As any editor’s inbox will testify, we’re now just two weeks away from EWEA – a conference that, should you believe everything that the organisers are telling you, promising all sorts of marvels and delights.
Delegate numbers look set to be on the up, the conference schedule is fit to burst and the exhibitors are no doubt starting to fill the goodie bags as I type. Love them or loathe them, there’s a comforting sense of familiarity about wandering through the hub-bub on a busy conference floor.
But behind the marketing schmaltz, is this “busyness” keeping the industry on track? With the 2020 deadlines already looming large, are the major players confident that the right deals are getting signed off at the right level, at the right time? And what are the implications if – heaven forbid – we fall woefully short?
While there will be much to talk about on the conference floor, let’s hope the focus a week today is on business, as opposed to busyness for busyness’ sake.
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In less than one week, the UK government will close its consultation on Electricity Market Reform. Chances are that you haven’t yet read the document (and if you haven’t, then you can download a copy here) but even if you just flick through the executive summary, it’s worth a look.
Why? Because with talk of the huge investment challenge, the talk of targets and the long term impact on consumers, it’s a piece of legislation that will leave a lasting impression on the European wind energy market.
Although it’s currently still in the consultation phase and the government is still very much dipping its toe in the water make no mistake, the legislation associated with it is just around the corner. And the government will be listening closely to the way in which the market has reacted during this initial exploratory phase.
It’s difficult to speculate on the outcome of the consultation until the government publishes its response to this feedback, later in the spring. However, if the closing comments in this initial paper are anything to go by, we can expect greater levels of collaboration with Northern Ireland and Scotland in the future. Lip service it may be but with the government keen to encourage private sector partnerships and engagement, perhaps the first step is to lead by example?
With the focus on operating costs and profit margins set to escalate, perhaps it was only a matter of time before turbines got bigger. A lot bigger.
And if last Friday’s deals announced by the likes of GE and Alstrom are anything to go by, then the next swathe of supersized turbines is only just the start.
From a construction and manufacturing perspective it certainly makes sense – and the argument only grows stronger once you begin to factor in the anticipated growth within the European offshore market. (And let’s face it, if you’re sticking a turbine in some pretty rough seas – you might as well make it as solid as possible!)
However, what’s particularly interesting about all the talk of supersized turbines, is the serious logistical challenge that comes with it. Sure, the actual construction phase isn’t exactly easy but what happens when it comes to shipping, installing and servicing them? Are we about to see the support services begin to go supersized too?
On Monday, we discussed the next generation of nimbyism. Today – in the spirit of fairness, we’re investigating its nemesis. And it comes in the form of what we’ve termed, the super specialist.
What are we talking about? We’re talking about the rise and rise of a myriad of specialist support businesses that are popping up all over the continent to solve a whole host of niche problems and challenges.
Now some of these businesses of course, are established institutions in their own right, with an international customer footprint and an arm full of major deals and contract wins. Others meanwhile, are start-ups (usually on to five person teams) that are trying their luck in a rapidly evolving marketplace.
Whatever the case, it’s interesting to note that in 9 times out of 10, the business model remains the same. Namely, the evolution of a single product or service that brings effectively migrates wider engineering knowledge and expertise into the wind energy markets. The key question of course, is what happens twelve to twenty four months down the line, when the super specialists expand?
The people are revolting! Or at least, they are if the latest set of weekend headlines is to be believed.
Naturally, it’s easy to get carried away with the stories but for an industry that has always courted controversy, there’s a growing sense of uneasiness in the air. Communities have started to find their voice and the challenge of tackling public opinion has become an increasingly complex issue.
Make no mistake, the installation of turbines divides communities – as they weigh up a swathe of recent financial incentives on the one hand against local planning and regulatory issues on the other. Where once town hall meetings and extended periods of consultation served to the smooth the way for a new site, suddenly it’s no longer enough.
Companies frequently finding themselves backed into a corner, tasked with a growing checklist of actions to be addressed. Ironically though, it’s the biggest challenge that all too often gets overlooked. That of community communication and engagement.
If wind farms are going to win over this new breed of next generation nimbyism, then let’s not underestimate the power of public opinion.
It’s been a busy week for Spanish manufacturer Gamesa. They’ve been committing yet more capital and perhaps more importantly, man power, to the market.
