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The coming o Europes oshore wind energy industry

A report by the European Wind Energy Association - 2011

Wind in our Sails


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Wind in our Sails

The coming o Europes oshore wind energy industry

A report by the European Wind Energy Association

Text and analysis:

Chapter 1 Athanasia Arapogianni and Jacopo Moccia, European Wind Energy Association

Chapters 2 to 7 David Williams and Joseph Phillips, GL Garrad Hassan

Revision: Christian Kjaer, Justin Wilkes and Anne-Bndicte Genachte, European Wind Energy Association

Editing: Sarah Azau and Zo Casey, European Wind Energy Association

Project coordinators: Sarah Azau and Raaella Bianchin, European Wind Energy Association

Design: www.devisu.com

Print: www.artoos.be

EWEA has joined a climate-neutral printing programme. It makes choices as to what it prints and how, based on

environmental criteria. The CO2

emissions o the printing process are then calculated and compensated by green

emission allowances purchased rom a sustainable project.

Cover photo: Dong

Published in November 2011


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2 Wind in our Sails The coming o Europes oshore wind energy industry

Foreword

The European Union leads the world in oshore windpower with 4,000 MW already installed, and this is

only the beginning o a major industrial development.

This industry will not only help revitalise European

economies, but will place Europe at the heart o global

oshore wind developments beneftting European

companies which are well established as frst movers,

and provide thousands o jobs or European citizens.

Our market and technology leadership in the oshore

wind sector will serve us well.

It is my pleasure to provide this oreword to Wind in ourSails The coming of Europe's offshore wind industry,

produced by the European Wind Energy Association,

once again showing overwhelming investor interest

and the huge contribution this innovative industry can

make to Europe. Oshore wind power contributes to

the EU goals o competitiveness, energy security and

reducing greenhouse gas emissions. As this report

highlights, the developing o a new industrial supply

chain will bring new jobs and a wealth o commercial

opportunities.

The European Environment Agency, in its 2009 report1

confrms that the wind resource is not a constraint. In

act, the EEA illustrate that oshore wind powers eco-

nomically competitive potential is around 3,400 TWh

in 2030, about 80% o the EUs projected electricity

demand.

At a time where Europe is at a major crossroads or its

energy uture, oshore wind provides a powerul domestic

answer to Europes energy supply and climate dilemma.

However, this development will not happen without

ambitious national programmes, and support rom the

European Union, underpinning the market promise.

There is strong evidence that the supply chain or o-

shore wind is dynamic and responding to challenges

through investment in innovation. Nevertheless, devel-

oping the necessary technology and industrial capacity

and getting projects through planning and consent-

ing takes time. To make the necessary investments,

the industry needs certainty and stability. Favourable

national ramework conditions implementing the

Renewable Energy Directive, together with a stablepost - 2020 legislative ramework and more innovative

fnancing will be key to achieving it.

But none o these goals will be reached without solid,

reliable electricity networks. They are and will become

even more the backbone o our energy system. The

European Commission, in its energy inrastructure

package, stresses the urgent need to invest in energy

inrastructure in order to transport large amounts o o-

shore wind energy to the consumption centres.

By working together we can build a cleaner, greener

energy uture. This EWEA report shows us that coordi-

nated action is needed across the supply chain, sup-

ported by a stable and clear legislative ramework and

new fnancial instruments to tap into this unlimited

indigenous and clean energy resource.

I know the European Commission can count on the

Member States, the European Parliament and all relevant

stakeholders at local, regional, national and European

level to work together in order to make it happen.

Gnther H. Oettinger,

European Commissioner or Energy

1 EEA (European Environment Agency), 2009. Europes onshore and oshore wind energy potential. Technical report No 6/2009.


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Wind in our Sails The coming o Europes oshore wind energy industry 3

Contents

Executive summary .......................................................................................................................4Recommendations ................................................................................................................................ 7

The coming o Europes oshore wind energy industry ............................................................................. 8

1. Oshore wind power market ................................................................................................ 10

1.1 Historical development o oshore wind power in Europe ................................................................. 11

1.2 Wind power market today .............................................................................................................. 13

1.3 Market outlook (2011 - 2020, 2020 - 2030) ..................................................................................... 17

1.4 Oshore development trends bigger, deeper and urther ............................................................... 27

1.5 Europes frst mover advantage ...................................................................................................... 29

1.6 Oshore wind energy employment and uture skill requirements....................................................... 32

2. Supply chain Introduction .................................................................................................. 34

2.1 Contracting trends ........................................................................................................................ 352.2 Scope allocation ........................................................................................................................... 39

2.3 Location o key players.................................................................................................................. 40

Key fndings ....................................................................................................................................... 41

3. Wind turbines ......................................................................................................................... 42

3.1 Historical context and market options ............................................................................................ 43

3.2 Key sub-components .................................................................................................................... 44

3.3 Current status o industry supply chain .......................................................................................... 46

3.4 Future technical trends ................................................................................................................. 51

Key fndings ....................................................................................................................................... 54

4. Substructures ......................................................................................................................... 56

4.1 Historical context ......................................................................................................................... 57

4.2 Substructure types ....................................................................................................................... 58

4.3 Substructure market status and outlook ......................................................................................... 60

4.4 Floating structures ........................................................................................................................ 62

Key fndings ....................................................................................................................................... 64

5. Electrical inrastructure ......................................................................................................... 66

5.1 Historical context and market options ............................................................................................ 67

5.2 Current status o industry supply chain .......................................................................................... 70

5.3 Announcements and uture technical trends ................................................................................... 73

Key fndings ....................................................................................................................................... 73

6. Vessels ............... .............. ............... .............. .............. ............... .............. .............. ............... ... 746.1 Vessel use at oshore wind arms ................................................................................................. 75

6.2 Estimation o uture demand ......................................................................................................... 76

6.3 Installation vessel types................................................................................................................ 78

6.4 New build and announced vessels ................................................................................................. 83

Key fndings ....................................................................................................................................... 83

7. Ports ........................................................................................................................................ 84

7.1 Background: the role o por ts in oshore wind development ............................................................ 85

7.2 Port requirements and current status ............................................................................................ 87

7.3 Announcements and uture trends ................................................................................................. 90

Key fndings ....................................................................................................................................... 91


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EXECUTIVE SUMMARY

Photo:Vestas


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The European Wind Energy Association (EWEA)

expects around 1 GW o new oshore wind capac-

ity to be installed in European waters during the

course o 2011. This will bring total oshore wind

capacity to almost 4 GW confrming Europe as the

world leader in oshore wind power. Currently, almost

6 GW o oshore wind capacity is under construc-

tion in Europe, 17 GW have been consented by EU

Member States and there are uture plans or a ur-

ther 114 GW. Thereore, it is expected that during

this decade, oshore wind power capacity in Europe

will grow tenold.

EWEA estimates that by 2020, 40 GW o oshore windpower will produce 148 TWh annually, meeting over 4%

o the EUs total electricity demand and avoiding 87

million tonnes o CO2

emissions2.

Between 2020 and 2030 a urther 110 GW o o-

shore wind capacity is expected to be added in

European waters. 150 GW o wind power would pro-

duce 562 TWh annually, enough to cover 14% o the

EUs 2030 electricity demand and avoid 315 million

tonnes o CO2

emissions3.

The projected growth o oshore wind energy resem-

bles the growth witnessed in the onshore wind sector at

a similar time in the industrys development. Onshore

wind energy deployment picked up speed in the mid-

1990s. With a 15 year dierence, oshore wind seems,

today, to be ollowing a similar growth path.

The oreseen growth o the sector will push oshore

wind power to the oreront o the EUs climate and

energy strategy.

The development o a new industrial sector in Europeprovides signifcant opportunities, particularly in the

current economic climate, or growth and job creation.

Oshore wind power will play a key role in Europes

uture renewable energy economy. However, a prere-

quisite or this is the provision by governments and theEuropean Union o stable legislative rameworks or

oshore wind, and access to and availability o, suf-

cient levels o fnancing. In order to reap the benefts

the oshore wind power sector oers, governments

need to play their role.

Oshore wind, creating high-skilled jobs

The oshore industry is orecast to see a steep rise

in employment numbers over the course o the next

decade. It is estimated that the wind energy sector will

employ 462,000 people in 2020. O these 169,500,almost 40% will be in oshore. By 2030, jobs in o-

shore are expected to count or 62% o total employ-

ment in the wind energy sector: around 300,000 jobs

out o a total o 480,000.

