate and as businesses cut overheads, fall back into line and reshuffle the executive pack, there’s a wider industry dynamic that comes into play.

And it’s something that makes many senior executives squirm.

Particularly those who might be confident in their ability to offer specialist sector expertise but that might not be so comfortable when it comes to managing the complex dynamic of the company’s wider industry reputation, influence and brand.

Yes, influence and brand. In a rapidly expanding market, they’re two words that are loved and loathed in equal measure. And for the vast majority, are concepts that are tucked neatly under the carpet; left to the reserve of the dedicated few.

Only that’s not really how it’s meant to be.

What’s more, despite the legacy and the market noise, it’s often not a genuine reflection of exactly where the true power, innovation and leadership really sits.

So it’s with this in mind that today I’m very pleased to launch a project that we’re calling, the Top 100 Power People.

It’s an entirely independent report that will unearth some of the as yet unsung market heroes and that will assess and quantify where the power lies and perhaps most importantly, who really calls the shots.

The report will be published in December and between now and then, we’ll be asking for your input and views. Who do you think will be the next generation of leaders – the as yet unsung heroes and the industry influencers of tomorrow?

August is a funny month. For much of the western world, it’s a time traditionally associated with the summer holiday; offering respite from the daily grind.

As a result, irrespective of whether you’re finding time to leave the desk, it’s almost inevitable that the inbox will get a little lighter and that the to do list starts to shrink.

And all in all, it’s really no bad thing. Particularly for those usually accustomed to a seemingly never ending stream of activity and commercial battles, as new ventures get shaped, developed and pushed.

It offers an opportunity to stop and think. It offers a chance to take a step back from the coalface and it offers a moment – just a moment – to pause and reflect.

Only here’s the thing. As the industry temporarily takes it foot off the gas and as the stream of company announcements and often all too excitable internal developments dial back, it would be a fallacy to think that everything’s stopped.

Far from it. And that’s particularly the case when it comes to the delicate issue of acquisitions – both in terms of individuals on the move and more broadly, in terms of the buying and selling of wind energy assets, pipelines and portfolios.

Indeed, in the last thirty days alone, we’ve already seen a host of key deals rise to the surface.

Take, for example, DONG Energy’s acquisition of three German wind farms from PNE. Or look to Velocita’s acquisition of a 450MW UK pipeline, in an unexpected deal with the team at 2020 Renewables.

However, this summer, it’s not just the acquisition of wind energy assets that has been generating the headlines and turning heads. Rather, it’s been the buying and selling of some of the businesses operating within the sector, that’s piqued interest.

The PMSS-TÜV SÜD deal is a case in point, but it’s by no means exclusive. And for many, it’s thought to be just the tip of the iceberg, particularly at a time when independent outfits look to enter the next phase of corporate evolution and growth.

For the buyer, these sorts of deals naturally offer a quick way in which to suck up market share, tap into an established client base and to cash in on many of the potential benefits of operating (and being seen to operate) in the sector.

However, not all marriages are supposed to be. And while we’ll undoubtedly see a rush to the altar from many rising stars over the final quarter of 2012 and into 2013, as some of the early sector acquisitions now demonstrate, there’s more to picking partners than the size of the cheque.

Lindo maravilhoso!

Well, yes, quite. For while us up-tight Brits aren’t known for our gushing enthusiasm, for South America, and for Brazil in particular, it’s a different story – especially when there’s much to celebrate.

In 2014 Brazil plays host to the World Cup, with the international jamboree that is the Olympics following just two short years later.

Both sporting spectacles require some serious infrastructure and investment and both are expected to provide the country with an economic shot in the arm that will help spur future growth.

And in good time too. After all, with Brazil’s economy having slowed to a crawl over previous years, the country that was once poster child to all emerging economies has found itself increasingly hampered by inadequate infrastructure (predominantly when it comes to roads, rails and ports) and a substantial shortage of skilled workers.

It was because of this that this week’s $66bn stimulus package – the first of many anticipated in the second half of 2012 – provided a welcome national respite and demonstrated another positive step to put Brazil back on the path to growth.

For clean energy, it also spells good news. For Brazil has long been recognised as one of the hottest tickets for wind power, with the country expected to add almost 1.5GW in 2012 alone – before repeating the trick again in 2013. This, set against a meagre few hundred MW all the way back in 2010 demonstrates much potential. Provided they can get the basics right.

As the challenges in the ports and with its container-shipping network demonstrate, delays are common, costs are high and the infrastructure needed to handle and transport large, heavy duty kit around the country is problematic at best.

Combine this with the challenge of actually hooking the farms up to the grid, with overcoming import tax issues and with an economy that has only recently started to encourage overseas business to invest and you’ve got no small task.

Nevertheless, it’s a task that remains wholly achievable. And as some of the bigger players in the market have demonstrated, the margins can present a compelling case. (Just don’t mention the ongoing Sinovel/Desenvix debacle.).

Whatever the case, with manufacturers already showing the way, it is no surprise to see the supply chain start to follow.

However, how much success the supply chain has is entirely dependent on its long-term commitment to the market, its integration into the local economy and in its ability to listen to the specific wants and desires of its local customer base.

