By Thomas Becker, CEO, EWEA

When you spend money on something, you expect to get something back. If you spend it on a house, you expect to get somewhere nice to live – and if you sell it later on, to make a reasonable profit. If you are a financier looking to invest millions in an offshore wind farm, you expect a return on your investment. If that return becomes uncertain, you will put your money elsewhere.

As soon as there’s uncertainty, there’s trouble. We have seen just how much trouble recently in countries like Spain where renewable energy support mechanisms have been cut or changed drastically, crippling the sector.

The European Wind Energy Association’s (EWEA) latest figures show strong European growth in offshore wind installations in the first six months of 2013 – with 1,045 MW added, double the same period in 2012. But a closer look reveals that the lack of certainty in the crucial markets of the UK and Germany is taking its toll. Only one project has reached financial close so far this year and component orders are down.

Wind energy creates jobs and export opportunities. It boosts European competitiveness. It increases our energy security. It saves us money on fossil fuel imports. By putting this vital sector at risk, Europe is shooting itself in the foot.

National governments must not mess with support mechanisms. If changes have to be made or support withdrawn – and ideally government support for all mature energy sectors including renewables will eventually be withdrawn – it should be done gradually and clearly. Regulatory stability is of the utmost importance.

And so is a sign of ambition from national and EU decision-makers. The impressive growth of the wind energy sector so far – it provides 7% of Europe’s electricity today – is largely thanks to ambitious binding targets set for 2020, including 20% renewable energy. This is why the European wind industry is calling on the EU to set fresh binding renewables and climate targets for 2030, to boost confidence in the sector.

This is especially true for the new offshore wind industry. It’s a younger sector and increasingly separate in terms of supply chain from ports to vessels to maritime engineering and underwater cabling. European companies are the pioneers and are building up the experience and know-how to benefit as the US, China, Japan and others begin to invest in offshore wind.

The UK’s recent announcement of draft strike prices under its new contract for difference scheme brings stability– but the jury is out on whether it will really encourage investment in offshore wind.

There needs to be greater clarity in Germany on what might happen to its renewable energy law (EEG). Responsibilities for grid financing also need to be cleared up so that the country can get back on track towards its 10 GW target for 2020.

Regulatory clarity and ambition will stabilise the sector and encourage new investors to come on board – such as pension funds and private equity – to replace the banks still reeling from the financial crisis.

All these issues and more will be discussed at the upcoming EWEA OFFSHORE 2013 event in Frankfurt this November: www.ewea.org/offshore2013

(Feature photo above by Mike Upton.)

 

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