As if the 600 MW deal with the Chinese developers wasn’t enough, they’ve confidently pushed ahead into the North American market, setting up the first offshore factory base on the other side of the Atlantic. Brave stuff. Particularly when you consider that the factory isn’t expected to earn its keep until 2015.
Compare this with the UK government’s review of the feed-in tariff’s that while encouraging on the one hand, are in danger of creating greater levels of uncertainty for private sector investment.
UK-based businesses should forget central government – for the time being at least. It’s only going to perpetuate the self doubt. Instead, they should look to Spain and take a leaf out of Gamesa’s book. Be bold, be brave.
With the spring conference circuit around the corner, it is perhaps all too easy to be focus on local matters and local markets. After all, with the North Sea waters starting to open up and with a whole host of EU states opening up their borders for renewable energy investment, consultants and developers already have plenty of opportunities sitting in the in tray.
But amid the furore, every once in a while it’s worth looking further afield to ensure that we’re not forgetting the bigger picture.
Take Brazil for example. Only this week, General Electric have signed a deal to supply the largest country in South America with more than 1GW of power in the next two years, while the likes Suzlon is already racking up the sales and opening a local factory in the region.
Sure, Brazil’s change in foreign policy has a lot to answer for this recent flurry of announcements but don’t think this is a temporary investment blip. From this point forwards, there will be a whole host of territories vying for the attention – and investment – from industry heavyweights.
The approval of the Humber Gateway wind farm is a significant – if not unsurprising – milestone in the evolution of offshore wind.
Naturally E.ON and the British government are keen to wax lyrical about the deal, with each keen to out do the other party on the myriad of benefits that it brings to the table. And to be fair to both parties – this is indeed a reason to celebrate.
1,000 jobs are due to be created throughout the two year construction phase, with further opportunities for ongoing service and maintenance contracts thereafter. But that’s not the really interesting bit.
No, the element that has real significance concerns the 19 miles of cabling required to hook the farm up to the mainland. Unglamorous it may be but is this the catalyst for the super grid?
Despite its size and despite its relatively late interest in the wind energy market, when it comes to bringing wind farms online, Malta isn’t dragging its feet.
At the beginning of last week, the Maltese government confirmed that a location for an offshore wind farm had been proved viable and an official call for expressions of interest will be issued later in the year. If everything goes to plan, the government should have the site fully operational by 2016 – four years ahead of the stipulated European-wide 10% renewable energy target.
And all in all, it is impressive stuff. For Malta – where tourism remains the dominant industry sector and the ability to safeguard the areas natural beauty remain paramount – streamlining the planning application process has been critical. A case study for other Mediterranean territories to watch closely, perhaps?
While the world watches the events in Egypt’s capital unfold, some nervous investors are already asking questions.
And while Egypt isn’t exactly the renewable energy capital of North Africa, concerns have been raised about the possible knock on effects of the unrest and more broadly, about the future appetite for overseas renewable energy investment.
However, while it’s important not to diminish the severity of the situation in Cairo, it’s also important for investors to take a longer-term approach to their renewable energy portfolio.
While these high profile projects remain influential symbols of foreign investment, they also need to be set within the wider context of the energy market. Government’s may not always be in a position to give the initiatives their full attention and the necessary level of protection and indeed public support but that doesn’t diminish the fact that for many expanding markets, renewable energy remains a key part of their future growth.
Egypt has a whole host of issues to tackle but as its commitment to the solar market demonstrates, renewable energy plays a key part in its future.
While it’s difficult to measure European industry investment figures with 100% certainty, you can’t help but think that the numbers that have been thrown around over the past 31 days tell an interesting tale.
Sure, deal sizes are inevitably talked up once a letter of intent has been signed and you’ve got customers and clients around the table but even so, there’s a definite feeling of certainty in the market and what’s more, it’s managed the impressive trick of retaining the interest of the politicians. Praise indeed.
However, while the EU has been quick to retain a healthy interest in future market investments and take its turn at throwing around some seriously large numbers, one can’t help but think that it’s the private sector – and the myriad of smaller, more discreet deals, that are going to become the real market driver in 2011.
Vestas – the very same firm that has been cutting its workforce and talking a tough game when it comes to the future of European wind – has opened an office in Bucharest, Romania.