Moreover, ollowing in the wake o substantial success

in the onshore wind industry, Europe as a frst-mover

could exploit uture export opportunities to other

emerging markets.

The renewable industry generally has a higher propor-

tion o jobs classifed as high-skilled than the econ-

omy at large. Companies are fnding these positions

difcult to fll, highlighting the importance o a ocus

on training and education measures to prevent uture

shortage in this oten neglected yet essential element

o the supply chain.

A rapidly maturing and increasingly

competitive market

Over the coming two decades, oshore wind will move

rapidly rom an emerging, immature technology to a

key component o the EUs energy mix. Consequently,competition across the supply chain or oshore wind

is increasing with an inux o signifcant new entrants.

2-3EWEA Pure Power 2011 report, http://www.ewea.org/fleadmin/ewea_documents/documents/publications/reports/Pure_Power_III.pd


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Executive summary

Substructures have a relatively high elasticity o sup-

ply, potentially reducing the risk o bottlenecks. They

present an attractive diversifcation opportunity orsubstantial existing marine and oil and gas (O&G)

manuacturing capacity in Europe.

The move into deeper waters will see space-rame

structures that is, wind turbine substructures which

use several piles to keep the turbine stable having

an increased market share, and new fxed and oating

structures in the longer term. Nevertheless improved

abrication and installation procedures could also

enhance the depths at which monopiles are used.

Subsea cables a critical bottleneck?

There is a limited range o suppliers or high voltage

(HV) subsea cables due to high investment costs and

long lead times or new capacity. Signifcant advances

are being made in the use o high voltage direct cur-

rent (HVDC) cables with a wider range o suppliers and

there is potential or multi-terminal capability.

Without increased capacity in manuacturing, a short-

age o high voltage (HV) subsea cables is likely. Other

equipment is generally drawn rom much larger trans-

mission and distribution (T&D) industries which are

relatively unconstrained, with the exception o HV

transormers, where delivery times are set by general

world demand.

Jack-up vessels remain industry workhorse as

vessel specialisation increases

The industry is seeing increased specialisation o

vessels or oshore wind generally and or the spe-

cifc tasks perormed on an oshore wind site.

Nevertheless jack-up designs are expected to con-

tinue to dominate vital installation procedures andparticularly turbine installation.

Developers are looking at strategic investments to

secure vessels. However, in the near term, supply con-

straints are decreasing, which may stem this trend.

The vessel supply chain outlook is strong through

to 2015 with several new builds, increased levels

The contracting ormat turned away rom, but then

moved back towards, Engineer-Procure-Construct-

Install (EPCI) turnkey contracts which mean onecompany is in charge o all the dierent stages as

developers and suppliers become more knowledge-

able concerning the risks involved and can allocate

them in a more cost eective way.

The emergence o major contractors rom the oshore

oil and gas (O&G) and traditional maritime sectors

may prove to be a signifcant shit in the dynamics o

the supply chain.

Increasing reliability driving down costsAn impressive and growing list o manuacturers are

developing new wind turbines dedicated to the o-

shore wind sector. It is estimated that the supply o

oshore wind turbines will meet and exceed demand

or the next decade, leading to healthy levels o com-

petition within Europe with the potential or export to

emerging oshore markets.

Sites or new projects are moving urther rom shore

and into deeper waters. To oset the costs involved in

developing such challenging projects, there is a clear

trend towards reducing the cost o energy through les-

sons learnt, improved reliability and structural ef-

ciency. Design trends are driving the supply chain

towards specialisation partially decoupling it rom

the onshore wind industry and developing specifc o-

shore solutions.

High elasticity o supply enables domestic

manuacturing o substructures

Substructures present an opportunity or domes-

tic manuacturing due to lower technical barriers or

entry via, or example, the diversifcation o shipyardsor tower manuacturers. Substructure manuacturing

brings a signifcant amount o supply chain value as

substructures represent a large part o the capital

expenditure in an oshore wind arm. This shows that

it is not necessary or there to be a wind turbine manu-

acturer in a country or that country to have a signif-

cant wind energy industry and job creation.


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o competition and supply likely to meet demand.

Through the latter hal o the decade increasing pres-

sure may return i urther investments are not made.

Ports a key stepping stone or the oshore

wind industry

There is a general move away rom the use o mobi-

lisation ports and instead components are exported

directly rom the manuacturing acilities to oshore

wind arms to save on logistical costs. However poten-

tial uture production in Eastern Europe to take advan-

tage o lower labour costs may reverse or slow thistrend.

There is a drive in certain regions towards cluster-

building or oshore wind manuacturing in closely

located ports. These initiatives are being pursued via

co-operation between the public and private sectors.

RECOMMENDATIONS

To ully tap its potential and ully exploit the benefts o this clean and abundant energy source,

Europe needs to set ambitious, but achievable, renewable energy targets beyond 2020, invest in

wind power research and development and develop the grid inrastructure to bring oshore winds

power rom the seas to the main areas o energy consumption on land.


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The coming o

Europes oshorewind energy

industry

15-20t/mBearing

25haStorage area

Crane or gantry crane o 1,000t

Waterway or 150-200m diameter rotors

>10mWater depth

Quayside length: Quay bearing 15-20t/m

Storage area: 25ha

Waterway or: 150-200m diameter rotors

Water depth: >10m

VESSELSAt least 6 dierent types o

vessels are needed to surveythe site, carry components and

personnel, install substructure,

turbines and substations, lay cables

and complete the installation o anoshore wind arm.

ELECTRICAL INF

Total demand 2010: 6 vessels

Total demand 2020: 27.5 vessels

PORTSTwo main types o ports:

MANUFACTURING PORTS: where themanuacturing acility is closely located to/or

at the port and the components are exporteddirectly to the oshore site.

MOBILIZATION PORTS: where the components andturbines are received ready and transported to either

the installation vessels directly or the eeder vessels whichtake them on the oshore site.

Oshore wind energy is a signifcant opportunity or ports to

counter-balance the downturn hitting traditional activities.

THE SUPPLY CH

- Total installed capacity o 40,000 MW

- Annual installations o 6,900 MW

- Total electricity production o 148 TWh

- Meeting 4% and 4.2% o total EU electricity demand- Avoiding 102 Mt o CO

2annually

- Annual investments in oshore wind turbines

o 10.4 billion

- Cumulative investments in oshore wind turbines

o 65.9 billion in the period 2011-2020

- Total installed capacity o 150,000 MW

- Annual installations o 13,700 MW

- Total electricity production o 562 TWh

- Meeting 13.9% o total EU electricity demand

- Avoiding 315 Mt o CO2

in 2030

- Annual investments in oshore wind turbines

o 17 billion in 2030

- Cumulative investments o 145.2 billion rom 2021 to 2030

2020

2030

Tot

Executive summary

What makes a suitable construction port


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ASTRUCTURE

SUBSTRUCTURES

TURBINES

Substructures present major opportunities ordomestic manuacturing thanks to low technical bar-

riers or entry. Substructure manuacturing also brings

a signifcant amount o supply chain value as it represents

a large part o the capital expenditure in an oshore windarm. It is not essential to have turbine manuacturing to develop

an oshore wind industry.

Types o

substructures:

Four to 12 new wind turbines

models are expected to reach some level omarket readiness in the next decade. Supply o oshore

wind turbines will meet and exceed demand or the next decade,leading to healthy levels o competition within Europe with the

potential or export.

N WILL DELIVER

2002

Rotor diameter:

90 m

3 MW

2007

Rotor diameter:

122 m

5 MW

2013

Rotor diameter:

170 m

10 MW

Spar TLP Jacket

MonopileSpace Frame

(Tripod)

Space Frame

(Jacket)Space Frame

(Tri-pile)

Gravity-based

Structure (GBS)


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Photo:iStock

Photo:iStock

OFFSHORE WIND POWER MARKET1Photo:Dong

1.1 Historical development o oshore wind power in Europe

1.2 Wind power market today

1.3 Market outlook (2011 - 2020, 2020 - 2030)

1.4 Oshore development trends bigger, deeper and urther

1.5 Europes frst mover advantage

1.6 Oshore wind energy employment and uture skill requirements


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1.1 Historicaldevelopment ooshore wind powerin EuropeThe frst oshore wind arm was inaugurated in 1991,

2.5 km o the Danish coast at Vindeby. Developed by

DONG Energy, it eatures eleven 450 kW turbines or a

total capacity o 4.95 MW. 20 years later, by the end o

2010, 2,946 MW o oshore wind capacity in 45 wind

arms spread across nine countries were eeding an esti-

mated 10.6 TWh o electricity into the European grid.

