World leader Britain takes its partners for offshore wind revolution

An international network, backed by the Prime Minister, David Cameron, has sett out its vision for offshore windfarms in the North Sea.

Their vision is for 40 gigawatts (GW) of offshore wind capacity to be deployed in the region by 2020. This is sufficient electricity to power the cities of London, Paris, Berlin, Dublin, Edinburgh, Copenhagen, Amsterdam and Brussels together.

Their astonishing claim is that, in the long-term, the total potential of economically-accessible offshore wind energy resources in Europe exceeds that of its total oil and gas production, with the potential to create more jobs than the North Sea oil and gas industry at its peak.

David Cameron has issued a statement reiterating his support for the drive. He first announced the setting up of the body in April at the clean energy ministerial, when it comprised only 20 companies. Called Norstek, it now includes over 40 world leading manufacturers, developers, supply chain companies, researchers and industry bodies.

“I am delighted to see Norstec rising from the waves," he said. “We are on the cusp of a second, clean energy revolution in the North Sea. Close collaboration between industry and government will be critical to making this happen.”

This was underlined by Edward Davey, Energy and Climate Change Secretary, who spoke of the “massive growth opportunity for the UK and our neighbours around the northern seas, bringing jobs and re-energising once thriving industrial heartlands on the East Coast and beyond.

“I am determined that we work closely with North Seas governments, businesses and academics to make the most of our plentiful offshore renewable resources,” he added. “Norstec will help the offshore wind industry in the northern seas to grow and create a new industrial revolution, driving economic growth across this part of Europe."

Maria McCaffery from Renewable UK said that its chief advantage was that it “fostered collaboration" because “we have more to gain by working together as nations than by pursuing our independent agendas".

She said this would “not only foreshorten the timescale for actual deployment of the generation capacity, but we can establish a new industrial wing and a skilled workforce". The initiative represents an enormous civil engineering challenge on an unprecedented scale.

World leader

The UK is already a world leader in offshore wind power. It has more than 2.67 GW of offshore wind capacity installed, enough to power more than 1,800,000 British homes. This is over 60% of the total of European offshore wind capacity.

Last month saw three major projects commencing generation: Statoil and Statkraft’s 317MW Sheringham Shoal wind farm off the coast of Norfolk, Vattenfall’s 150MW Ormonde wind farm off the coast of Cumbria, and SE and RWE npower renewables' 500MW Greater Gabbard, off the Suffolk coast.

Together these have created over 1,700 jobs, with a capital investment of over £2 billion.

Other countries, though, are about to get in on the act, putting the UK in a prime position to offer its expertise abroad.

American ambitions

Deepwater Wind, a company majority-owned by New York investment firm DE Shaw and minority-owned by Boston-based wind developer First Wind, is planning to build its first offshore wind farm off Rhode Island. It aims to set up a string of them off the East Coast.

It is enthusiastically backed by Rhode Island's state administration and will be built by a local company, Providence. It hopes to achieve a federal lease during the first quarter of 2013.

Initially, there will be five Siemens 6 MW turbines, capable of powering 10,000 homes. Three 1 GW projects will follow. Eventually, there will be a network comprising of up to 200 turbines, costing over $4 billion and connected to New England and New York.

"It is great to have cheap natural gas. However, even if investing in new renewables seems expensive compared to today's gas prices, you need to take a longer view," said Deepwater CEO William Moore.

Japan's $483 billion drive

As it phases out nuclear power, Japan also plans to invest heavily in offshore wind power as part of a 20-year $483 billion investment that will also include solar, energy-from-waste and geothermal power.

Japan has several wind turbine manufacturers, such as Mitsubishi, Japan steelworks and Fuji heavy industries, but none of them are among the top 10 in the world by market share.

For this reason, David Cameron is hoping that expertise gained from working in the North Sea can be exported and sold in places like the US and Japan, not to mention developing countries like Africa and South America.

In developing countries, the UK will be able to count upon the leveraging power of public funds from the International Climate Fund and the $100 billion Green Climate Fund, agreed at the Dakar climate talks last December, to unlock far more private investment.

Energy Minister Greg Barker is currently in East Africa doing just this, promoting British renewable energy expertise, specifically in solar and geothermal, but also in onshore wind, and facilitating deals lubricated by these funds.

The full list of Norstec signatories is:

• Able UK
• Alstom
• Areva
• Balfour Beatty
• The Crown Estate
• David Brown Gear Systems Ltd.
• Deep Ocean Group
• Dong Energy
• EDPR
• E.On
• Fluor Ltd.
• Gamesa
• Harland & Wolff
• Hochtief
• JDR Cables
• Mainstream
• Modus Seabed Intervention Ltd
• Narec
• National Grid
• NIRAS Consulting Ltd
• OGN Group & Aquind
• Parsons Brinckerhoff
• PMT Industries Ltd.
• Prysmian Group
• RenewableUK
• REpower
• Repsol
• Scottish Enterprise
• Scottish Power
• Scottish Renewables
• SeaEnergy PLC
• Seajacks
• Siemens
• Skanska SMIT-Grontmij
• Southboats
• SSE
• Statkraft
• Statoil
• TAG Energy Solutions
• Tata Steel
• Technip
• Vattenfall
• Vestas
• VSMC

Pension funds - and Lego owners - go safely offshore – into wind farms

Carsten Krogsgaard Thomsen, Acting CEO of DONG Energy

Pension companies and industrial investors are increasingly finding that investment in renewable energy, particularly wind power, is providing a better rate of return, one guaranteed over a longer period, than elsewhere.

