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Orders for wind turbines to fall by 93%, energy experts predict  

Credit:  Tim Webb, www.guardian.co.uk 7 November 2010 ~~

Orders for offshore wind turbines in Britain will slump next year, threatening to halt the industry’s recent growth and the expected creation of up to 10,000 “green economy” jobs.

Analysts are forecasting a 93% drop in the installation of new offshore windfarms in 2013 compared with the previous year. As orders for cables, foundations and other equipment are typically made two to three years ahead of the project being completed, the slowdown will start to bite among UK suppliers next year.

Windfarm developers are worried that the hiatus in the industry will last several years, which could result in large-scale job losses if other related work cannot be found. One said this gap would cause “huge problems” for the supply chain and it would be hard for manufacturers to invest in new facilities in Britain without a steady stream of work.

Britain recently overtook Denmark to become the world’s largest offshore windfarm player, implying the tripling of capacity in the next two years. But new projects will dry up in 2013. Only 90 megawatts (MW) of newly installed capacity, which is enough to supply 30,000 homes when the wind blows, is being forecast by energy experts at Douglas-Westwood, compared with 1,368Mw the year before.

Energy companies are expected to spend the next two years planning bids to build huge “Round 3” projects and these may not become operational much before the end of the decade.

There are other extra projects on the drawing board which are supposed to fill this gap. But planning problems, difficulties securing finance and cost overruns on existing projects mean that these plans could be scaled back. Swedish firm Vattenfall said last month that it would not take up the option of expanding its Thanet windfarm – the largest offshore project in the world – blaming problems securing access to the grid.

Analysts at Douglas-Westwood are forecasting a pick-up in activity in 2014, estimating 774MW of new capacity, and bigger increases beyond that, but this assumes that developers build these extra projects.

Huge problems

One offshore windfarm developer said: “The industry faces a gap mid-decade whilst it waits for Round 3 and this will cause huge problems for the supply chain. Projects such as Thanet have kicked off the programme after the Round 1 demonstrator projects but without a steady build-up of work the investments needed, for example in new manufacturing facilities, may be difficult to justify.”

The industry received a huge boost last month when Siemens, General Electric and Gamesa said they would go ahead with plans to build new turbine manufacturing facilities in Britain. But the factories may not ramp up production until towards the end of the decade for Round 3 projects.

The availability of bank finance for offshore projects – at least twice as costly as onshore windfarms – has still not returned to pre-credit crunch levels. Now there are only 10-14 banks actively lending, compared with almost 40 before 2008, each lending about half what they were lending before. Andy Cox, head of KPMG’s energy practice, said: “It takes more time to get their credit committees comfortable with the risks associated with these projects, particularly as they get bigger and bigger. A huge financing gap in the market is looming with Round 3.”

Middle East funds such as Masdar, which took a stake in the London Array project when Shell pulled out, are in talks with cash-strapped utility firms about making further investments.

The government will outline this month how it will overhaul the energy market to make it more attractive to invest in low-carbon forms of generation such as gigantic offshore windfarms.

Source:  Tim Webb, www.guardian.co.uk 7 November 2010

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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