Offshore windfarms have high risks, says analysis

FRANKFURT, Germany, 2004-07-07 (Refocus Weekly)

Offshore windfarms still have high risk from construction, technological and operational issues, according to an assessment by a company involved in credit analysis.

“The turbine technology for windfarms a long way from shore is not sufficiently tested, and the distance from the coast and poor weather conditions could prevent necessary repairs,” says Jan Willem Plantagie of Standard & Poor's Ratings Services in the report, ‘Winds of Change Blow Through The U.K. Wind Power Sector.’ Maintenance costs could increase if there were a failure in the connection between the windfarm and the main grid, and construction and repair costs are likely to be high.

“All these factors would have a direct negative impact on turbine availability,” he adds.

Britain is particularly focussed on developing offshore wind projects, but such projects carry “significantly higher risks than onshore ones.” In addition, few offshore projects have been undertaken and, although Germany, the Netherlands and Denmark want to develop them, the UK's proposals are “the most ambitious.”

Considerable uncertainty surrounds wind power planning requirements, infrastructure and grid access costs in Britain, and this uncertainty “may threaten the sector's development in future years and constrain its contribution” to government targets for renewable energies. “Conflicting messages sent by different government departments further increase the uncertainty about future support for the industry,” the report warns.

“The UK's abundance of windy weather could deliver significant clean renewable power for the nation over the next decade,” which would put the country on track to meet the target of 15% of electricity from renewables by 2015. The industry expects Britain to have the fourth-largest wind capacity in the EU by 2010, but these goals seem “optimistic” given that total capacity at the end of last year was only 649 MW, equivalent to 0.5% of the country’s power, explains Plantagie.

“It is likely that an improved planning permission process would be required, along with a long-term, benign regulatory framework to deliver the government's expected targets,” he says.

Despite the positive signals such as extending the Renewables Obligation Scheme to 2015, the installation of 100 MW of new wind capacity during 2003 and the opportunity to install large windfarms beyond the 12-nautical-mile limit, the domestic industry still has a high level of objections to windfarms from the Ministry of Defence, as well as a generally protracted proposal evaluation process for turbines. “Recent renewable energy studies have concluded that other energy sources are cheaper than wind power, leading to renewed debate about its viability.”

“In Standard & Poor's opinion, however, offshore wind power generation is still developing, and construction, technological, and operational risks are high,” the report concludes, and a list of factors would have a “direct negative impact” on turbine availability. The long-term maintenance needs of turbines in deep saltwater have not been gauged and the entry of “new and inexperienced offshore developers” into the offshore sector “may further increase risks.”