Many support services firms show healthy optimism when faced with entering new markets – believing that many problems can be fixed along the way.

That may well be true, but while the Brazilians may say, “…fique tranquilo…” others may not have the ability to simply relax and forget about it.

It’s been a week in which Dutch-owned grid operator TenneT became the popular whipping boy as the challenge of German offshore wind connections rose again to the fore.

As German grid regulator BnetzA bought a case against TenneT following a complaint by German wind developer, Windreich, over a connection issue, it brought into focus the complexity of having a myriad of actors attempting to deliver a common goal.

It also warrants a look at some broader themes including the privatisation of the energy infrastructure and the ability of private firms, with shareholders to answer to, to provide the best service.

Most commentators will suggest that privatisation frees the state from the burden of providing hideously expensive services. French state railway business, SNCF, for example, runs consistently at a loss and has to be heavily subsidised.

Conversely, though, one has to ask the question as to how enthusiastic the Chinese investors in Thames Water are in having to spend a huge amount in upgrading the UK’s ancient water infrastructure and stopping leaks that see roughly 500million litres of water lost per year.

It’s an argument that returned to plain view in the UK this week following the failure of Richard Branson’s Virgin Trains business to secure operating rights for the West Coast Mainline.

The tender was handed to First Great Western, following the firm’s rumoured ability to put in a bid of an extra £1.5billion and £200million in guarantees over and above the Virgin proposal.

In the long-privatised railway business, and with a Government looking for the biggest return, the First Great Western bid was always going to be a winner.

But it raises questions as to whether the highest bidder is always the most suitable candidate for the job. Something we will undoubtedly see played out in the renewable energy industry.

Returning to the issue at hand, TenneT - a Dutch firm that bought the German grid from E.ON in 2009 - might not have the drive to stretch itself to raise the 15 billion Euros it is estimated to cost to connect German offshore wind farms to the national grid.

There are reports that the German Government would be keen to see TenneT sell its German grid business to some German insurance firms, such as Munich Re, which this week bought three UK onshore wind farms.

This would in theory free up the funds that the industry needs, whilst passing control to a domestic business.

Whatever happens in the coming months it’s not a situation that the developers, TenneT or the German offshore wind market can tolerate indefinitely.

In the aftermath of the Second World War, in a practice that became known as the cargo cult, Micronesian tribes would clear landing strips in the hope of attracting overflying aircraft that they believed would bring wealth and prosperity to their communities.

In a somewhat crude analogy, it was something that was bought to mind following recent UK Government announcements regarding wind energy supply chain and industrial policy.

No one is under any doubt of the potential and the possibilities that the market presents. And there’s certainly no shortage of opportunities to track down chase (and to pour money into), either.

Rather, it’s that complex issue of delivering against targets, promises and plans – while all the while ensuring that an operation turns a profit – that’s get’s people scratching heads.

In its most simplistic state, this is of course capitalism at its best. After all, the multitude of new market entrants that continue to flood the market demonstrate one the clearest indicators yet that the entrepreneurial spirit remains alive and well, despite the economic gloom.

However, as the market diversifies and as the wind energy sector in particular fights battles on multiple fronts, it’s sometimes too easy to be busy, for the sake of being busy. And being busy doesn’t always necessarily mean that what we’re doing is right.

It’s because of this that the most ambitious market movers won’t have given much time to yet another letter calling for greater clarity in the sector – judging instead that if the incentives aren’t already in place, then there are easier paths to follow.

Lobbying for an improvement in incentives certainly has its place and is vital if we are to keep the wind industry in good health. However, for the canny entrepreneur, that’s looking for early advantage, it’s an area where attention quickly starts to wane.

And that’s where the real danger lies. Because as the market diversifies and as the disconnect grows between those early pioneers and the wider industry and its supporting supply chain, there’s the very real possibility that the focus shifts from what the industry needs, to what people think the industry needs.

That’s why the news late last week that Narec, the UK’s national renewable energy centre, has completed construction on its new 100 metre blade testing facility is of interest.

The facility, that is part of an £80 million government investment on the Northumberland site, is the second of three structures to be completed at Blyth.

It’s a site that offers much potential. And provided it’s addressing the precise challenges that the manufacturers and the market face, then the deals will surely follow.

Unlike those Micronesian tribes, an investment of this nature means that Narec has had the opportunity and foresight to truly understand exactly what it’s getting involved in.

The landing strip has been cleared and the red carpet is being rolled out. In a year where the UK has a laser focus on infrastructure legacy and longevity, let’s hope that the team at Narec truly understand who’ll be setting foot on the tarmac.

A good price doesn’t always make for a good deal. At least that’s been the lesson for UTC as it finally offloads troubled turbine manufacturer Clipper Windpower from its industrial portfolio.

As the back-story goes, UTC bought a partial stake in Clipper to find an easy way into a market in which it didn’t have any experience.

At that stage Clipper had big plans: A 10MW offshore turbine, named Britannia, was to be built at a brand new facility in the UK. The project even had financial support from DECC and the Crown Estate and seemed to be a dead cert.

But UTC got cold feet about the future of UK offshore wind, particularly as it looked to come up against strong competition from Siemens, Vestas and Gamesa. The project was quietly dropped and the funds returned to the UK Government.

