The deal signed between Siemens and Dong Energy to supply 300 offshore wind turbines, estimated to be worth Eur2.5 billion, reaffirms the ‘fantastic’ potential for the UK to become a leader in offshore renewables, according to WWF-UK. The group warns, however, that Government indecision over support for renewable energy was creating uncertainty in a sector which needed to plan investment decisions for the long term.

Jenny Banks, energy policy officer at WWF-UK, says: “This deal is fantastic news for the UK but it’s coming despite, not because of, what the Government’s doing. Political rows over support for renewables between DECC and the Treasury risk serious damage to this sector, even though the economics of wind are, according to the CBI, ‘blindingly obvious’. The Government also needs to be aware that the industry’s also looking for certainty beyond 2020 too – otherwise there’s a danger that serious investment like this in the UK economy will simply drop off a cliff-edge.”

The world’s largest operational offshore wind farm has been opened off the coast of Barrow-in-Furness, Cumbria, England. The £1 billion Walney wind farm is a joint venture between DONG Energy (50.1%), SSE (25.1%) and OPW (24.8%). With 102 turbines and a total capacity of 367.2 MW, Walney can supply up to 320,000 households a year with renewable power.

The wind farm, which combines the Walney 1 and 2 projects, has already set a number of industry records, and will create approximately 60 jobs at its new operations centre in Barrow-in-Furness.

DONG Energy managed to construct Walney 2 in the fastest ever time for an offshore wind project, with all turbines and cables installed in just five months and 13 days, setting a record in the sector. It marks an important step for the industry, and DONG Energy’s strong drive towards further industrialising the industry.

Walney is also ground-breaking in its financing, being the first UK offshore wind farm to receive investment from a pension fund service provider and an equity fund before it had even been built. OPW, a consortium of the Dutch pension fund service provider PGGM and Ampere Equity Fund, took a 24.8 per cent stake in the project in December 2010.

The partnership with PGGM and Ampere Equity Fund, which is managed by Triodos Bank’s subsidiary Triodos Investment Management, clearly demonstrates that institutional investors are willing to invest in well-structured offshore wind projects alongside market leading industry participants. DONG Energy has around 30 per cent of the offshore wind market throughout Europe. Walney is made up of 102 Siemens Wind Power turbines each with a capacity of 3.6 MW.

2011 was a stable year for the offshore wind industry with 235 new offshore wind turbines grid connected, worth approximately Eur2.4 billion. The European Wind Energy Association’s offshore wind statistics for 2011 show that 235 new turbines with a total power capacity of 866 Megawatts (MW) were fully grid connected across nine offshore wind farms. This was slightly down on the 883 MW of new offshore wind capacity connected in 2010.

Nine offshore wind farms currently under construction will bring online an additional 2375 MW – increasing the EU’s total installed offshore wind power capacity by 62%. Across the EU, a total of 1,371 offshore turbines have now been grid connected, with a total power capacity of 3813 Megawatts in 53 wind farms in ten European countries.

EWEA’s target for installed EU offshore wind power capacity by 2020 is 40,000 MW, producing approximately 4% of the EU’s total electricity consumption.

“The offshore wind sector witnessed a stable market in 2011,” says Justin Wilkes, policy director of EWEA. “Despite the economy-wide financial squeeze, 2011 saw a 40 per cent increase on the previous year in offshore non-recourse debt financing, up from Eur1.46 billion in 2010 to Eur2.05 billion in 2011.”

He continues: “The strong project pipeline and financial developments highlight the importance of countries continuing to provide and develop stable long-term frameworks for offshore wind power in order to allow the industry to continue its development.”

The majority (87%) of all newly installed and grid connected offshore wind power in 2011 was in British waters. Siemens supplied 80% of the MW installed offshore last year while SSE and RWE Innogy were the most active developers and DONG Energy continued to be the most active equity player in offshore wind power.

Belfast Harbour and DONG Energy, a world leader in offshore wind farms, are combining to establish a new hub for the burgeoning offshore wind energy sector. As part of the project, Belfast Harbour is to fund and build a new £40m, 450m quay and 50-acre logistics space on the County Down side of the Harbour.