DONG Energy, which is a co-builder of several offshore UK wind farms including the London Array, has secured investment from Danish pension providers PensionDanmark and PKA, Dutch pension group PGGM, the owners of Lego, and Japanese trading house Marubeni, amongst others.

Leaving aside the intriguing idea of Lego building wind farms, Torben Möger Pedersen, managing director of PensionDanmark, which has £13.4 billion in assets, said "I think this will...develop into a standard investment case for many pension funds because the alternative of investing in government bonds provides such bad returns that you are obliged to identify alternative investments".

The company's total investment in DONG's wind projects is £475 million, and Pedersen plans to invest more in the future, as PensionDanmark increases the proportion of its portfolio allocated to energy and infrastructure from 6% to 10%.

"In five years we will have £19 billion under management. So our total budget for these kind of investments will be £1-1.5 billion over the next 10 years," he said.

Yesterday, DONG announced that it is using some of this finance to acquire 100% ownership of three offshore wind development projects in Germany in the North Sea.

These are Gode Wind 1, 2, and 3, previously owned by PNE Wind AG, with a total capacity of up to 900 MW. The first two projects already have permission to construct and operate while the third is still in the application stage, although this is expected to be granted in 2013.

Carsten Krogsgaard Thomsen, Acting CEO of DONG Energy, which is owned by the Danish state, said: “The Gode Wind projects in Germany are very interesting for us. If a positive investment decision is taken, we expect that construction of parts of the projects could begin by 2015, subject to the available grid connection confirmations."

Denmark is a pioneer in wind energy, and is now reaping the dividend of its experience. 25% of Danish electricity comes from wind power, contradicting claims by sceptics in the UK that a national grid cannot handle that proportion of wind power.

Some investors see wind power as an uncertain bet because they are expensive to build and maintain, regulation is uncertain, and the plants can face logistical and technological problems. However, other pension funds and investors clearly think differently; taking a longer view, they realise that such investments will provide a steady cash flow over 20 to 30 years, once the projects are up and running.

Last year, the OECD encouraged institutional investors such as pension funds to take more interest in financing the low carbon revolution. There are plenty of benefits, which offset the risks. Compared to unstable financial markets, the OECD points out that there is a clear advantage for those who team up with reliable partners like DONG.

Amongst the early movers in this field, with over £1 billion of investment in renewable energy, predominantly new wind farms in Germany and France, is Allianz of Germany. David Jones, CEO of Allianz Specialized Investment, observes that returns on wind and solar projects are now around 7%.

“This is much higher than many other asset classes,” he says. Moreover, the returns are "totally decoupled from the ups and downs of the financial markets", and far better than government bonds. 10 year UK government bonds are currently yielding a mere 1.5%, almost half the rate of inflation.

Pedersen says that PensionDanmark expects "a return with a spread of between 300 and 500 basis points above a government bond," that is “very much less risky than listed equities".

Walney wind farm in the Irish Sea near Cumbria, is co-funded with direct investment by Dutch pension group PGGM, which has allocated 15-20% of its infrastructure portfolio to renewable energy. Henk Huizing, its head of infrastructure investment, agreed with the OECD assessment: "If you have a good partner, then the risk for joining in the development phase can be acceptable, and you get a premium for going in earlier".

"I hope this will be a model that catches on," says Morten Buchgreitz, DONG Energy's acting deputy CEO for wind power, "because, just looking at the northern European offshore market, we expect that the capacity will have to go from 4 gigawatts now to 37 by 2020".

That is a factor of 10 increase, which will require about £80 billion. Although this sounds a lot, it is less than 1000th (0.08%) of the £18 trillion assets held by pension funds worldwide.

Some of the funding may come from the consortium of 80 of the world’s largest pension funds, that has signalled its readiness to provide funding for infrastructure projects under the Government’s £40 billion infrastructure guarantee initiative. More will come from the Green Investment Bank, when it is finally allowed to borrow.

Deal with Norway guarantees future UK gas and oil dependency

Øyvind Eriksen, executive chairman of Aker Solutions, Norwegian Prime Minister Jens Stoltenberg and David Cameron discussing the deal in a side street in Oslo, Norway.

The Norwegian and British Prime Ministers yesterday agreed several landmark energy partnerships between the two countries designed to secure long-term energy supplies.

The deals will further increase UK dependence on gas and oil for decades to come, including committing it to tapping reserves in the Arctic that are opposed by environmentalists. They will also support the development of offshore wind and, it is hoped, carbon capture and storage. Finally, they continue to support a grid interconnector between the two countries, allowing the UK to import geothermal power.