Until 2001, the growth o the oshore wind power sector

was irregular and mainly depended on a handul o small

near-shore projects in Danish and Dutch waters eatur-

ing wind turbines with a capacity o less than 1 MW.

With 20 turbines and a total capacity o 40 MW, in

2001, the Middelgrunden project in Danish waters

became the frst utility-scale oshore wind arm.

That same year, seven 1.5 MW turbines were grid con-

nected o Utgrunden in Sweden.

Since the beginning o the decade, new oshore wind

capacity has been going online every year. Moreover,

the share o new oshore wind capacity in total wind

capacity additions has been increasing. In 2001 the

50.5 MW o installed oshore capacity represented1% o total new European annual wind capacity, the

883 MW installed in 2010 represented 9.5% o the

annual European wind energy market.

FIGURE 1.1 CUMULATIVE OFFSHORE WIND CAPACITY EU AND NON EU (1991 - 2010)

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Cumulative non EU 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 102

Cumulative EU 5 5 5 7 12 29 29 32 32 36 86 256 515 605 695 787 1,106 1,479 2,063 2,946

1,000

2,000

3,000

3,500

2,500

1,500

500

0

MW

Source: EWEA


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Chapter x: name o the chapter


Chapter 1: Oshore wind power market

FIGURE 1.2 ANNUAL OFFSHORE WIND CAPACITY EU AND NON EU (1991 - 2010)

FIGURE 1.3 NEW OFFSHORE CAPACITY SHARE OF TOTAL NEW WIND POWER CAPACITY IN THE EU

400

600

800

1,000

1,200

MW

Annual non-EU

Annual EU

0

200

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 102

5 0 0 2 5 17 0 3 0 4 51 170 259 90 90 93 318 374 584 883

97.1% 98.5% 98.5%

97.3%

97.5% 95.4%

95.0%

90.4%

0.1%

1.1%

2.9%4.8% 1.5%

1.5%

2.7%

2.5%4.6%

5.0%

9.6%

4,000

6,000

8,000

10,000

12,000

MW

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Oshore new annual capacity (MW) 4 51 170 259 90 90 93 318 373 584 883

Total new annual capacity (MW) 3,209 4,428 5,913 5,462 5,838 6,204 7,592 8,535 8,263 10,499 9,332

99.9%

98.9%95.2%

0

2,000

Source: EWEA

Source: EWEA


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1.2 Wind power

market today308 new oshore wind turbines, worth some 2.6billion (20.5% o total EU investments in wind), were

ully grid connected in the EU during 2010, totalling

883 MW in nine separate oshore wind arms. This

is the biggest annual increase in capacity since the

frst oshore turbines were installed in 1991 and

a 51% increase compared to the annual market in

2009. Total installed capacity at the end o 2010 was

2,944 MW spread over eight EU Member States, with

a urther 2.3 MW as a oating turbine operating since2009 o the coast o Norway.

More than hal the total annual capacity (458 MW

52%) was installed in the UK, which remains the coun-

try with the largest installed oshore capacity in the

world ater having overtaken Denmark during the pre-

vious year.

FIGURE 1.4 SHARE OF NEW INSTALLED CAPACITY IN EUROPE IN 2010

Belgium 19%(165 MW)

Germany 6%

(50 MW)

Finland 0%(2.3 MW)

United Kingdom 52%

(458 MW)

Denmark 23%(207 MW)

Source: EWEA


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During the frst hal o 2011 (rom 1 January to 30

June), 101 oshore wind turbines were ully grid con-

nected in fve wind arms in European waters totalling348 MW. Total installed capacity at the end o June

2011 reached 3,294 MW.

Overall, 16 oshore wind arms are under construction

in 2011. During the frst hal o the year, 129 oshore

oundations were installed and a urther 108 turbines

were erected but not yet grid connected. Once com-

pleted, the 16 wind arms under construction will have

a total capacity o 5,603 MW.

During the frst six months o 2011, the total o-shore capacity connected to the grid was 4.5% higher

than during the same period the previous year, when

333 MW were connected to the grid. Moreover this

growth was achieved with ewer turbines (17 ewer)

than during the same period in the previous year, indi-

cating a move towards larger machines or oshore

projects.

During 2010, the largest oshore wind arm to date

(300 MW), Thanet, was ully grid connected in British

waters. Furthermore, the frst our turbines at BARDoshore 1 wind arm were grid connected at a dis-

tance o 100 km rom the German coast.

In addition to these record-breaking projects, large pro-

jects in Denmark (Rdsand 2) and Belgium (Belwind)

were completed. Moreover, a 0.03 MW experimental

oating concept combining wave and wind technolo-

gies (Poseidon) was connected in Danish waters.

A 102 MW oshore wind arm was also grid-connected

in Chinese waters.

2011: annual market passes 1 GW

2010 saw strong market development with a much

larger number o projects beginning construction than

in 2009, under construction, expected to be com-

pleted, or completed during the course o the year.

FIGURE 1.5 EU OFFSHORE WIND POWER CAPACITY CONNECTED TO THE GRID ANNUAL AND CUMULATIVE 2010 - 2011

550

652

estimate

333

348

200

400

600

800

1,000

1,200

First hal

Second hal

0

200

2010 2011

MW

Source: EWEA


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141 GW and counting

EWEA has identifed 141 GW o oshore wind projectsin European waters either operational, under con-

struction, consented, in the consenting phase or pro-

posed by project developers or government proposed

development zones. This 141 GW shows tremendous

developer interest. With 26 GW already operational,

under construction or consented, solid progress has

been made towards 40 GW o oshore wind by 2020.

Moreover, it provides a good indication that EWEAs

expectation that 150 GW o oshore wind power will

be operating by 2030 is both accurate and credible.

Depending on the amount o wind power installed

onshore, it looks as i Europes 2011 oshore market

could make up approximately 10% o Europes totalannual wind capacity market and more than 20% o

total European wind arm capital investments, making

the oshore industry a signifcant mainstream energy

player in its own right.

EWEA expects a total installed oshore capacity o

just under 4,000 MW in Europe by the end o 2011.

Summary o the oshore wind energy market

in the EU in 2011 Total installed capacity o 4,000 MW

Meeting 0.4% o total EU electricity demand

Annual installations o 1,000 MW

Avoiding 9.9 Mt o CO2

annually

Total electricity production o 14.4 TWh

Annual investments in wind turbines o

2.8 billion.

PLANNED

114,737 MW

UNDER

CONSTRUCTION

5,603 MW

ONLINE

3,295 MW

CONSENTED

17,341 MW

TOTAL EUROPE

140,976 MW

Ca

pac

ityofg

over

nment

concessio

nzones

orforeseenfuturetende

rzo

nes

:73,6

95MWMARKET OUTLOOK

Source: EWEA

FIGURE 1.6 TOTAL OFFSHORE WIND CAPACITY INSTALLED, UNDER CONSTRUCTION, CONSENTED, PLANNED AT 30 JUNE 2011

AND PER SEA BASIN IN MW


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Only our EU Member States with a coastline (Bulgaria,

Lithuania, Romania and Slovenia) have no identifed

oshore pipeline, however, it is expected that oshore

wind will be a part o the energy mix in all the Baltic

states over the coming years.

Table 1.1 confrms that oshore wind energy is cur-

rently most developed amongst the North Sea coun-

tries. The United Kingdom alone represents, on 30

June 2011, almost 45% o total installed capacity

in Europe. By 2020 it is expected that 18 Europeancountries will have developed oshore capacity.

