Confidence is key


August 5, 2011

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Aside from the size of the numbers involved, the key thing to fall out of the ABB deal this week is market confidence.

And in a kind of virtuous circle, this confidence will continue to build as infrastructure providers like ABB are able to drive industry costs lower, increasing the attractiveness, and ultimately demand for offshore wind energy schemes.

Undertaking the mechanics of the project will also provide an incentive for European countries to start to think supranationally about renewable developments, with the prospect of a European super grid becoming an ever more realistic proposition.

Figures from the EWEA this week suggested that windpower generation will triple by 2020, so it follows that the transmission businesses are the ones to watch, with ABB’s stock having risen 4% immediately on the publication of the deal’s announcement.

Big ambitions aside, the main issue to overcome may again be one at a local level. Recent protests in Wales saw a backlash against the construction of transmission pylons to connect onshore wind energy schemes. And in Germany, recent findings showed that in order to make its wind energy plans achievable, the country will have to construct 2800 miles of transmission lines, which despite the population’s generally broad support for renewables, will have to be constructed through some of its more picturesque regions.

But with announcements like this week’s appearing with increasing frequency, the market seems to be reaching that critical mass crucial for true long-term momentum. Something that’s critical if we are to enable government to move beyond simplistic financial backing and instead, take on a more holistic approach.

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