The deals were sealed at a breakfast meeting in Oslo with Prime Ministers David Cameron and Jens Stoltenberg that was attended by ten leading energy companies from both countries: Fred Olsen, Gassco, Aker Solutions, National Grid, NorthConnect, Shell, Statoil, Statnett, Statkraft and Centrica.

Billions of pounds of new investment are expected to result, with the potential to create thousands of new jobs. The agreements include the creation of:

• 300 jobs from Statoil's £12 billion investment over the lifetime of oilfields in the UK's Mariner-Bressay North Sea
• 1300 jobs in the oil services industry created by Norwegian firm Aker Solutions in Chiswick
• continued cooperation on gas supply and exploration between Centrica and Statoil, sealed in a new Memorandum of Understanding
• a promise to develop the 9GW Dogger Bank offshore wind farm off the East coast of Yorkshire by the Forewind Consortium
• a deal to provide more Norwegian gas to Shell from Gassco
• continued progress on installing two subsea electricity interconnectors to provide geothermal electricity between the UK and Norway.

Prime Minister David Cameron said of the Norway-UK Energy Partnership for Sustainable Growth: "The jobs and investments announced today highlight how vital the strong relationship between Norway and the United Kingdom is for our energy security and economic growth. We look forward to strengthening our partnership further, driving investment into a diverse, sustainable energy mix that delivers affordable long term supplies for consumers."

Norway is already an important supplier of oil and gas to the UK, providing over a quarter of the UK's primary energy demands: 42% of imported gas and 62% of imported oil in 2011. Charles Hendry, Energy Minister, added that: “The investments and jobs announced today by British and Norwegian companies are a clear signal of the benefits of this partnership.”

The agreement says that oil exploration on the Norwegian and the UK continental shelves “will continue to provide substantial energy supplies for the coming decades". Included in this is the ability to use new technology to improve recovery from mature fields and from the Arctic.

Carbon capture and storage

The statement continues: "The UK is currently developing a gas generation strategy, setting out the role for gas-fired power in delivering a secure and affordable route to a low-carbon economy. CCS will enable gas to provide substantial electricity consistent with our climate change agenda."

Norway is leading the world in this technology; it has been burying carbon dioxide there since 1996. Last month, Norway's Prime Minister, Jens Stoltenberg, opened the next stage of the world's largest prototype carbon capture and storage plant at an oil refinery and gas power plant at Mongstad, that is financed by the Norwegian government to the tune of $1bn.

The United Kingdom, however, like the rest of Europe, is lagging behind Norway and other countries such as America, Canada and Australia, all famous for the size of their carbon footprints in implementing CCS. The main reason is the low price fetched for a tonne of carbon released into the atmosphere under the European Emissions Trading Scheme, roughly one tenth of the cost of burying it back in the ground.

David Cameron hopes that we can learn a thing or two about CCS from the Norwegians to improve the prospects of the fledgling CCS projects here in the UK.

However, with the proposed emission limits of 450gCO2/kWh for Emissions Performance Certificates for new gas-fired power stations in the new Energy White Paper, it is hard to see that there will be any regulatory incentive to capture carbon from these power stations.

Arctic oil and gas

Because of the agreement, Britain will have no shortage of oil and gas in the years to come. Norway is ranked 13th amongst nations with gas reserves. Major new discoveries of oil and gas have been made recently in the Norwegian Continental Shelf, in the Skrugard and Havis fields in the Barents Sea, and the Johan Sverdrup in the North Sea. Aker Solutions has recently been awarded contracts by Statoil for exploring these. The Barents in particular is a harsh, Arctic environment.

But exploration in the Arctic faces severe opposition from environmentalists. Greenpeace calls it “a catastrophe waiting to happen" and is mounting a big campaign, fronted by Jarvis Cocker, who recently visited the Arctic Circle and was reportedly moved to tears at the region's majestic landscape.

David Cameron did not have time to do any sightseeing. In the joint statement is the claim that coming Electricity Market Reform will create a "framework for investment in the UK" worth "over £200bn in energy project opportunities. Similarly," it continues, “Norwegian policies are creating new commercial opportunities for companies, particularly in the High North," a reference to the Barents Sea discoveries. "The Norwegian-Swedish Green Certificate Scheme also offers incentives for British investors in renewable energy," it adds.

This scheme was launched on 1 January 2012 and is a market-based system to support the expansion of electricity production from renewable energy sources and peat. Since then 12,573 green certificates have been issued in Norway in relation to 26 plants.

In Norway, Statoil, which is 67% owned by the Norwegian government, is facing stiff opposition from the public, church leaders and 28 Norwegian organisations including WWF Norway and Greenpeace Norway, for having chosen to get involved with tar sands.

Wind farms

As for the renewable energy projects, the largest of these is the Dogger Bank one, which comprises up to four offshore wind farm projects, 156km off the coast of Teesside, which could provide over 10% of the UK's energy needs

The windfarms will be connected by onshore high voltage direct current (HVDC) underground cabling and up to four direct current (DC) to alternating current (AC) converter stations. A local consultation is currently underway.