TABLE 1.1 TOTAL OFFSHORE WIND CAPACITY INSTALLED, UNDER CONSTRUCTION, CONSENTED, PLANNED ON 30 JUNE 2011 AND

SIZE OF GOVERNMENT CONCESSION ZONES OR FORESEEN FUTURE TENDER ZONES IN MW

Online

Under

construction Consented Planned Total projects

Size o government

concession zones

or oreseen uture

tender zones

Belgium 195 462 750 450 1,857 2,000

Denmark 854 0 418 1,200 2,471 4,600

Finland 26 0 765 3,502 4,294 n/a

Estonia 0 0 1,000 0 1,000 n/a

France 0 0 0 6,000 6,000 6,000

Germany 195 833 8,725 21,493 31,247 8,000

Greece 0 0 0 4,889 4,889 n/a

Ireland 25 0 1,600 2,155 3,780 n/a

Italy 0 0 162 2,538 2,700 n/a

Latvia 0 0 200 0 200 n/a

Malta 0 0 0 95 95 95

Netherlands 247 0 1,792 3,953 5,992 6,000

Norway 2 0 350 11,042 11,394 n/a

Poland 0 0 0 900 900 n/a

Portugal 0 0 0 478 478 n/a

Spain 0 0 0 6,804 6,804 n/a

Sweden 164 0 991 7,124 8,279 n/a

UK 1,586 4,308 588 42,114 48,596 47,000

Total Europe 3,294 5,603 17,341 114,737 140,976 73,695


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University o Athens, the Commission published new

fgures in 20105. These expected wind to cover 14.2%o total electricity consumption in the EU by 2020, with

an installed capacity in 2020 o 55.6 GW oshore

wind power, meeting between 4 and 4.2% o the EUs

electricity demand. EWEA expects the total installed

oshore wind capacity in 2020 to be 40 GW, up rom

just less than 3 GW at the end o 2010.

The 2009 directive also required all Member States

to produce National Renewable Energy Action Plans

(NREAPs) determining the share o each renewable

technology in the energy mix rom 2010 to 2020 and,thereore, setting sectoral objectives. The 27 NREAPs

combined objective or oshore wind capacity by 2020

is 43.3 GW6. EWEAs predictions are, thus, or the frst

time below those o the national governments.

1.3 Market outlook

(2011 - 2020, 2020 - 2030)2011 - 2020

In December 2008 the European Union agreed on

a binding target o 20% renewable energy by 2020.

To meet the 20% target or renewable energy, the

European Commission expected 34%4 o electricity

to come rom renewable energy sources by 2020 and

believed that wind could contribute 12% o EU elec-

tricity by 2020.

Not least due to the 2009 Renewable Energy Directiveand the 27 mandatory national renewable energy

targets, the Commissions expectations or 2020

were increased. Based on the PRIMES energy model

developed by the E3M Lab at the National Technical

4 European Commission, 2006. Renewable Energy Roadmap, COM (2006) 848 fnal.5 Energy trends to 2030 - 2009 update. European Commission, 2010.

6 Belgium did not provide separate fgures or onshore and oshore wind capacity to the Commission. Inormation subsequentlyobtained by EWEA indicates that Belgiums oshore wind energy target or 2020 determined in light o the NREAP exercise is

2,000 MW.

FIGURE 1.7 PROJECTED CUMULATIVE OFFSHORE WIND CAPACITY (EWEA AND NATIONAL RENEWABLE ENERGY ACTION PLANS)

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

EWEA 3.9 5.3 8.1 10.9 14.0 17.4 21.6 26.7 33.1 40.0

NREAPs 3.7 5.8 9.1 12.4 15.6 20.4 25.8 31.1 36.8 43.3

5

0

10

15

20

25

30

35

40

45

50

GW

Source: EWEA


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EWEAs projected growth o oshore wind energy

resembles the growth witnessed in the onshore sector

at a similar time in the industrys development. Figure1.8 compares EWEAs assumed oshore development

to the actual development o onshore wind capacity

rom 1995 to 2005.

The reasons or the discrepancy between EWEAs pre-

dictions and those o the EU Member States include

the act that EWEA has always made conservativeorecasts in terms o installed wind energy capacity,

but are also strongly linked to the need or additional

R&D in oshore wind energy, or steadier fnancing,

and or an updated, European power grid to transport

the electricity produced in the seas.

FIGURE 1.8 HISTORICAL ONSHORE GROWTH (1995 - 2005) COMPARED TO EWEA'S OFFSHORE PROJECTION (2010 - 2020)

1995 /

2010

1996 /

2011

1997 /

2012

1998 /

2013

1999 /

2014

2000 /

2015

2001 /

2016

2002 /

2017

2003 /

2018

2004 /

2019

2005 /

2020

Onshore 2.5 3.4 4.7 6.4 9.6 12.9 17.2 22.8 28.0 33.8 39.8

Oshore 2.9 3.9 5.3 8.1 10.9 14.0 17.4 21.6 26.7 33.1 40.0

5

0

10

15

20

25

30

35

40

45

GW

Source: EWEA


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exceed the oshore market in the EU. In 2010, o-

shore made up 9.5% o the annual wind energy mar-

ket. By 2020, oshore will make up 28% o the annual

wind energy market.

Annual installations

Between 2011 and 2020, EWEA expects the annual

oshore market or wind turbines to grow steadily

rom 1 GW in 2011 to 6.9 GW in 2020. Throughout

this period, the market or onshore wind turbines will

FIGURE 1.9 OFFSHORE WIND POWER ANNUAL (LEFT) AND CUMULATIVE (RIGHT) INSTALLATIONS 2010 - 2020

15

20

25

30

35

40

45

3

4

5

6

7

8

GW

GW

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Annual 1.0 1.4 2.8 2.9 3.1 3.4 4.1 5.1 6.4 6.9

Cumulative 3.9 5.3 8.1 10.9 14.0 17.4 21.6 26.7 33.1 40.0

0

5

10

1

0

2

Source: EWEA


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quarter o Europes wind energy would be produced

oshore in 2020, according to EWEAs scenarios.

Including onshore, wind energy would produce

581 TWh, enough to meet between 15.7% and 16.5%

o total EU electricity demand by 2020.

Wind energy production

The 40 GW o installed capacity in 2020 would pro-

duce 148 TWh o electricity, equal to between 4% and

4.2% o EU electricity consumption, depending on the

development in electricity demand7. Approximately a

7 EWEA orecasts a total installed wind capacity o 230 GW in 2020 producing 581 TWh o electricity, with the 40 GW oshore

contributing 148 TWh.

FIGURE 1.10 OFFSHORE WIND ELECTRICITY PRODUCTION 2010 - 2020

20

0

40

60

80

100

120

140

160

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

TWh

14.2 19.129.1

39.550.6

63.278.3

97.1

120.5

148.2

Source: EWEA


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Avoiding climate change

In 2011, oshore wind power will avoid the emission

o 9.8 million tonnes (Mt) o CO2, a fgure that will rise

to 102.1 Mt in 2020.

FIGURE 1.12 CO2

EMISSIONS AVOIDED BY OFFSHORE WIND

20

0

40

60

80

100

120

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Mt

9.8 13.220.0

27.234.9

43.553.9

66.983.0

102.1

Source: EWEA

Summary o the oshore wind energy market in the EU in 2020

Total installed capacity o 40,000 MW

Meeting 4% and 4.2% o total EU electricity demand


Avoiding 102 Mt o CO2

annually

Total electricity production o 148 TWh

Annual investments in oshore wind turbines o 10.4 billion

Cumulative investments in oshore wind turbines o 65.9 billion in the period 2011 - 2020.


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2021 - 2030

Annual installationsBetween 2021 and 2030, the annual oshore market

or wind turbines is estimated to grow steadily rom

7.8 GW in 2021 to reach 13.7 GW in 2030. 2027 would

be the frst year in which the market or oshore wind

turbines (in MW) exceeds the onshore market in the EU.

60

80

100

120

140

160

6

8

10

12

14

16

GW

GW

0

20

40

2

0

4

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Annual 7.8 8.5 9.1 9.6 10.5 11.5 12.4 13.0 13.2 13.7

Cumulative 47.7 56.2 65.5 75.6 86.5 98.1 110.4 123.2 136.4 150.0

FIGURE 1.13 OFFSHORE WIND POWER ANNUAL (LEFT) AND CUMULATIVE (RIGHT) INSTALLATIONS (2021 - 2030)

Source: EWEA


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electricity would be produced oshore in 20308. An

additional 591 TWh would be produced onshore, bring-

ing wind energys total share to 28.5% o EU electric-

ity demand.

Wind energy production

The 150 GW o installed capacity in 2030 would pro-

duce 562 TWh o electricity, equal to 13.9% o EU elec-

tricity consumption, depending on the development in

demand or power. Approximately hal o Europes wind

8 The 400 GW o wind power operating in 2030 would produce 1,154 TWh o electricity, with the 150 GW oshore contributing

562 TWh.

FIGURE 1.14 ONSHORE AND OFFSHORE WIND ELECTRICITY PRODUCTION 2021 - 2030

462 489514 534 550 562

571 579 586 591

177209

244281

322366

412461

511562

0

200

400

600

800

1,000

1,200

1,400

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

TWh

Onshore Oshore

Source: EWEA


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Oshore wind power investments

Annual investments in oshore wind power are

expected to increase rom 11.5 billion in 2021 to

17 billion in 2030.