By this stage UTC had been forced to buy the remainder of the firm, reasoning that its better to have control of the business you’re lending vast sums to. But without its ‘next big thing’ in the offing, things got steadily worse for Clipper.

It would of course be unfair to single out Clipper as worse than any other turbine manufacturer – after all, most European and US firms are finding the market a tough place to operate in right now. However, it goes to show that even with the industrial might of UTC, Clipper couldn’t be made to work.

It’s a brave buy by Platinum Equity too, the new owner. There are rumours that the PTC may be continued, but either way, 2013 is still going to be a light year for wind projects in the US.

But judging by Platinum Equity’s track record of buying companies and investing in their operational assets, rather than just stripping them back to their most profitable (as practiced by some PE funds) logic dictates we’ll see Clipper looking to compete in the European markets again in the near future.

So what does this chapter in the wind energy industry tell us?

Well, just because the numbers stack up on paper, the deal isn’t always right. Mergers and acquisitions in this market will always be about more than just the financials. They’re about attaining synergies and w orking relationships that extend beyond the corporate mindset of the management.

We’ll undoubtedly see more mergers, acquisitions and company divestitures in the market as the industry matures. However, as the UTC saga demonstrates, the ones that will truly lead to long-term sector success will be those that look beyond the balance sheet.

Towards the end of July a report was published that, candidly, you’d be forgiven for having overlooked.

Authored by a specialist UK engineering consultancy, it took a closer look at the supply chain for offshore wind farm power export cables.

In it, the author and his team assessed whether existing cable manufacturing capacity was sufficient to meet the needs of developers operating in the space.

As I say, since the cable and transmission market isn’t known to set many pulses racing, I’ll let you off the hook if the study was initially overlooked.

However, I urge you to take another look. Since while the specifics of the report might not necessarily be of interest, some of the broader conclusions are wholly applicable to the vast majority of us. Particularly as individuals and enterprises throughout the wind energy sector get to grips with the challenge of managing and understanding the true complexity of supply and demand.

Of course, the report cited many of the usual common themes.

China cropped up as a market that offered much promise to European developers. Although while the market offered a natural route for reduced costs and increased supply, the all too often cited concerns regarding quality and proven market experience remained.

Then there was the issue of tackling system voltage. A technical bit of wizardry that would – by upgrading many traditional AC lines to a higher power transmission – create the possibility of reducing the number of cables required and by proxy, creating a longer term saving both in terms of time, equipment and money.

However, tackling this issue of cable supply (or lack thereof) wasn’t all about reducing the amount of kit required. Moreover, many of the suggestions involved no such technical genius but moreover a healthy dose of common sense.

Take for instance the issue of cable rating. Traditionally, a very conservative approach is adopted here, whereby the cables that are installed far exceed the realities of a daily operating load. Instead, they’re based on past use, whereby transmission loads were far more constant and where as a result, corresponding energy loss (often through heat) could be equally high.

Not so with wind farms. And not so on many traditional technical assumptions that have simply been pulled across from previous power and transmission experience.

Time then, for some fresh thinking and a new approach. And time then, for a new set of common standards. An initiative that would help to bring some new thinking not just to the technicians but to the procurement and management teams working at all levels and battling with the challenges of supply.

As an industry we’ve slowly started getting better at setting targets, raising standards and looking further into the future. That’s all well and good.

However, without radically rethinking the way in which we tackle the wider issue of supply and demand we’re in danger of getting bogged down in the detail. Perish the thought.

Prevention is better than a cure, reads the old adage. It’s an almost universal truth that should encourage policy makers to sit up and take stock of this week’s blackouts in India.

Couldn’t happen in Europe? Don’t be so sure.

Yes, in the case of India, there have been a number of political failures in addressing the country’s power needs over the past 10 years, but whilst India’s rapid urbanization has caused a unique headache, it has neglected to address the core issue at hand: the grid.

But that isn’t just an Indian problem, and unlike some editorial that has castigated India for failures in governance, it should be borne in mind that the Europeans are only just waking up to addressing the problem.

In the UK this week, the National Grid confirmed plans for a route to connect the wind farms of west Wales to central England.

And whilst additional capacity is to be welcomed, particularly from renewables, until it can be adequately distributed, broader efforts to reduce carbon emissions and provide energy security will be rendered meaningless.

And laudable moves to present the problem at an international scale – such as Friends of the Supergrid – continue to look abstract, pushing for an intangible ideal.

But along with pan-European renewable targets, a cohesive, international, smart grids are an essential part of the future energy space.

Before we look to blame India’s problems on a policy failure, or ascribe it to a set of problems unique to a rapidly emerging economy, we should heed the lessons of taking a piecemeal approach to grid infrastructure and development.

And perhaps more broadly, remember that while a diversified and balanced power portfolio for any aspirational economy remains key, without the political will and infrastructure to support it, it's dead in the water.

As public relations coups go, the news that King Juan Carlos of Spain, the honorary country president of conservation group WWF, had been elephant hunting in Botswana won’t win any prizes.

After all, here was a man who demonstrated clear disregard for the ethics and values of an organisation that, for over forty years, he allegedly represented.