The Forewind consortium managing the project is comprised of the Norwegian companies Statkraft and Statoil, German company RWE npower renewables, and Scottish company SSE.

Finally, the Norwegian-UK agreement says that "The UK and Norway will work together to build on outcomes of the Rio+20 Conference, including further development of the Energy+ Initiative to increase clean energy access for developing countries."

The next step is a conference to discuss the achievements and future priorities of the UK-Norway energy partnership, to be held at London’s Royal Geographical Society in September.

Call for wind farm developers to do more for communities

Helping communities to develop their own local renewable energy resources could boost the local economy and improve participation in community activities, according to a new report from the Joseph Rowntree Trust.

It says that the Government, instead of reforming planning processes to force unwanted schemes on towns and villages, should instead consider ways in which communities can benefit from low carbon energy.

The report, Wind energy and justice for disadvantaged communities, says that it is not simply about large companies giving a share of their profits to local communities when they put a wind farm in their neighbourhood.

Instead, it should be about bolstering local resilience in the face of difficult economic conditions and rising energy prices, which can have spin-off benefits in terms of improving local facilities and promoting a sense of community spirit.

The report does not consider community-owned schemes, which have their own, separate benefits. Rather, it examines how commercial, large-scale schemes can be more embedded in their locality. It calls on developers to directly invest in community resources or environmental enhancement.

There are community benefit funds from wind farms that now exceed £100,000 a year. As the size of these wind farms continues to increase so will the funds. With this, the report says, “comes the opportunity to achieve something transformational".

This “exciting vision" could, in 25 years time, leave communities with a more “sustainable, autonomous, locally embedded energy system, which retains more local employment and generates funds for other goals".

It quotes research showing that large wind farms tend to be in areas of social disadvantage, or of lower population and lower incomes. These include West Wales, Cornwall, Lincolnshire, North East England, Lothian and Scottish Highlands. By contrast, the affluent counties of southern England, often the most vocal against wind farms, have very few such facilities.

This is not surprising, since remote areas tend to be both windy and socially deprived. But it does show that there is an opportunity for wind farms to redress the economic disadvantage experienced by these areas.

The report cites communities already existing across the country with this transformational aspiration.

One example is that of Argyll and Bute, Scotland, which decided that the sum of £2000 per megawatt of installed capacity should be the minimum payment of the community benefit, with an additional £1000 per megawatt based on the actual output of the wind farm. 60% of this share of the profit is channelled to the immediate local community through a trust fund, and 40% to the wider community.

Another example is Forestry Commission Wales, which manages a lot of upland coniferous plantation land on behalf of the Welsh government, that is made available for developers. Tenders for wind farms are evaluated with considerable weight given to community and financial dimensions: 60% in total, with just 40% given to technical aspects.

Finally the report looks at an example of offshore wind near Lincolnshire on the east coast of England. Here, community benefits have been substantially shaped by the developer, Centrica. For example, they have invested in a local community centre to give it heating and hot water, and provided a visitor centre and education officer.

The report has been welcomed by RenewableUK, which points out that already in Scotland there is a national register detailing community benefits already agreed with developers to help other communities negotiate with developers.

There is also an emerging UK-wide Coastal Communities Fund, which is beginning a debate about the equitable division of profits between the government and local communities, in cases where projects are developed on land owned by the Crown.

Many companies are seeing the benefits of investing in local communities. In Scotland, Scottish and Southern Energy are increasing their standard community benefit offer to £5000 per megawatt, half of which is put into a “Scotland Sustainable Energy Fund" with the aim of supporting the development of skills, community energy schemes and environmental improvements in the wider region.

The Rowntree Report concludes by saying: “The prize is a significant one: a low-carbon energy revolution that not only addresses global obligations to future generations, but which fosters long-term resilience in the communities that live alongside the infrastructure".

Wind farm developers go into schools in search of the next generation of workers

In an effort to make sure that the skills needed for the imminent offshore renewable energy industry will be available, renewable energy developers have begun teaming up with schools and communities in the North East of England.

Forewind, a consortium of RWE, SSE, Statkraft and Statoil, which is a development partner for the Dogger Bank offshore wind farm zone, has launched a programme for schools that will support teachers to develop classroom resources about the job opportunities that will be available for their students in the locality in offshore wind power.

Graduate schools are also capitalising opportunities provided by offshore renewable energy. Some prestigious universities and online graduate degree programmesare now offering programs with offshore windpower as the main focus.

Stephen Logan, ICT and business studies teacher at Malet Lambert school in east Hull, said: "It is crucial young people are aware of the career opportunities in the area. It will raise aspiration and ambition and give them the opportunity to see what they can do.

"The offshore wind and renewables industry could have a massive impact on this area and it could be their future career for a decade or 20 years."

Forewind's general manager, Lee Clarke, said the schools, from Scarborough in the north to Withernsea in the south, are in the area where the first proposed offshore wind farms are planned to connect with the national grid.