FIGURE 1.15 ANNUAL (LEFT) AND CUMULATIVE (RIGHT) INVESTMENTS IN OFFSHORE WIND POWER

100

150

200

250

6

8

10

12

14

16

18

billion2010

billion2010

0

50

2

0

4

6

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Annual Cumulative

Source: EWEA


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Avoiding climate change

In 2021, oshore wind power will avoid the emission

o 104 Mt CO2, a fgure that will rise to 315 Mt CO

2in

the year 2030.

FIGURE 1.16 ANNUAL (LEFT) AND CUMULATIVE (RIGHT) AVOIDED CO2

EMISSIONS 2021 - 2030

1,500

2,000

2,500

3,000

150

200

250

300

350

Mt

Mt

0

500

1,000

50

0

100

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Annual Cumulative

Source: EWEA

Summary o the oshore wind energy market in the EU in 2030

Total installed capacity o 150,000 MW


Total electricity production o 562 TWh

Meeting 13.9% o total EU electricity demand

Avoiding 315 Mt o CO2 in 2030

Annual investments in oshore wind turbines o 17 billion in 2030

Cumulative investments o 145.2 billion rom 2021 to 2030.


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1.4 Oshore

development trends bigger, deeper andurtherAs the technology develops, valuable experience is

being gained and the oshore wind industry is moving

into deeper waters, urther rom the shore with bigger

arms. Looking at the online wind arms along with

the ones under construction and already consented,

the ollowing graph represents the current trends in

distances to shore and water depths.

The wind arms that are already operating are con-

centrated in the 20x20 zone (up to 20 km rom

shore and in water depths o up to 20 metres). The

majority o uture oshore wind arms will be big-

ger in terms o capacity (bubble size in Figure 1.17),

going into deeper waters and certainly moving ur-

ther away rom the shore.

Figure 1.18 presents oshore wind arms planned or

development ater 2015.

Figure 1.18 shows that the oshore wind projects

planned or post 2015 are expected to be built in

deeper waters and urther rom shore than existing

projects and projects planned to go online beore

2015. The ollowing analysis identifes the trends,

based on the inormation in Figures 1.17 and 1.18.


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To be provided by Ewea

FIGURE 1.18 DISTANCE AND DEPTH OF PLANNED OFFSHORE WIND FARMS

Water depth (m)

Dista

ncetoshore(km)

0

60

40

20

80

100

140

160

200

120

180

0 60 120 180

Source: EWEA

FIGURE 1.17 DISTANCE AND DEPTH OF ONLINE, CONSENTED AND UNDER CONSTRUCTION OFFSHORE WIND FARMS

Under construction ConsentedOnline excluding Hywind

Water depth (m)

Distancetoshore(km)

0

20

40

60

80

100

0 10 20 30 40 50 60

Source: EWEA


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In February 2011, the Department o Energy (DOE)

announced $50.5 million (35.4 million) to support

the joint national strategy to accelerate the develop-

ment o the US oshore wind power industry, agreed

between the Secretary o Interior and the Secretary o

Energy. In this context at least nine projects have been

proposed, totalling 2,322 MW (Figure 1.20).

Three o the proposed projects (NRG Bluewater Wind

in Delaware, Deepwater wind in Rhode Island and

Cape Wind in Massachusetts) have already signed

power purchase agreements.

1.5 Europes f rst

mover advantageCurrently all major operational oshore wind armsare in European waters with the exception o the frst

Chinese oshore wind arm in Shanghai, with a capac-

ity o 102 MW. The development o oshore wind

energy globally creates signifcant opportunities or

European companies, rom manuacturers to develop-

ers, to expand their activities beyond European waters.

The United States

In the US, no oshore projects have been built to date.

Political support is slowly growing but planning, sitingand permitting procedures are still a challenge. Policy

developments show a clear trend in boosting oshore

wind development10.

In June 2010, the US Department o the Interior (DOI)

signed a Memorandum o Understanding together with

the governors o ten coastal states11 and ormed the

Atlantic Oshore Wind Consortium. Its principle aim

is to acilitate the co-ordination o oshore develop-

ment o the eastern coast. In addition, in late 2009,

the DOIs Bureau o Ocean Energy Management,

Regulation and Enorcement (BOEMRE) ormed renew-

able energy task orces in several coastal states.

In 2010, the task orces in Maryland, Delaware and

Massachusetts published Requests or Inormation

(RFI) to measure the commercial interest in desig-

nated areas or oshore development. In April 2010,

the Cape Wind project in Massachusetts became the

frst proposed oshore wind arm to obtain fnal ed-

eral regulatory approval rom the BOEMRE and the

fnal lease was issued in October. The Smart rom

the Start initiative was announced in November 2010

rom the DOI, aiming at shortening the ederal o-shore permitting process. Following that, in February

2011, BOEMRE defned our areas or potential wind

energy development in the mid-Atlantic or public com-

ments shown in Figure 1.19.

10 Inormation based on: U.S. Department o Energys 2010 Wind Technologies Market Report.11 Maine, New Hampshire, Massachusetts, Rhode Island, New York, New Jersey, Delaware, Maryland, Virginia and North Carolina.

FIGURE 1.19 MID-ATLANTIC WIND ENERGY AREAS UNDER

CONSIDERATION BY BOEMRE

Pennsylvania

New Jersey

Dover

Delaware

Maryland

Virginia

Vir

ginia

AtlanticCity

Ocean

City

VirginiaBeach

Delaware

Bay

Chesapeake

Bay

Wilmington

New Jersey

Delaware

Maryland

Virginia

Nautical miles

Legend:

0 10 20 30

Source: US Department o Energys2010 Wind Technologies Market Report


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mainly in the north and western areas o the country

where the wind resource is biggest.

However, the main centres o electricity consumption

are in the eastern and other coastal areas. The need

to overcome this grid bottleneck has pushed the devel-

opment o oshore wind arms o the coasts near the

main consumption areas.

The frst commercial oshore wind arm in China, the

102 MW Donghai Daqiao oshore wind project, came

online in June 2010. Located o Shanghai City, it is

composed o 34 3 MW Sinovel turbines. The closest

turbine to shore is situated 6 km out to sea and the

urthest at 13 km.

China is also developing a number o near-shore

projects in its vast intertidal areas. The advantage

o exploiting inter-tidal sites is shallow waters with

water depths o seldom more than fve metres. Three

FIGURE 1.20 PROPOSED OFFSHORE WIND FARM PROJECTS IN AN ADVANCED STATE OF DEVELOPMENT

Federal waters

State waters

Cape Wind (MA)

Deepwater Wind (RI)

Bluewater Wind (NJ)

Garden State Oshore Energy (NJ)

Coastal Point Energy (TX)

Fishermans Energy (NJ)

Fishermans Energy (NJ)

Bluewater Wind (DE)

LEEDCo (OH)

Legend:

1,200

1,000

800

600

400

200

0

NJ MA DE TX RI OH

1,055

OFFSHORE WIND ENERGY PROPOSED NAMEPLATE CAPACITY BY STATE

468 450

300

20

MW

29

Source: US Department o Energys 2010 Wind Technologies Market Report

In addition to the proposed projects, a major devel-

opment on the inrastructure side came in October

2010. According to the recent US DOE report or

wind technologies, a $5 billion transmission project

was announced by Trans-Elect. The Atlantic Wind

Connection project received fnancial support rom

Google, Good Energies and Marubeni Corporation.

This transmission line will be underwater and will be

built in fve phases. The fnal capacity is expected

to be as much as 7,000 MW. It will connect Virginia

to northern New Jersey and possibly New York City.

During the frst phase a line will connect Northern

New Jersey with southern Delaware with a 2,000 MW

capacity and it is expected to be built by 2016.

China

China has put great emphasis on oshore develop-

ment in the past two years. The wind base programme

started in 2008, aiming at developing some 70 GW

o wind power by 2020. Onshore wind development is


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The tender winners are all domestic utilities, as the

rules stipulate that only Chinese companies (at least

51% share owned by Chinese company) can partici-pate in the process. The turbine suppliers are Sinovel

(3 MW model), Goldwind (2.5 MW model) and Shanghai

Electric (3.6 MW model).