The project would create up to 300 full time jobs and 150 construction posts. If a final agreement is signed, DONG Energy will use the facility to pre-assemble both the turbines and their foundations. The scheme represents one of the Harbour’s largest ever capital investment projects.

Peter Gedbjerg, DONG Energy vice president and UK country manager, power, says: “We hope to achieve a long and fruitful relationship with Belfast Harbour. The possibility of a tailor-made facility to make the installation of offshore wind turbines even more efficient fits perfectly with DONG Energy’s goal of bringing down the construction cost of renewable energy.”

Over the next 20 years it is expected that 11,000 new offshore wind turbines will be built in UK and Irish territorial waters at a cost of about £100 billion. With almost a quarter of the planned turbines located within 150 nautical miles of Belfast, the Harbour area is well placed to become a major centre in the rapidly expanding offshore wind sector.

The Crown Estate, which manages licences for UK offshore wind farms, has awarded DONG Energy (as part of its Round 2 and 2.5 Licence Rounds), the licence to construct the West of Duddon Sands Offshore Wind Farm together with Scottish Power Renewables, and to further extend the capacity of the Burbo Bank (up to 234 MW) and Walney (up to 750 MW) offshore wind farms in the Irish Sea.

“This initiative, which the Harbour has been pursuing for well over a year, has the potential to kick-start Belfast’s aspirations to become a leading player in the new green economy,” explains Len O’Hagan, chairman of Belfast Harbour. “Belfast Harbour has a long track record of investing in new infrastructure, such as the dry docks and quays which helped make Belfast the ‘shipbuilder to the world’ or the aerodrome which laid the basis for Belfast’s aviation industry. In similar vein, our expectation is that investment in a new offshore wind facility will help establish a new 21st century renewable cluster.”

In addition to turbine assembly operations, there may also be opportunities to attract turbine manufacturers to Northern Ireland, helping to lay the basis of a Marine Energy Park that would create significant numbers of new high-value-add jobs and inward investment.

Belfast is the only port on the island of Ireland with the capacity to undertake a turnkey investment of this scale in the timescales required. DONG Energy has built five of the world’s ten largest offshore wind farms.

Ten years after the first wind farm was commissioned, the UK is now Europe’s leading offshore wind generator. Currently planned offshore wind projects will generate 32 gigawatts of electricity or one quarter of the UK’s electricity needs.

The planned development of a Marine Energy Park is supported by Belfast Harbour’s long-term land reclamation strategy (the proposed site was initially reclaimed in the 1960s) and will complement the decision by Bombardier, Queen’s University and the University of Ulster to develop the Northern Ireland Advanced Composites and Engineering Centre, also within Belfast Harbour Estate.

Energy giant E.ON, which operates wind farms in Northern Ireland and Britain, has become the latest investor to back the Carbon Trust’s Offshore Wind Accelerator (OWA), a pioneering industry initiative to slash the costs of offshore wind power.

EON is teaming up with five founding members that include offshore wind developers: DONG Energy; RWE Innogy; ScottishPower Renewables; SSE Renewables and Statoil, which recently announced it will be extending its commitment to the OWA over the next four years bringing the total investment into the project to £9.2m.

Collectively the OWA partners represent 61% of the offshore wind capacity licensed in UK waters (30GW). Launched by the Carbon Trust in 2008, the OWA is one of the world’s leading technology research and development initiatives designed to reduce the total cost of offshore wind energy.

Offshore wind structures are taller than the Gherkin building in London and installation rates need to increase from less than one a week to as many as 2.5 per day by 2020 if the UK is to meet its 15% renewable energy target. The OWA has the objective to reduce costs by 10% over the next decade which would enable deployment to happen faster.

“E.ON has installed 64% of all offshore capacity in Europe so far this year, and we have another 4000MW of offshore wind in our project pipeline, so reducing the cost is of vital importance to us. The OWA will help focus the industry’s efforts to tackle the big issues in a coordinated way and the results will benefit us all,” says Michael Lewis, European managing director of E.ON’s renewable business.

“The fact that one of the world’s largest and most important energy companies is joining this project shows just how serious investors are in the offshore wind potential of the UK,” points out UK Energy minister Charles Hendry. “We’ve got the resource for a huge expansion of offshore wind and we want to make sure we harness the supply chain, investment and job potential that can bring.”