Dr Clarke said: "It made sense for us to focus on the area around the onshore infrastructure for our first development – Dogger Bank Creyke Beck – to ensure the nearby community is aware of the potential opportunities offshore wind may bring."

The project, called the Champions For Wind careers education programme, was launched last week at conference in Hull with speakers from Forewind, The Crown Estate and Renewable UK and the Humberside Engineering Training Association (Heta).

The teachers are enthusiastic. Sarah Bone, deputy head teacher at Hessle High School, said: "I want to raise awareness and aspirations about what the industry can offer. The industry is facing problems that there aren't yet solutions for and our students could be the ones to come up with them."

UK Government calls for more investment in offshore wind

The Ormonde Offshore Wind Farm under construction in the Irish Sea, 10km off Barrow-in-Furness, with 30 REpower 5M wind turbines.

David Cameron is backing a call to investment funds, pension funds and sovereign wealth funds to invest in large offshore wind projects.

But potential investors will need more confidence that the government is not going to keep shifting the regulatory goalposts.

At a conference in London today, Ministers are meeting potential investors in offshore wind projects to establish what can be done to increase investment in this area.

Prime Minister David Cameron, said: “I see offshore wind as a significant energy and industrial opportunity for the UK, and one that I am determined to seize.

He said he believes "the UK will remain the world’s most attractive offshore wind market for many years to come," citing "abundant natural advantages and a world-leading marine engineering base".

He underscored the Coalition Government's "strong support for the growth of renewable energy in order to help diversify and decarbonise our long term energy mix."

The UK needs around £200bn of investment in new energy infrastructure to help reduce dependence on imported fossil fuels and boost our energy security, and the Government is looking to the banks and pension funds to fund it, as well as the UK’s current major energy suppliers.

Charles Hendry, Minister of State for Energy, said: “We have invited potential investors to London today to make the case for offshore wind as a stable, long-term and lucrative investment opportunity."

Risk management

Hendry added that "if people are not seriously considering investing here then I want to know why.”

Some of the answers can be found in a survey of 284 senior-level renewable energy executives, by the Economist Intelligence Unit (EIU), sponsored by Swiss Re, and published today.

It finds that operators are nervous about putting their money into renewables, and wind especially, because they need to feel confident about the security of the regulatory landscape, cost-effective insurance and protection from the vagaries of the weather.

In particular, investors will be wanting to know today that any government support on offer will be guaranteed for a long period of time in order to provide the security their business plans require.

Recent sudden changes to levels of support such as tax breaks and subsidies have not given them confidence.

Overcoming financial risks is another challenge perceived by the executives, affecting 76% of the survey's respondents. Renewable energy projects are often capital-intensive and highly leveraged, and up to 70-80% financed through loans.

A change in the weather

62% of respondents also place political and regulatory risk as important, while weather related risk is even more important for wind power producers (66%).

The impact of weather is more pronounced on wind than any other renewable energy. Returns may deviate by 25% from expected in any given year, whereas solar radiation levels typically deviate by no more than 4% from normal levels.

Of course, the deviation may be up or down, and it is a feature of climate change itself that weather is becoming more unpredictable.

Hans Bünting, CFO of German firm RWE Innogy, says that although weather variations might smooth out over the long term, “the main risks coming from instability are on the shorter-term weather risks. It creates volatility of earnings year to year.”

The need for insurance

Most operators therefore turn to insurance to manage this risk, according to Agostino Galvagni, Chief Executive Officer Swiss Re Corporate Solutions. "Risk management measures such as insurance will be key to encourage further private sector investment," he emphasises.

The Economist survey says that at present only 60% of respondents regard themselves as being successful at transferring risks this way, indicating that learning is still taking place.

Insurance company Swiss Re regards this as crucial to managing the world's safe transition to a post-carbon, climate-friendly future. "New technologies and innovation in renewable energy will be the only possibilities left should a global policy regime to reduce carbon emission not materialise" at Durban, says Andreas Spiegel, Swiss Re's Senior Climate Change Adviser.

"This is why Swiss Re is investing a great deal of research to better understand how insurance can mobilise financing for renewable energy projects and identify the most cost-effective ways to reduce risks, such as construction and operational risks as well as risks related to the intermittent nature of renewable energy production."

Only 4% of wind power producers use weather-based financial derivatives to protect themselves, due to their expense and complexity, but this is slowly increasing. One obstacle is that many offerings are currently not appropriate for small-scale projects.

This highlights a need in the insurance industry for more underwriters and risk engineers with specialised insight into the renewable energy industry, who can reassure investors that their cash will be safe and provide cheaper policies.

This is particularly true if the UK Government wishes to interest the big pension fundholders in this non-traditional type of investment.

Spreading the risk

One general way to spread business risk for developers is to take a portfolio of equity investors into a project, or to enter a project as part of a consortium or joint venture with other renewable energy developers or financial partners.

A recent example is the joint venture between DONG Energy and Siemens Project Ventures to acquire a 50% stake of Lincs, a 270MW wind farm project situated five miles off the UK coast.