And clearly whilst its morally repugnant to shoot elephants, the whole palaver teaches us about more than just animal rights. Rather, for the wider commercial markets it raises some interesting observations about the principles, ethics and interests of people in power.

Why? Put bluntly, because the way in which executive leaders behave – both in and out of the boardroom – matters more now, than ever before. It’s simply no longer acceptable for executive interests to be anything but aligned with the wider commercial interests of the business.

This might sound like it’s stating the obvious. But trust me, it’s incredible how quickly this can get forgotten. The financial services sector – that itself has been put through the mill over the past couple of months – recognises this better than most and the energy markets aren’t immune to it either.

Who can forget for instance, the time when Tony Hayward, former head of BP, spent the day sailing with his son, while the business got to grips with one of the biggest oil disasters in living memory.

Irrespective of how badly the poor chap had been briefed, it simply wasn’t appropriate to be seen to be perched on the edge of a boat.

What was needed was empathy, understanding and perhaps, just a sense that the person at the very top was rolling up their sleeves and was getting stuck in.

For the wind energy markets this is an important lesson, particularly as a fresh influx of capital begins to sweep through the market and the priorities and attitudes of senior management begin to shift.

Make no mistake, this is not about rediscovering any previously forgotten, wholly altruistic roots. Rather it’s a question of staying true to what an industry believes in and, in doing so, protecting the long terms capitalist interests and ambitions of this emerging energy economy.

Twenty-five years. It’s an oft-bandied around timeframe in renewable energy, and one that is used in many different contexts – be it financial support, procurement, research and design or equipment lifetime.

But why? Yes, choosing subsidy regimes over a 25-year lifetime makes sense for Governmental macro-financial planning, but it forces industries into cycles that may not be most appropriate.

One only has to look at the US for an example of the boom and bust scenarios created by Governmental support for wind energy.

And as we’ve seen in the UK this week with the wrangling and eventual deal on ROC revisions to onshore wind, these support cycles can make investors and industry practitioners very nervous.

It’s not just all about the financials, either. If we look at industry procurement, equipment is commensurately supplied with 25-year operating lifetimes. But this doesn’t always work in practice, with some turbine gearboxes failing much earlier, meaning the insurance industry has to step in if the warranties are not supported.

Conversely, a 25-year period doesn’t always ensure the fastest means of innovation either, as manufacturers see order cycles in the longer term, rather than continually striving to improve in time for the next phase.

And it’s this question of life cycles and support that leads many people to forget the overarching aims of renewable energy - that is to combat climate change and enhance energy security.

It’s why the revised tariff changes are actually disappointing. With the deal struck to placate the Treasury for a 10% cut, the banding is again up for review in 2013.

Hypothetically, had the banding been cut by 25%, but with the guarantee that the revision would stay until 2050, industry responses would probably be far more positive.

The 25 year time frame also raises a ‘what then?’ question. It’s surely time to ask the long-term questions about wind energy.

Will wind farms be reduced in size as new technology enables increased generational capacity from fewer turbines? Will storage and the supergrid enable wind to be the most efficient renewable?

The answer may not yet be clear, but like the defence and automotive sectors, the wind energy industry needs to look beyond 25 years to really scope its future.

There’s a lot to be said about this so-called age of austerity.

No, really.

For most, it brings a series of not insignificant challenges, as budgets shrink, cash gets stuffed away and the market develops a sudden reticence to spend.

However, it’s only through such commercial pain that some companies are forced to re-evaluate what they do and why they do it.

Perhaps then it’s no surprise that as budgets get squeezed, output dips and company results and profitability comes under increasing scrutiny that, at the very top, there’s a changing of the guard.

And here’s the thing. For many, this shuffling of the management pack actually makes a lot of sense.

As short-term sales suffer, differences between senior executives and their teams quickly rise to the surface. Company strategy gets called into question, future expansion and investment plans get re-evaluated and assessed and, in most instances at least, a business stops to think.

For some, this brief period of reflection is vital to secure long-term commercial growth and, as such, can be wholly beneficial.

Does Manager X really have a handle on their particular area of operations? Is Director Y really likely to hit those all-important quarterly targets? And if the individuals aren’t performing – is it the brief or the individual that doesn’t fit?

A potential benefit, then. Particularly when working in a fast-moving market.

However, for others, it’s not always quite so clear-cut. And while management team reshuffles can often start with the best of commercial intentions, if left unchecked then can prove a dangerous distraction – shifting the gaze from the factory floor just when that focus is needed the most.

Now let’s be clear. Hiring and firing has been and always will be a deeply political process – and only ever partially based on an individual’s true performance.

As such I maintain that it’s a challenge for anyone – at any level – to make a decision that’s genuinely focused on the exclusive interests of the firm.

However, irrespective of this, these difficult decisions have to continue to be made and a period of economic austerity often offers a commercial catalyst that many might not usually admit that they really need.

Sometimes, there’s never a good time to make a difficult decision. Forced or not, perhaps the current market malaise offers just the thing to instigate a changing of the guard?

There was more uncertainty in onshore wind energy this week, following the Government’s mixed messages as to its plans to reduce the Renewable Obligation subsidy for onshore developments.