The second round o oshore concession tenders is

planned or the second hal o 2011, or a capacity

totalling 200 MW.

Oshore wind starting elsewhere in Asia

The Korean government has announced an oshore

wind energy strategy to attract investments wortharound 6 billion to develop oshore wind arms

with a total capacity o 2.5 GW during this decade.

The government is aiming to set up a private-public

partnership (PPP) to install about 500 turbines o

the countrys west coast. Under this PPP 100 MW o

wind projects should be operational by 2013, a ur-

ther 900 MW by 2016 and the fnal 1.5 GW by 2016.

Moreover, local governments are promoting another

4.5 GW o oshore wind projects across the country.

In the atermath o events at Fukushima, Japan is step-

ping up its eorts to develop renewables. Oshore

wind is seen as a key technology despite the challeng-

ing sea environment o the Japanese coasts. Japan

has already some 25 MW o oshore projects, near

shore, with the frst turbines operating since 2003. In

2011 a senior government panel developed plans or

a 1 GW oshore wind arm to be operational by 2020.

An initial fve year programme should und six or more

oating turbines o the North Eastern coast as a frst

step towards the larger project.

inter-tidal projects have already been built in China:

Rudong (30 MW), Jiangsu Xiangshui (6 MW) and

Shandong Rongcheng (6 MW).

Moreover, the 30 MW Rudong intertidal project is a

demonstration project in which nine dierent tur-

bine models are being tested, mainly rom Chinese

manuacturers.

Policy development

The eleventh Five Year plan or energy and renewable

energy, which is currently under development, has a

tentative oshore wind development target o 5 GW by

2015 and 30 GW by 2020.

In 2010, the National Energy Administration (NEA) and

the State Oceanic Administration (SOA) jointly issued

Oshore project development interim management

rules. They stipulate that oshore projects will be

authorised on the basis o concession tenders to

determine the tari.

In July 2011, a new policy was issued by the NEA and

SOA: Detailed rules or oshore project develop-

ment. This stipulates that oshore projects should

be at least 10 km rom the shore and in water depths

o no less than 10 metres. These rules aim to mini-

mise conicts with other sea uses such as fshing and

aquaculture. Consequently, the scope or developing

intertidal projects urther will be limited.

The frst oshore concession tender in 2010

In May 2010, the frst round o tenders took place

or our wind arms totalling 100MW, all located in

Jiangsu province. Two o the projects are intertidal the

other two are urther oshore.

The taris retained range rom 624 RMB/MWh (73/

MWh) to 737 RMB/MWh (87MWh). Compared to the

onshore tari o RMB 510 (60) to RMB 64O (75)

per MWh, the oshore bids are quite low.


33/93




aces a shortage o skilled labour, notably engineers,

O&M technicians and project managers, and that this

is an area which needs addressing.

Institutes in both Germany and the UK the two coun-

tries expected to lead European oshore wind develop-

ment during the next decade have taken measures to

address this shortage through training programmes. In

Germany the Education Centre or Renewable Energies

(BZEE) ounded in 2000 by the German Wind Energy

Association (BWE), the Chamber o Industry and

Commerce in Flensburg and wind energy enterprises

in northern Germany, provides a number o special-

ised training courses. The institute recently developeda qualifcation programme dedicated to the service

and maintenance o oshore wind arms13. In the UK

a similar collaboration between industry, government

bodies and Narec, the UK National Renewable Energy

centre or renewable energy development and testing,

has resulted in the opening o a new training tower.

This is designed to provide academic and industrial

training programmes or technicians in the wind indus-

try, with a strong ocus on the oshore sector14.

The University o Aalborg in Denmark has been a ore-

runner in oering academic programmes ocused on

wind energy including a dedicated Masters course in

wind energy as well as other related on-site training

possibilities.

Over the last three years the POWER Cluster project

(Pushing Oshore Wind Energy Regions), the direct

successor o the North Sea Region (NSR) Interreg IIIBs

programme POWER project, has been running. The pro-

ject comprises eighteen partners rom six countries:

Germany, the UK, Denmark the Netherlands, Norway

and Sweden15

. As part o its objectives, the projecthas been tackling the problem o missing specialists

1.6 Oshore wind

energy employmentand uture skillrequirementsOshore wind employment

Historically, the principal political drivers or the deploy-

ment o renewable energy in many countries were the

twin pillars o climate change objectives and energy

security the ormer being inuenced through inter-

national agreements notably within the UNFCCC and

more stringently through the EU with the 20% renew-

able energy by 2020 target. However the fnancial cri-sis o 2008 - 2009 and the resultant recession are

adding industrial development, export potentials and

employment opportunities associated with renewable

energy as a primary motivation or promoting renew-

able energy development.

The potential rewards are vast EWEA estimates that

the wind energy sector in Europe will create around

273,000 direct and indirect new jobs over the next

decade, taking the industry to a total o approximately

462,000 direct and indirect jobs by 202012. The cor-

responding fgures or the oshore sector alone are

134,000 and 169,500 respectively, highlighting the

ast increasing importance o oshore development

within the broader wind industry in Europe. By 2030,

around 480,000 people are expected to be employed

in the sector, around 300,000 o whom in the oshore

sector (almost 62% o the total).

Requirements or uture

Very high growth rates are expected in the oshore

wind sector over the next decade, thereore this will

create huge demand or appropriately skilled sta.There is general agreement in the industry that it

12EWEA Pure Power 2011 report, http://www.ewea.org/fleadmin/ewea_documents/documents/publications/reports/Pure_Power_III.pd13 http://www.wwindea.org/technology/ch03/en/3_5_1.html

14 http://www.narec.co.uk/media/news/n/successul_collaboration_launches_new_wind_training_acility_in_the_north_east15 http://www.power-cluster.net/AboutPOWERcluster/tabid/587/Deault.aspx


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Scotland. There are signifcant skill-set cross-over

opportunities with the wind industry as noted by re-

erence to the oil and gas sector at numerous pointswithin this report. Specifcally, the transer o Health,

Saety and Environment (HSE) skills rom this sector

are likely to be required.

However in order to prevent skills shortages severely

impacting oshore wind arm development, ur-

ther measures to provide training courses and edu-

cation or engineers and technical sta need to be

addressed by industry, universities and policy-makers

across Europe.

in oshore wind by promoting career opportunities

to young people and students and acilitating quali-

fcation pathways. A sister project named the SouthBaltic OFF.E.R. project (South Baltic Oshore Wind

Energy Regions) was initiated in 2010 and is due or

completion in February 2013. Part o the project is

specifcally aimed at enhancing educational possibili-

ties in oshore wind and generating opportunities in

the wind industry or highly qualifed workers.

Further potential exists or the transer o skills rom

the oil & gas sector in areas expected to see declin-

ing demand or their services, such as Aberdeen in


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SUPPLY CHAIN INTRODUCTION2

Photo:Oshorestatoil

2.1 Contracting trends

2.2 Scope allocation

2.3 Location o key players


36/93


The remainder o this chapter provides an overview

o the history and current status o the supply chain

or the oshore wind power industries, as well asanticipated uture trends or each o the key sub-

sectors: wind turbines, substructures, electrical sys-

tems, installation vessels and ports.

2.1 ContractingtrendsUnlike more mature sectors such as the automotive

industry and indeed onshore wind, the oshore wind

supply chain is currently exible in terms o both par-ticipants and contracting structures. The ollowing

section is intended to provide a snapshot o the con-

tracting landscape in order to characterise the type o

companies involved in the supply chain and the rela-

tionships between them.

A potted history o contracting structures within the

oshore wind sector is given below.

2000 - 2004: Engineer-Procure-Construct-

Install contracts (EPCI) the norm

The majority o early commercial oshore wind pro-

jects were contracted on the basis o a single major

construction contract under an EPCI (Engineer-

Procure-Construct-Install) arrangement. The wind tur-

bine manuacturers were the turnkey counterparty in

these cases, usually via a joint venture with a marine

contractor. These oers coincided with high levels o

early competition as the supply chain ought or early-

mover advantage in this promising new industry.