Another way for investors and operators to reduce business risk is to buy into renewable energy developments at a later stage, once the riskier early stages of development are complete, and the renewable power assets are fully permitted or operational.

Potential investors can seek expert advice on potential investments from either government agencies, like the Carbon Trust, or external consultants, as do just over one-half of developers.

There is no shortage of these consultants, who, in the words of one of them, are there to "deliver the insurance and risk management services our clients require to capitalise on the opportunities the flourishing renewable/cleantech power sector presents”.

In the Economist survey, most operators feel they are successful in managing the various aspects of risk management: 70% say their companies are either “highly successful” or “somewhat successful” in identifying risks.

61% say they are similarly competent in assessing the scale and scope of risk.

However, investors might worry that they could end up with some of the 39% who aren't, and Charles Hendry could finish today wondering how he can help them to improve their confidence.

Floating turbines and car-rally suspension are part of the offshore windfarm future

As the UK announces new proposals for maintaining offshore windfarms in rough seas that could save up to £3bn, Japan is planning a floating windfarm off the coast of Fukushima to help replace its lost nuclear power generation.

The Carbon Trust has published a shortlist of 13 designs picked from 450 submissions of ideas that would help transfer engineers and equipment from boats to turbines in ocean swells of up to three metres.

Among them are a boat that uses a giant robotic arm to make the transfers to the turbine base, one with suspension inspired by Paris Dakar-winning rally cars that keeps it stable, and another which, like a seahorse, has a deep keel to provide balance.

Meanwhile, according to a government official, Japan is going one step further by looking at wind farm designs which, instead of being fixed to the seabed, are anchored to it and float on the surface.

Its energy agency is looking at siting some of these off the Pacific coast of Fukushima prefecture, where the nuclear reactors that went into meltdown six months ago are located.

The country is expecting to move towards a non-nuclear, renewables-powered future by not replacing nuclear power stations as they become redundant.

The Japanese energy agency has assigned up to 20 billion yen (£166 million) to the project, using cash intended to finance the rebuilding of the disaster-hit area, the official said.

The windfarm would consist of six floating 2MW wind turbines, and would be operational by 2015.

Britain's future 'round three' offshore windfarms will utilise much larger turbines - 10MW or more - and may be located up to 300km away from land and in deeper seas than at present - up to 80m - consisting of up to 2,500 turbines.

Maintaining them in harsh weather conditions will be a tough job, but it has economic consequences - increasing access time by just 4% could save up to £3bn.

Through its Offshore Wind Accelerator programme, the Carbon Trust is therefore coordinating eight UK wind farm developers - E.ON, DONG Energy, Mainstream Renewable Power, RWE Innogy, ScottishPower Renewables, SSE Renewables, Statkraft and Statoil – to sponsor a competition to find solutions.

The winning technologies are expected to increase the access time from the current average of 210 days a year to 300, and to help reduce the levelised cost of offshore wind by saving an extra 1.3Mt CO2 per year.

Climate Change Minister Greg Barker called the projects "some of the best ideas to overcome the challenges of working in deeper water.”

The new generation of turbines will also be specifically designed for use in these windier situations by having much larger and better adapted blades.

Each successful applicant to the competition will get up to £100,000 to support the design and development of their concept, as well as technical support from the eight developers in the Offshore Wind Accelerator.

The Trust says that the shortlisted designers include a university student as well as established offshore wind maintenance vessel operators, and come from the UK, Norway, Germany, Netherlands, Canada and Australia.

The systems, together with the shortlisted winners, include:

• Transfer systems – to transfer personnel and equipment from vessel to turbine, potentially with motion-compensation:
o Autobrow, South Boats
o MOTS, Momac GmBH
o Wind Bridge, Knud Hansen
o TAS2, BMT Nigel Gee / Houlder

• Vessels – for transporting personnel and equipment from permanent bases or mother ships to turbines, incorporating a transfer system:
o Pivoting Deck Vessel, North Sea Logistics
o Nauti-Craft, Nauti-Craft
o Fjellstrand Vessel, Fjellstrand
o SES Vessel, Umoe Mandal
o SolidSea, University of Strathclyde
o TranSPAR, Extreme Ocean Innovation

• Launch and recovery systems – fitted to the permanent bases or mother ships for launching and recovering daughter craft from the sea:
o Launch & Recovery, Offshore Kinetics
o Z Port, Z Technologies
o Launch And Recovery System, Divex.

The Carbon Trust says that the global offshore wind sector is set to grow by up to 10% per year with the UK expected to capture around a 10% share of this market, estimated to be worth up to £170bn/year by 2050, making these solutions potential future export money-spinners.

Back in Japan, the six reactors at the damaged Daiichi (number two) plant where reactors went into meltdown following the March 11 earthquake and tsunami. will be taken out of operation.

In addition, it has been announced that the four damaged reactors at the Fukushima Daini plant that have been brought to a stable state of "cold shutdown", are also unlikely to ever start up again.