At present, the industry is still no clearer as to whether ROCs will be reduced by 10%, the level favoured by Climate Change Secretary Ed Davey, or by higher levels, allegedly being pushed for by the Treasury.

Rumours abound that we may hear the final decision during the Olympics, conveniently whilst Parliament is in recess.

Given the delay, there’s clearly some wrangling going on.

But with the recent revolt by 100 backbench Tory MPs over onshore wind, and the danger that this poses to tearing apart the wider coalition, our money is on the rate cut being at a higher level.

The question then, is to what extent this cut will slow wind energy production.

CBI Director General John Cridland stepped into the debate to warn that drastically cutting green subsidies would undoubtedly threaten jobs and growth.

And for the fund community, particularly the more activist elements, onshore wind will probably cease to be of interest as an asset class. The exception may be pension funds, which can afford lower returns over a longer period.

In recent years onshore wind has certainly proliferated, but despite certain large projects being given the go-ahead, there are some challenges in the market that seem to be slowing the impetus before the ROC reduction was even discussed.

Planning complications, grid connections and site accessibility have conspired in some cases to make councils think twice before granting permission to particular projects.

So coupled with the ROC reduction, DECC targets of onshore wind growth rates of 13% a year seem unlikely.

Which, really, should spark a debate as to what onshore wind energy can now realistically deliver to the renewable energy mix. That inexorably leads to more questions as to overall green energy policy and which other renewable sources need to be expedited to make up the shortfall.

Ultimately, the subsidy cut won’t stop the industry in its tracks, and it may even encourage cost cutting in some processes.

Additionally, in the short term, it will force developers to ensure that they only scope the best projects with strong wind profiles.

Long-term though, and given the relatively slow pace of offshore wind developments, the Government has some difficult questions to answer as to how it hopes to reach 18GW of wind energy supply by 2020.

In European offshore, all eyes are on the prize. And with just under 4GW of installed capacity, the continent has got a mountain to climb if it’s to increase that figure tenfold in just seven and a half years.

However, it’s not just within Europe where offshore wind energy ambitions are running high.

In China, there’s a similar appetite for growth. And at this early stage it’s unsurprising that a country which has already achieved a whopping 62GW of installed onshore wind capacity is keen to repeat the trick.

Currently the People’s Republic has two early stage projects in the water, with Donghai Bridge having entered operations in 2010 and with the 131MW Longyuan Rudong Intertidal project due to enter operation later this year.

However, according the Global Wind Energy Council, that takes China’s total offshore installed capacity to just 258MW – small change for a country that has demonstrated such a show of strength when it comes to onshore operations.

And that’s not all. With the second round of bidding for offshore concession projects due to have taken place in the next couple of months, but now widely expected to be delayed, there’s trouble afoot.

In the ports, domestic businesses have made it clear that they see little progress within the local market and little incentive from government to try. As a result, many are sticking to what they know best – namely, winning large-scale orders from the West and exporting overseas.

That keeps manufacturing output high and leaves little capacity for the domestic market – all the while making the 5GW 2015 target seem all the more elusive.

There are however, a couple of significant developments that might just help tackle this hiatus and that in doing so, would undoubtedly change the dynamics of the international market once again.

The first is the wider appetite for offshore within the region.

South Korea has already set some impressive targets to help bolster its offshore growth and has developed an impressive ability to forge strategic commercial partnerships with the West. Japan too, is keen to dip its toe in the water, with offshore renewable energy widely expected to play an increasing role in its future energy mix.

And the second concerns future investment and finance.

Armed with competitive finance packages that undercut European rates and help manufacturers get turbines in the water, China has the potential to quickly boost its offshore market share, learn lessons and thereby reduce its domestic development phase.

For Europe, this cheap finance is highly competitive, often beating European finance rates, and for the developer it thus presents both an opportunity and a threat.

In a market keen to cut costs, cheap debt certainly helps. And utilising relatively unproven and untested turbines – in European waters – is high risk.

However, make no mistake, risk is relative. And as the likes of Sinovel increase their European market share, someone will roll the dice.

More unrest amongst the turbine manufacturers this week as Ming Yang was named as the third firm rumoured to be circling Danish turbine manufacturer, Vestas.

The Chinese firm swiftly moved to deny the reports in the Chinese national daily newspaper, Caixin, stating in a Bloomberg report that ‘this is not happening so far’.

The news follows earlier reports in April that Sinovel and Goldwind were said to be preparing a joint takeover bid for the troubled firm.

Regardless, as the largest private wind power manufacturer in China, the move may be a stretch for Ming Yang, especially following the $18.5million loss the firm saw in Q1 2012 and the obvious slow down in the domestic Chinese wind market.

But for Vestas the potential suitors for a takeover must be running out. If Ming Yang, Goldwind and Sinovel have all kicked the tyres and walked away, there can’t be too many other market protagonists who would be interested. The South Korean majors – Hyundai, Doosan and Daewoo may have the balance sheets, but not the market access to make the deal work in the long term.

Takeover rumours and some well-publicised claims that the firm is having to restructure its debt on the orders of its lenders, have meant the Vestas share price continues to yo-yo.