Fighting talk if ever there was. And potentially a serious U-turn since the comments made to investors just a couple of months ago.
Irrespective of the company’s appetite for investment, it’s refreshing to see such an established organisation commit some serious capital to an emerging local market. As Romania has consistently proved over the past 24 months, it remains steadfastly committed to wind energy and it continues to woe plenty of foreign investors to set up shop.
The question of course, is who will be next to follow suit? Romania, go strut your stuff.
What do you do with an ageing western European wind farm? Ship it east of course.
Although it’s an issue that has yet to truly be explored within the mainstream European media, the last six months has seen a growing trend for project developers to start upgrading wind farm sites with the latest technology and equipment. And with generous incentive packages on offer from the manufacturers, it’s not difficult to see why.
Naturally, as the upgrade begins to get underway, it’s not long before the question of what to do with the old stock comes up. And the straightforward solution is to resell it.
Within Europe, the obvious buyers are located in the east – as the likes of Poland and Latvia come online and begin to invest in the renewables market. In fact, this is exactly where the old Goonhilly turbines are headed and it’s where others will follow suit.
In practice, it’s a simple transaction that stands to benefits both parties. However, as the turbines come back online to enter the second phase of their operational life, questions are starting to be raised about the long term operations costs and risks associated with the initiative. And while the secondary market should be wholeheartedly encouraged, are there any drawbacks that are getting overlooked?
Slowly the momentum builds.
300 new jobs generated here, 250 somewhere else. The UK manufacturing industry is fighting back. Either that, or they’ve started wising up to the fact that positive news breeds positive news.
And about time too. Turn back the clocks twelve months and it was failed planning applications, factory closures and desperate appeals for funding. Now don’t get me wrong, those days certainly aren’t yet fully behind us and for many industry participants the challenge of cash flow and basic company economics still present a very real headache, five days a week. Despite this however, the mind set has begun to change. And while the outlook is set to remain very challenging indeed, slowly the optimism has taken root.
And as industry heavyweights such as Alex Simms, Chief Executive of Impax Asset Management start building their profile’s and taking a more proactive approach to communications, it’s only a matter of time before other sectors follow suit.
It’s not the first time I’ve said it but I’ll say it again, 2011 isn’t going to be easy but for those who are in it for the long run, there’s a renewed sense of hope in the air.
Back in December, there was much chatter within the markets about the potential of a European super grid. And rightly so. After all, if managed and implemented effectively it has the potential to kick start future offshore initiatives and unlock gigawatts of wind power capacity.
An initial memorandum of understanding – signed last month - is the latest step towards seeing this dream become a reality and in the latest edition of Renewable Energy World, Alasdair Cameron provides some good thinking and insight into the true potential of the initiative.
In fact, as the results of that memorandum get digested, there’s a whole stream of industry thinking that’s rising to the surface, as the sector considers its true implications. The video produced by Mainstream Renewable Power is possibly one of the best of the bunch.
As 130 workers return to the Skylon factory to fulfil an outstanding order, the facts that have begun to emerge from the auditors tell a salutary tale. Despite all the optimism within European wind, such positivity accounts for nothing if the numbers – and perhaps more specifically – the cash flow – doesn’t stack up.
With Skylon having been forced to suspend all its payments back in October, it was only ever a matter of time before one of its factories failed. In the subsequent media fallout, it was easy to believe that the closure marked just the tip of the iceberg for an industry that was in danger of becoming over cooked.
The resultant job losses, the unfulfilled orders and Skylon’s silence only added fuel to the fire. Sklylon was not the flavour of the day. And yet, to pin the blame on anything but bad financial forecasting seems naïve at best.
Sure, the financial uncertainty and the resultant lack of credit over the past 18 months have created a whole host of very real problems for wind energy businesses throughout Europe. But for an industry that’s still very much in its ascendancy, these financial challenges can and indeed will be overcome. However, for the moment at least, cash is king.
And the UK Government’s Green Investment Bank knows it.
Apex Clean Energy has ordered Vestas wind turbines for the 126MW Downeast Wind repowering project in US state Maine.
Vestas is set to begin delivering the turbines in the second quarter of 2024, with commissioning due by the end of 2024.