Tea Party tycoon in battle to halt vital £150m Scottish offshore wind test centre

A climate-sceptic tycoon who has told a Tea Party rally he might stand for President has vowed to oppose a key part of UK plans to become a world leader in offshore wind power.

Last week, utility company Vattenfall, engineering firm Technip and Aberdeen Renewable Energy Group (AREG), together submitted a planning application to Marine Scotland to begin construction of a £150 million development - the European Offshore Wind Deployment Centre.

But US real-estate tycoon and developer Donald Trump - who last April told a cheering Tea Party rally in Florida he would be the ideal man to run for US President, and who is host of the US version of The Apprentice - has promised to fight it "on every possible front".

His organisation, which operates numerous casinos, hotels and golf courses worldwide - is building a controversial £750m development on the Menie Estate near Aberdeen on the North Sea coast and has previously objected to the wind farm.

His development - featuring a luxury hotel, Trump Boulevard, a golf academy, a second course and timeshare apartments - is obliterating a SSSI (Site of Special Scientific Interest) on 4,000-year-old sand dunes. It was only approved against bitter opposition from locals, in a controversial planning inquiry ordered by the Scottish Government in June 2008, at which Trump himself testified.

In June this year, bulldozers began work tearing up grasses from the dunes. Trump is spending up to £60m of his own money turning the dunes into the course, which is scheduled to open in a year.

In a statement, the Trump organisation said: "We are opposed to the siting of this wind farm and will fight the proposal on every possible front."

His objection is ostensibly to the view. Yet the turbines would be 1.5 miles away from the development, and the Tea Party is famous for its opposition to climate change and renewable energy.

The European Offshore Wind Deployment Centre

Eight years in preparation and containing 11 wind turbines - shrunk from an original 33 to address safety concerns from shipping agencies and the Aberdeen heliport - the planned wind farm and test centre would stretch across Aberdeen Bay.

It will form a major plank of Scottish and UK-wide efforts to win a share of the huge and valuable construction work which will follow the granting of consent for the Round 3 offshore wind farm zones which are expected to deliver up to 25GW of new offshore windfarm sites by 2020.

The project has already received significant support from the Scottish European Green Energy Centre and was awarded a grant by the European Commission of up to forty million Euros in December last year.

The Deployment Centre is being developed by Aberdeen Offshore Wind Ltd, comprising Vattenfall Wind Power UK and Aberdeen Renewable Energy Group (AREG). Technip will also play a major role in the delivery of the project.

In a classic example of the old technology fusing into the new, the EOWDC will tap into the experience of the 900 engineering companies in Aberdeen that have been associated with the offshore oil and gas industry.

When operational it will be a test bed for offshore wind farm developers and associated supply chain companies for the next generation of designs. It will also allow existing technologies to be monitored and receive independent validation and accreditation ahead of their commercial deployment.

For this reason, if the windfarm is delayed or halted by Trump it will be a major block to the UK's expansion plans for offshore wind.

Results from the research which the project would generate are regarded as vital in the drive to make the industry more economic, and to deploy the 7,000 offshore wind turbines deemed to be necessary to keep the lights on in the future.

EOWDC also has the backing of local business leaders - but so does Trump's development. And in some cases they are the same people - such as the Wood Group, founded by the oil services magnate Sir Ian Wood, and Aberdeenshire council itself, which approved Trump's resort and is a partner in the Aberdeen Renewable Energy Group (AREG).

Squaring up for the coming fight, the UK manager of Vattenfall, David Hodkinson, said: "We believe we have made a good case for the development, which places Aberdeen at the heart of the development of new technologies to serve the growing European offshore wind sector."

Niall Stuart, Chief Executive of Scottish Renewables, said: “Offshore wind is especially important as it has the potential to deliver more than 28,000 direct jobs in Scotland by 2020 and contribute up to £7.1 billion of investment to the economy, breathing new life into our manufacturing sector.”

But Trump is having none of this. "We are here to stay and I don't think it's a good idea to interfere with our investment," George Sorial, managing director of the Trump Organization, has told a local paper. "We are not going to support a project that compromises what we have done. We will use any legal means in our jurisdiction."

The fight will be long and aggressively fought, and will begin as soon as the schedule for the consultation process is issued.

A neighbour of Trump's development, David Milne, who lives in a former coastguard station at Hermit Point next to the golf course, has had his view over the dunes and the sea blocked by a 20-foot high wall and a row of trees as part of the construction of the golf course.

"How can a man who has just destroyed a site of special scientific interest and is in the process of despoiling an area of outstanding natural beauty with his golf course, comment on the view? It's laughable," he asks.



The conflict over Trump's own development is the subject of a revealing and hilarious documentary, You've Been Trumped.

The $1bn contract to connect North Sea windfarms

What is possibly the world's largest ever order - at $1bn - for grid connection technology for offshore wind farms has been signed, an indicator of the coming huge expansion in wind capacity in Europe.

Dutch-German transmission grid operator TenneT has commissioned ABB, a power and automation technology group, to supply a power link connecting offshore North Sea wind farms to the German mainland grid.