Coupled with the cancellation of its UK factory in Sheerness, the pressure is back on the Danish firm to inspire the confidence of the markets.

And in times where firms that were too big to fail have indeed failed, then this needs to be a priority.

Vestas has maintained a dignified silence throughout, but if it is to remain on a largely even keel, it needs to ensure that the next raft of news from the business is entirely positive.

It is estimated that, between now and 2020, approximately £8 billion of investment is required in order to connect offshore wind farms to the onshore grid.

And that’s just for those located off the UK coast. Forget Germany, forget Denmark and don’t even factor in France. That’s an £8bn single country investment.

In short, it’s no small cheque. And it’s no small construction and installation challenge either.

Currently investors are bidding to buy up existing assets, with a regulated licence issued by Ofgem, to become an offshore transmission owner (OFTO) – a process that enables them to transmit electricity from the sites to the shore.

It’s a competitive bidding tender and the first round of this initiative has already achieved some pretty positive results.

For the first four licenses, representing assets worth £254m, there was a good level of interest despite financial market volatility. The cost of debt was pegged at just above 2% - the sort of thing typically associated with UK gilt yields – and the assets have already been recognised as an attractive investment for long-term institutional investors. An attraction that’s thanks in part to a guaranteed a 20-year inflation proof income (although there’s no clarity on what this means for the end user just yet, mind…).

So why the potted history?

Well, as offshore wind energy construction escalates and as increasing numbers of projects and plants continue to come online, for many it’s only now that the sheer size and scale of the transmission task is becoming apparent.

This, set against the wider European challenge of not just building out existing grids, but fundamentally re-thinking the way in which energy in the future is transmitted and regulated, presents quite the headache.

And moreover, it requires developers, investors, utilities and the wider manufacturing community to recognise this key macroeconomic shift.

It’s because of this that in the next couple of months we’ll be giving this topic some further thought. As such, if you’ve got any views that you’d like to share, then please share your thoughts below.

Eddie O’Connor’s ambitions for a European supergrid may be creeping further to fruition following plans by his company, Mainstream Renewable Power, to develop 5GW of onshore wind capacity in Ireland for the UK grid.

The project would not be in any way connected to the Irish national grid, but instead provide all of its power to the UK through a new interconnector to the UK mainland.

It’s an interesting project, and one that proves that certain developers are starting to think more about international power exports.

And it also raises some questions as to the future development of the grid. Will the largest leaps in the technology instead be made by private developers looking to bring on board wind projects from other locations?

Given the current problems experienced in Germany with grid connections, and the slow development of the OFTO regime in the UK, there is certainly a case for developers to look at their own connections.

Financing projects like this, though, will be tricky.

According to reports in The Irish Times, Eddie O’Connor names China as a potential source of future investment.

Attracting either Chinese manufactures to come on board as equity partners, or securing the interest of Chinese and other Asian sovereign wealth funds would be a coup for such an ambitious project.

If he manages it, Eddie O’Connor will achieve a significant new revenue stream for Ireland, enabling it to capitalise on a new source of export revenue and provide an additional lifeline for the hard-hit Irish economy.

And at the very least it should provide an interesting benchmark for future ambitions for a transnational green energy grid.

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.

So long Sheerness. At least, that’s as far as Vestas’ plans for its European offshore factory site are concerned.

As early stage reports made clear, the Danish manufacturer has not renewed an option agreement that it had had in place and as a result, is scrapping plans to build its V164-7.0MW units in Kent.

However, for those working in the market, the development wasn’t quite such the surprise that some would have led you to believe.

After all, with the manufacturer struggling to return to profit, and with the business continuing to streamline its manufacturing model - focusing on fewer, more profitable turbines – the desire to set up an entirely new facility and to tool up, would have been a tough sell. Even to the most thick-skinned of investors.

Combine this with the small challenge for Vestas of actually booking a 7.0MW order and for Sheerness, it’s easy to see why its card was quickly marked.

Undoubtedly, both government policy and ongoing financial uncertainty certainly played its part. And in this regard it’s worth noting that an increasing number of manufacturers and investors are demanding greater clarity on UK energy strategy before they commit fresh funds.

However, to suggest that the market is exclusively dependent on the whim of policy makers and bureaucrats is a dangerous set of assumptions to make.

After all, let’s just remember that while governments can (in theory at least,) help reduce barriers to entry and provide a credible framework for growth, they’re not the ones who will roll their sleeves up and do the actual job.

That means that when it comes to building the networks and winning the contracts, it’s the manufacturers and those working in the thick of it that will be calling the shots.

And that involves making tough decisions not just when markets are fully up and running and operational but also right now – when the foundations, the factory’s and the facilities to support the supply chain are already being put in place.

One of the big arguments within European wind at the moment is that not enough is being built at sufficient speed and that even the stuff that is already underway, is taking too long to come online.

However, while speed is certainly of importance, so to is the need for balanced and manageable growth.

As the North American energy market has demonstrated time and time again, it’s all too easy to slip into a cyclical scenario of boom and bust.

That type of market might foster talent and work for some; however it does little to alleviate long-term sector uncertainty.

Plans for Sheerness might have been put on ice for now but so long as ambitions for long-term prosperity remain, the sky has not yet fallen in.