2004 - 2010: switch to multi-contracting

Whether due to a deliberate policy o 'loss-leading' orinadvertent cost optimism, it is considered unlikely

that the principal contractors turned a proft on the

preceding early engagements. Evidence or this is

demonstrated through the subsequent insolvency or

buy-outs o several key second level contractors

notable examples including Dutch Sea Cable, CNS

Renewables, Mayower Energy and more recently

The supply chain or the oshore wind industry is

evolving rapidly. The market promise underpinned by

ambitious national programmes, particularly in the UKand Germany, has sparked an enormous volume o

industrial interest as well as a signifcant amount o

new investment in plant and acilities. This burst o

activity should be set against the backdrop o a reces-

sionary climate in other industries, which has histori-

cally been responsible or the diversion o investment

and supply chain resources rom oshore wind.

Contracting practices have also shited signifcantly

in the last ew years, perhaps in part as a result o

the changes in the available companies in the supplychain mix. The emergence o larger, more fnancially

sound contracting partners who are willing to take on

a broader scope o supply within an individual project

is seen as a positive development rom the perspec-

tive o investor confdence. Also, perhaps or the frst

time, these developments oer the real possibility o

the widely discussed cross ertilisation o skills and

knowledge rom the oshore oil and gas sector to

come to ruition.

Increased levels o competition within the supply

chain are observed as a result o new capacity and

companies becoming engaged in the industry. In the

short term, this is likely to help stabilise capital pricing

o projects with the prospect o signifcant urther sav-

ings through scale, learning and innovation eects so

long as competition levels remain healthy. Clearly this

trend should be set against the increased technical

challenges associated with moving urther rom shore

and in to deeper waters. New approaches and tech-

nologies will be required in order to meet these chal-

lenges, and as explored in this chapter, there is strong

evidence that the supply chain is responding throughinvestment in innovation.

We are also witnessing the development o more

long-term commercial partnerships between some

o the leading project developers and their supply

chain. This brings greater certainty and continuity to

the industry.


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(primarily or oundation design), certifcation authori-

ties, project management companies, Health & Saety

consultants, marine warranty surveyors, insuranceproviders and other minor contractors. The position o

any individual company amongst the above mentioned

categories within the value-chain is highly uncertain,

with a wide variety o approaches to procurement

strategy being adopted to date, as illustrated in Figure

2.2. In this context "Level" reers to the position o

the entity in question in the contracting hierarchy e.g.

Level 1 represents a direct contractual relationship

with the project owner, Level 2 a sub-contract let by a

Level 1 supplier, and so on.

8. EPCI contractors large construction frms or joint

ventures between parties rom one or more o the

above categories taking responsibility or a broaderscope o work, in some cases comprising the vast

majority o the capital spend.

9. Port operators various private port companies

and publically owned harbours providing acilities

or manuacturing and/or assembly, acting as a mo-

bilisation port or the construction phase and as

base or operation and maintenance during the lie-

time o the projects.

In addition to these main categories, smaller con-

tract lots will be awarded to specialist design houses

FIGURE 2.1. ILLUSTRATION OF TRENDS IN CONTRACTUAL PRACTISE

Source: GL Garrad Hassan

2002

OEMs as turnkey providers Early competition

(market positioning)

Low prices DONG the exception

2007

Fingers burnt Complete withdrawal o

turnkey approach

Owners orced towardsmulti-contracting

2011

Risks better understoodby supply chain

New entrants oeringlarger scope

Some owners utilisingmulti-contracting ability

2013?

WTG OEMs more comortablewith larger scope (again)

Large BoP players oeringwrapped solutions

Approximate relative size and number o major construction contracts:


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Chapter 2: Supply chain Introduction

This uid picture is primarily a symptom o the relative

immaturity o the oshore wind industry which may be

contrasted with the relatively stable and well-defned

supply chain or mature sectors, such as the automo-

tive industry, or example.

FIGURE 2.2. A FLUID SUPPLY CHAIN INCUMBENT AND NEW ENTRANT SUPPLIERS

Source: GL Garrad Hassan

Wind turbinemanufacturers

Structuralfabricators

Electricalsuppliers

Marinecontractors

Cablesuppliers

Cableinstallers

EPCIcontractors

Portoperators

Example

incumbents

Siemens,

Vestas,

REpower,

Areva

SIF,

Smulders,

Bladt, EEW,

Weserwind,

BiFAB, Aker

ABB,

Siemens

Energy,

Alstom Grid

A2Sea,

MPI, SHL,

Geosea

Nexans,

Prysmian,

ABB NKT,

Scanrope

Technip,

CT Oshore,

Global

Marine,

Visser&Smit

Fluor,

Van Oord,

ABJV, MT

Hojgaard,

DEME

Various

Example

new

entrants

BARD, GE,

Doosan,

Gamesa,

Alstom,

Nordex,

Mitsubishi

H&W,

TAG, Tata,

Hereema,

ZPMC,

Shinan,

Fabricom

C&G Fred Olsen,

Beluga,

Inwind,

GOAH,

Sea Jacks

DRAKA,

JDR

Beluga Hochtie,

Saipem,

Technip,

Subsea7

Various

Level 1

Level 2

Level 3

Legend:Ticks and crosses repre-

sent likelihood o position-

ing at relevant Level in thecontractual hierarchy:

Likely Possible

Unlikely


40/93


41/93



Chapter 2: Supply chain Introduction

drawing on signifcant North Sea oil and gas and

coastal engineering experience. Electrical equipment

and subsea cable supply has a somewhat more dis-tributed supply base with notable contributions rom

Norway, Sweden, Germany and Italy. The UK, which

until recently had not played a signifcant role in the

supply to the oshore wind sector, has seen substan-

tial recent investment, with new acilities being estab-

lished primarily along its east coast to serve domestic

and export markets in the North Sea.

The specifc companies eaturing in Figure 2.4 are dis-

cussed in more detail later in the report. See fgures

3.3 and 4.3 or more detail.

2.3 Location o

key playersFigure 2.4 shows the geographical distribution o

some o the key suppliers rom the upper levels o the

oshore wind supply chain in Europe, including estab-

lished and planned manuacturing inrastructure.

Denmark and Germany have historically played and

continue to play host to a signifcant amount o estab-

lished inrastructure, particularly in terms o wind tur-

bine manuacturing acilities. The Netherlands and

Belgium have also enjoyed signifcant participation,

especially via the provision o installation services

FIGURE 2.4 AN EXAMPLE OF KEY SUPPLIERS AND MANUFACTURING INFRASTRUCTURE

Wind turbine manuacturers

Foundation manuacturers

Electrical equipment suppliers

Marine contractors

Cable suppliers


42/93


KEY FINDINGS Competition across the supply chain or oshore wind is increasing with an inux o signifcant

new entrants over the last 12 - 24 months. The contracting ormat has taken a ull turn away rom

and back towards EPCI turnkey contracts: wind turbine manuacturers initially vied or early-mover

advantage, but they are now in a knowledgeable and risk-averse market with multiple contracting

practices. Looking to the uture, more mature risk-eective and cost-eective supplier collabora-

tions are likely to be developed.

The emergence o major contractors rom the oshore oil and gas and traditional maritime

sectors may prove to be a signifcant shit in the dynamics o the supply chain.


43/93

WIND TURBINES3Photo:Eon

3.1 Historical context and market options

3.2 Key sub-components

3.3 Current status o industry supply chain

3.4 Future technical trends


44/93

Wind in our Sails The coming of Europes offshore wind energy industry 43

manuacturers have until recently had limited incentive

to participate in oshore wind. Indeed there is only

limited incentive to invest heavily in ramping up pro-

duction acilities or what is still considered by some

as a high-risk, marginal market. The plot in Figure 3.1

shows how historically oshore wind has been dwared

by the scale o onshore wind deployment, globally.

Despite this, build-out rates or oshore wind over the

last three years have been relatively impressive with

year on year average growth o ~40%, leading to a total

installed base o around 3 GW by the end o 2010.

As momentum increases, there are some indicationsthat the supply-demand imbalance o recent years is

beginning to ease, with increased levels o competi-

tion between the handul o existing incumbent sup-

pliers. In the medium term, the prospects or urther

improvements in the level o competition increases

with new entrant suppliers rom both Europe and Asia,

providing additional supply capacity.

3.1 Historical context

and market optionsThe rapid acceleration o onshore wind energy deploy-ment, uelled by particularly strong growth in North

America and Asia as well as sustained expansion in

Europe, has placed signifcant pressure on the global

wind energy supply chain as demand has come to

outstrip supply. Turbine production capacity has, to a

large degree, been limited by second and third level

supplier constraints. In particular, shortages o key

components such as gears, large bearings, transorm-

ers, castings, orgings and carbon-fbre have contrib-

uted to this trend. Currently, the market or oshorewind turbines largely coincides with that or onshore

turbines in terms o players, products and production

acilities.