The initiative will form part of Germany's plans to meet its carbon reduction targets while phasing out its nuclear power plants.

When completed, it will be the world’s largest offshore HVDC (high-voltage direct current) system - rated at over 900 megawatts (MW) - and will be capable of supplying over 1.5 million households with wind-generated electricity.

It will utilise ABB's HVDC (high voltage direct current) Light technology. This means that by transmitting the power at high voltage in direct current (DC), rather than alternating current (AC), electrical losses over distance can be kept to below 1% per converter station.

The technology is well proven and ten years old - ABB has previously used it to connect the BorWin1 windfarm and last year won a contract to connect the 800MW Dolwin1 windfarm, both also in the North Sea.

The cables can transmit power underground and underwater over long distances with the other advantages of having neutral electromagnetic fields, oil-free cables and compact converter stations.

The company claims that it is economically feasible to expand transmission capacity using this system, to minimise the visual and environmental impact of the grid and improve the quality of the power supply.

The expense and visual intrusion of overland grid-connection cables has become a focus for opposition to the expansion of wind power in the UK , particularly in Scotland.

The planned connector will link the 400 MW Gode Wind II and other wind farms in the North Sea, sending DC electricity at 320 kilovolts to a converter station at Dörpen on the German coast, via another station offshore, along 135 kilometers of underwater and underground cables. It will then feed AC electricity into the mainland grid.

It should be completed by 2015, so that by 2020 Germany will have more than doubled its offshore wind electricity generation, from its present 8% of total supply (a capacity of over 27 gigawatts).

Britain and Germany are both competitors and partners in the race to establish windfarms in the North Sea. Wind energy is expected to more than triple its power output by 2020 in the EU.

Energy and Climate Change Minister Chris Huhne, on a visit yesterday to the Vestas wind turbine facility in the Isle of Wight, spoke enthusiastically of the UK leading the world in the area, with some 1.5GW of wind capacity installed.

"Last week’s new European Wind Energy Association numbers found almost all turbines installed in the first half of this year were in the UK: 101 off the UK, compared to just 7 in the rest of Europe," he said.

Justin Wilkes, Policy Director of the European Wind Energy Association (EWEA), believes that 194 billion Euros will be invested in European onshore and offshore wind farms in this decade. "This success is mainly driven by a strong EU regulatory framework to 2020, which we need also after 2020," he said, as he launched a new EWEA report on scenarios for onshore and offshore wind power deployment in the EU.

This says that electricity production from wind power is expected to increase from 182 Terawatt hours (TWh) or 5.5% of the total EU demand in 2010, to 581 TWh or 15.7% of the total demand in 2020. At this point it will be equivalent to the combined electricity consumption of all households in France, Germany, Poland, Spain and the United Kingdom.

Chris Huhne would like to see many more of the turbines that are erected around the UK being built in this country, which was a motivation for his visit to the Vestas facility in Newport on the Isle of Wight. This was a turbine-making factory that Vestas closed two years ago despite attempts by the government to dissuade its Danish owner.

Huhne said that he believes "Vestas are one of a number of companies who have announced intentions to open turbine manufacturing plants in the UK. I very much hope to see that intention become reality.”

Despite not making wind turbines, the factory still employs 220 people. It is testimony to efforts by islanders to attain its council's goal of being carbon neutral by 2020.

Huhne saw how the facility now designs and tests wind turbine blades. “Innovative new components, including those likely to be tested and developed here in these very facilities, will play a crucial role in bringing [future wind power] costs down," Huhne said. "As will new, high yield, multi-megawatt turbines of the type Vestas have recently announced."

Council representatives and members of the Eco Island community group then discussed with Chris Huhne proposals to create an ocean energy centre to test tidal and wave technology off the west and south coasts of the island.

"5,000 to 7,000 more offshore wind turbines" - report

Environmental study to inform location of future offshore energy developments

A new Government study of the UK's shores has recommended that between 5,000 to 7,000 more offshore wind turbines could be installed. This would be enough to power the equivalent of almost all the homes in the UK (assuming 3.6MW to 5MW turbines).

An Offshore Energy Strategic Environmental Assessment (SEA), produced by Hartley Anderson Ltd, assesses the potential for further development in offshore wind, as well as oil and gas licensing and natural gas storage. The environmental report, the bulk of it, records vital information on bird populations, mammals, plankton and more. Following a twelve week consultation on this report, the Government will propose an "acceptable" level of offshore wind development, as well as offshore oil and gas licensing.

Energy and Climate Change Secretary Ed Miliband said: "This report provides a real advance in our understanding of the ecology and geology of the UK marine environment so we can continue to ensure that projects like wind farms are built in the most suitable places and that we will also protect the natural environment."

The Government has already proposed increases in the financial incentives to make the UK an attractive place for offshore wind development. Seven wind farms (North Hoyle, Scroby Sands, Kentish Flats, Barrow, Burbo Bank, Lynn and Inner Dowsing) are already operating off the UK coast, five more are being built, nine have been approved and two are in the planning process.

> www.offshore-sea.org.uk
> DECC's offshore wind pages