For the markets, June is always a busy month. Although none more so, it would appear, than if you're the British Monarch.

What with all the pomp of the Jubilee (and an Official Birthday), the Royal Family has certainly done its bit to lift the nation’s mood and to encourage some spend.

Only that’s not all. Last week the Crown Estate, the company that owns and manages the sovereign’s UK land and property portfolio, announced net profits of £240m and a growth in total capital value to just over £8bn.

What’s more, the marine estate division – that covers the seabed up to 12 nautical miles from the shore – delivered some of the best performance yet.

Investment in offshore wind farms (combined with a demand for dredged aggregates, used in construction) increased divisional growth by almost a quarter and generated revenue of £55.6m.

No small change in the current economic climate. And exactly the sort of performance that helped deliver an overall group gain of 11% from 2011.

Impressive stuff. However, step back from the specifics of the Crown Estate and the story becomes all the more compelling.

Throughout Western Europe, farmland and agricultural values have, over recent years, consistently outperformed almost all other areas of the property market. A peak performance that is in part supported by higher soft commodity prices, but also supported by a wider move towards wind and solar.

And that’s an important shift. Since it means that it’s not just high profile property portfolios that stand to gain.

Moreover, European landowners have started to capitalise on new ways in which they can register returns – cashing in on what was previously thought of as relatively low-grade agricultural assets.

All in all, a good deal for the a-typical asset-rich and cash-poor landowner who is invariably on the lookout for ways in which to diversify future revenue.

And what’s interesting of course is that in any smart deal, the focus is not on the incremental numbers per se, but rather, on the strength of the relationship, the length of tenure and the term.

With manufacturers and developers expressing growing unease at the UK government’s handling of the Electricity Market Reform and with prospective manufacturing hubs increasingly finding that they are bidding against each other and in the process, cannibalising rates, perhaps there’s a lesson to be learned.

Short-term gain may register some swift returns, but as the latest Crown Estate numbers show, it’s only through an ability to demonstrate genuine empathy and understanding of a market that portfolios can truly expect to gain.

Let’s just suppose for a moment that Oliver Letwin knows something that we don’t. That is, UK onshore wind will be subsidy free by 2020, and that the forthcoming reduction in renewable obligation certificate's (ROCs) is likely to be nearer to 25%, rather than the 10% favoured by Ed Davey.

Such a move certainly seems to be the Treasury’s agenda, keen to keep the support of the back-bench Tory right.

Nick Clegg, speaking in Rio, was keen to raise the Lib-Dem voice in the debate, stating that although subsidies weren’t set in stone, early stage support went a long way to developing the appropriate technologies.

The Daily Telegraph’s Benedict Brogan suggested that were ROC support to be removed from onshore wind then the ‘march of turbines’ across the UK landscape would be halted almost immediately.

Perhaps so. Much of the unofficial feedback from the American Wind Energy Association's annual conference was of a much quieter event than last year, as businesses hedged their bets against the potential for the entire removal of the Production Tax Credit (PTC).

But either way, the future state of the ROC mechanism is something that should be very clear when the UK Energy Bill is finally published.

Whatever the final plan for onshore wind, it should leave little room for speculation or uncertainty. Developers won’t get involved if they are unlikely to be able to sell their projects to secondary investors, particularly if the rewards for taking on the costs of construction are steadily falling.

There are also some questions as to the continuation of the ROC mechanism as the best method for supporting renewables. As an incentive, it’s somewhat complex, something that adds to the misperception that wind energy is an opaque way of investors becoming wealthy at the expense of consumers.

We’ll have to wait until the Autumn for the full detail. And while it's easy to look over our shoulder and dismiss what's happening in North America, let's not forget that these are still uncertain times for UK wind.

Last week at Global Offshore, aside from the standard statistical bun fight, there was some promising talk of cost cutting (both from government and from the industry body) and there were a handful of project updates and developments.

However, look a little closer and I’m not convinced that it was the turbines and the technology that, this time at least, was the real draw.

Rather, it was the escalating issue of the grid.

As we outlined last Wednesday, the global electrical interconnection market has already started to heat up and there are already a number of links underway and in development that now criss-cross the North Sea.

This, combined with Germany’s recent commitment to speed up its investment and expansion of its power network (enabling electricity to be carried from the coast, to the country’s industrial heartland), suggests that finally things are starting to get serious.

And in good time too. Currently there is approximately 4GW of offshore installed wind energy capacity operational in Europe; a figure that is expected to increase tenfold between now and 2020, if the continent is to hit the magic 40GW.

Whether it does of course, is a subject that’s very much open for debate, with the advocates and the anti’s arguing one way and then the other.

However, to get hung up on the semantics is to miss the point. A target is a target. And for as long as the industry keeps marching towards it, then the grid infrastructure and transmission networks need to do so, too.

And make no mistake, this grid lark matters. Without an effective and fully operational network, the revenue stream disappears. And that’s a heavy burden to rest on the shoulders of the cabling and HVDC community.

So how well is the market getting on? Well, while the problems at TenneT have been well documented over the past twelve months, considerable ground has been made.