Given the additional risks associated with supply-

ing technology to the oshore market and the high

demand or turbines in lower-risk onshore markets,

FIGURE 3.1 GLOBAL OFFSHORE WIND HISTORICALLY A NICHE MARKET

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Onshore 3.7 6.4 7.0 7.6 7.6 10.8 14.3 18.8 25.1 38.2 37.3

Offshore 0.0 0.1 0.2 0.3 0.1 0.1 0.2 0.2 0.4 0.6 1.0

15

20

25

30

35

40

5

0

10Annualwindcapacity(GW)

Source: EWEA and GWEC


45/93



Chapter 3: Wind turbines

industry. Against this, we are likely to see more strate-

gic acquisitions as the manuacturers seek to secure

a competitive advantage.

3.2 Key sub-componentsTowers

Supply o towers or oshore wind turbines is consid-

ered to be relatively elastic, with low barriers to entry

and an economic driver to manuacture close to mar-

ket. A mixture o in-house and outsourcing approacheshas been adopted by the wind turbine manuacturers.

A reasonably wide selection o tower manuacturing

acilities exists in Europe, although those capable

o manuacturing larger diameter towers required or

wind turbines in the 5-7 MW range are more limited.

Whilst manuacturing equipment can be upgraded to

cope with this, transportation constraints may pre-

vent access to market in some cases. To mitigate the

impact o this, it is considered likely that additional

coastal tower manuacturing acilities will be required

in Europe in the coming decade.

Blades

Blade technology and manuacturing is increasingly

viewed as a highly strategic element o the value chain

or wind energy, given the high technological barriers to

entry and the value o Intellectual Property associated

with their design / production. In addition, previous

shortages o materials and production capacity may

There is now clear evidence o a trend towards oshore

specifc wind turbine models and in some instances,

manuacturers. This trend should mitigate the histori-cal 'resource diversion' suered by the oshore wind

industry, particularly as manuacturers commit to sig-

nifcant investment in bespoke production acilities.

There is strong evidence or this with three manuac-

turers with turbines in the 5-6 MW range commission-

ing substantial production acilities in the last ew

years (BARD, REpower and Areva). Whilst production

is yet to ramp up to serial levels at these sites (all in

northern Germany), the development signals that this

critical part o the supply chain is now confdent o

long-term, sustainable markets.

However, the biurcation discussed above, which is

considered to be an important current trend, will not

entirely resolve the resource diversion caused by con-

tinued high demand rom the global onshore wind

business, since second and third level sub-suppliers

are likely to remain largely common to both onshore

and oshore products and players. Recent announce-

ments have indicated a scaling-back o new produc-

tion capacity rom previous plans or certain key

sub-suppliers which on the surace would suggest a

urther tightening o supply. In reality it is considered

that this development is a reaction to lower than antic-

ipated demand rom onshore wind, particularly rom

North American markets and in this respect the o-

shore market may not be aected directly.

In the short term new entrant wind turbine manuac-

turers will rely on strategic partnerships with third

party suppliers until they establish themselves in the


46/93


Although there is some evidence o vertical integration

(e.g. Vestas), the majority o cast and orged compo-

nents are supplied by independent companies. Supplycapacity in both cases has increased over the last two

to three years.

Overall, key trends in the supply chain or oshore

wind turbines may be summarised as ollows:

Incumbent wind turbine manuacturers are moving

towards vertical integration o their supply chains

through investments and acquisitions. This is driven

by the desire to secure design and production IP as

well as capacity or uture expansion. Wind turbine

designers are shiting towards more specialist tech-

nologies and this is likely to increase the trend to-

wards vertical integration urther still.

In the short term new entrant wind turbine manu-

acturers will have to rely on strategic partnerships

with third party suppliers until they establish them-

selves in the industry. Against this, we are likely to

see more strategic acquisitions o specifc technol-

ogy providers as the manuacturers seek to secure

a competitive advantage. A recent example o this is

Mitsubishi's purchase o specialist technology pro-

vider, Artemis, and GE's investment in power con-

verter supplier Converteam.

have contributed to cost increases. The longer blades

required by oshore wind turbine manuacturers bring

additional manuacturing and logistical requirementsand are likely to limit additional supply chain capacity

to coastal locations. Independent suppliers are likely

to continue to have a limited role supplying part o the

new entrant wind turbine manuacturers.

Drive train components

Drive train components including gearboxes, large bear-

ings and generators are increasingly viewed by wind tur-

bine manuacturers as strategically critical elements

o the value chain, with an increasing trend towardsvertical integration. Examples include investments

by Siemens and Suzlon in leading gearbox suppliers

Winergy and Hansen. Looking ahead, the technological

developments in the supply chain towards more spe-

cialist solutions medium and low speed (direct drive)

concepts is likely to accelerate the process o verti-

cal integration with wind turbine manuacturers looking

to consolidate control o design, intellectual property,

manuacturing and quality as well as securing supply

capacity.

Castings and orgings

The bedrame, hub and gearbox/bearing housings are

the main cast components within a modern wind tur-

bine with the main shat, and bearing/gear rings being

orged constructions. Whilst there is a large global

supply base or castings and orgings, the dimensional

demands o wind energy, and in particular or large

wind turbines reduces the feld o available suppliers.


47/93



Chapter 3: Wind turbines

3.3 Current status o

industry supply chainFIGURE 3.2 SELECTION OF LEADING OFFSHORE WIND TURBINE SUPPLIERS AND FACILITIES

4 1

825-67

3

No Company Notes

1,2 Siemens

Established supplier with a frm order book or over 3 GW o oshore wind capacity to be delivered

beore 2014. Existing 3.6 MW platorm manuactured in Denmark with new UK assembly acility

planned or orthcoming 6.0 MW direct drive model.

3,4 Vestas

Established supplier with oshore deployments totalling ~1.5 GW to date. V80 and V90 wind turbineplatorms have given way to current market oering o the V112 3.0 MW unit. Recently announced

plans or UK production o V164-7.0 MW unit rom ~2015, the latter being the frst Vestas unit to be

exclusively intended or oshore deployment.

5 REpower

Previous market oering (5M) now superseded by upscaled 6.0 MW version (6M). Demonstration

deployments o the 5M at Beatrice (UK - 2007), Thornton Bank (BE - 2009) and Alpha Ventus (DE - 2009)

have paved the way or the frst commercial-scale sales (Ormonde, Nordsee-Ost and Thornton Bank

phases 2&3) totalling ~650 MW.

6 AREVA

First prototype o M5000 (5 MW) unit deployed in 2006 with oshore demonstration o six units at

Alpha Ventus producing frst power rom 2010. Commercial orders secured or Borkum West II Phase 1

(200 MW, DE), Global Tech I (400 MW, DE), MEG1 (400 MW, DE) to be delivered in 2012/13.

7 BARD

First prototype o BARD 5.0 (5 MW) unit deployed in 2007 ollowed by frst commercial deployment

on Bard Oshore 1 (400 MW) which is currently in construction. Unique vertically integrated business

model including project development, substructure abrication and installation.

8 Nordex

Early interest in oshore sector with marinisation o N90 (2.5 MW) product. No urther oshore

deployment beyond a near-shore prototype in 2006. Recent announcement o oshore-specifc product

(N150-6000) with frst deployments o this 6 MW unit expected in 2014/15.


48/93


A supply-side analysis has been undertaken based on

two databases, known as the GLGH Component and

Activity Costing Database and the GLGH OshoreWind Installation Vessel Database, or the period

2010 - 2020. This has been carried out or each major

Level 1 activity (wind turbine supply, oundation supply,

electrical equipment supply and installation vessels)

on the basis o the current and uture planned expan-

sion o capacity.

Projections o supply capacity are notoriously problem-

atic, especially beyond a two to three year timerame.

In this regard, the ollowing actors are highlighted:

Supply capacity or certain items is relatively elas-tic and dynamic it can be ramped up, within lim-

its, to meet demand in quite short timerames. In

these cases, pressure on supply rom the market

is less likely to result in short-term upward pres-

sure on pricing. In the majority o cases or the o-

shore wind sector however, investment decisions or

signifcant additional Level 1 supply chain capacity

must be made 18-36 months beore that capacity is

ready to be delivered, with

Documents

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