Yes, cable damage and cable failure continues to present a substantial financial and logistical headache for many. However, the first steps towards tackling this most complex of challenges has already been taken and there’s an increasing argument to suggest that the investment in the cable and transmission markets has already facilitated future economic and manufacturing growth.

It’s the next bit though, that gets tricky. Since, as Friends of the Supergrid argued in its latest report published only last week, it’s time for a better regulatory framework. Great in principle. Let’s just not let the politicians meddle in this most entrepreneurial of markets, too much.

It is achievable. The offshore industry can reach a cost base of £100/MWh by 2020. That at least is the conclusion of the Offshore Wind Cost Reduction Task Force (CRTF), a body set up at Government request to investigate realistic cost cutting in the offshore wind industry.

The premise of the CRTF’s establishment was laid out in the Government’s Renewable Energy Roadmap of 2011: If the industry is to fulfill its ambition of 18GW of offshore capacity by 2020, then the costs simply have to come down.

The subtext was clearly that unless the industry could start cutting costs, the supporting subsidy regime would be increasingly hard to deliver.

The political arguments for supporting an environmentally and socially sound industry regardless of up front costs is a debate for another time, but the pressure being applied is obviously substantial, particularly given that cost reduction dominates industry debates and conferences – such as this week’sRenewableUK Global Offshore event.

Whilst the industry has little choice but to pursue cost reduction, there is an argument to say that given that 2020 targets are to be delivered over the next eight years, the sector will eventually start to see, in the words of economists, falling long run average total costs.

Like any other industry this will be achieved through bulk purchasing, economies of scale and increased sector experience.

The report from CRTF, though, is largely promising. It suggests a raft of measures to address problems with contracting, supply chain, planning, connectivity and stakeholder coordination.

And it's addressing the second of those issues, the suppy chain, that is really the hardest battle.

On the one hand, the industry needs more firms involved competing to supply goods and services. Conversely, offshore wind is a large technical challenge, which requires experienced firms with good track records. And it’s the experienced firms who are more likely to be able to help lower costs.

If anything, though, there’s more of a risk of the industry allowing cost reduction to become a millstone around its neck. Making it an all-encompassing aim, can put pressure on other areas, or lead to a belief that the sector needs to re-invent the wheel.

And that’s not the case. Faced with a similar predicament in the 1980s, the offshore oil and gas sector established CRINE – an acronym that stood for Cost Reduction In Next Era.

Initiatives under the CRINE umbrella resulted in the industry achieving a 30% cost reduction. Crucial to the success of this program was improving competitiveness without compromising standards.

Most offshore wind businesses seem confident that costs will fall, and naturally have their own interest at heart in being more efficient. But cost reduction shouldn’t become the only thing that’s ever talked about in offshore wind. In an age of austerity and bleak economic outlook, the industry has more to offer.

The news that Vestas is to seek compensation from a supplier following a gearbox bearings fault might not at first turn heads.

However, it adds another twist to what has been a tough twelve months for the Danish manufacturer. And once set in context, points towards a growing trend.

As we’ve previously discussed, Vestas has recently posted some grim financial results and as the Q1 2012 figures show, they’re not (yet) getting better.

Thankfully for Vestas, revenue was in fact up (by 4%) based on the same period in 2011 and the battles in the boardroom have started to subside.

And these are all changes that, for many within the business, can’t come soon enough. Particularly with all that torrid talk of takeovers back in April.

For the wider market though, it’s this gearbox saga – and the news that Vestas has already set aside €40 million in warranty provisions – that’s worthy of note.

That’s no small cheque to write (particularly when you’re already making a loss) and it’s all a direct result of bearing failures that have afflicted about 15% of its V90 -3.0MW machines.

Naturally, Vestas has been quick to shift the problem to one that’s shared with the equipment supplier, who delivered the kit a couple of years back. And according to both ZF Friedrichshafen (formerly Hansen Transmissions) and Vestas, discussions between manufacturer and supplier continue.

For the market though, it’s this issue of warranties – and in particular, understanding where responsibilities begin and end – that’s now up for debate.

Quite understandably, developers and investors have been quick to recognise the benefits of manufacturer warranties and service agreements – believing them to be a cast iron fail safe to hedge against and fall back on, if and when things go wrong.

And with a pressure to sell more and more units, manufacturers haven’t exactly been quick to educate the market on the difference between service agreements and warranties, versus the long-term operational implications of wear and tear.

However, if left unchecked these can become dangerous assumptions to make. And as the grey area between warranties, service agreements and operations and maintenance contracts grows, the boundaries get blurred and the basics all too often get overlooked.

Now, to be clear, in this instance it would appear that the issue is in fact a genuine problem associated with defective parts. Naturally, the finger pointing will continue but ultimately it won’t be the developer that’s picking up the tab.

However, as turbine technology evolves and as new investors and developers enter the fray, there are lessons to be learnt.

As good as they are, the simple reality is that operation and maintenance contracts, warranties and service agreements are never perfect.

Even with the best due diligence in place, machinery and moving parts can and will always go wrong and no level of assurance – no matter how good - can offer a genuine cast iron guarantee.

For all manufacturers, investors and developers alike, that’s not necessarily a bad thing. But it is something that needs to be understood, right from the outset.