Discover the insights from Financing Wind 2023, highlighting the spread of offshore wind auctions across Europe and the potential of countries like Spain, Portugal, France, Poland, and Italy to meet EU renewable energy targets. Explore the challenges faced by turbine suppliers, the role of non-price criteria in auctions, and the rise of floating wind projects.
Offshore wind growth markets in Europe include Spain, Portugal, France, Poland and Italy due to EU renewable energy targets.
Wind sector observers say these markets will need to build offshore wind to reach the EU’s existing 32 per cent by 2030 renewables target, recently proposed for raising to 42.5 per cent. Three years ago, the EU had 22 per cent renewables in its combined energy mix.
In Spain and Portugal, floating offshore wind is the only kind of wind that is practical to build. Both countries are aiming to hold their first floating wind auctions by year-end. In Spain, local players have already initiated early-stage development in partnership with more experienced offshore wind parties. Floating wind will benefit from coastal grid availabity, but grid nodes in the centre of the country are fully utilised.
Looking to Poland, offshore wind lenders hope the country will link its CfD auction agreements to the euro rather than to local złoty currency, enabling more international finance. They also note that Greece is held back in auctions because of its low credit rating, suggesting the country should look into private funding arrangements.
Rising turbine prices have forced some offshore wind tender participants to seek to renegotiate or rearrange revenues related to CfD auction wins or PPAs with utility offtakers. Observers warn that the public may come to resent the wind industry if it privatises investment gains while socialising investment losses.
European turbine suppliers have faced steep cost rises due to commodity price increases in the past year, coupled with long-term pressure to cut costs thanks to fierce auction bidding. As a result, the three large European manufacturers are simply not answering the phone calls from smaller developers, and they are asking for orders of at least 100 wind turbines, observers say. Some developers are considering Chinese offshore wind turbines because the European OEMs have been unable to meet demand.
One observer said Chinese turbines have yet to win any European CfD auctions. Chinese OEMs must make performance data more available, allow site visits and share failure rates with lenders for this to happen. Perhaps information could be shared from an Egyptian project using Chinese onshore wind turbines. For example in Egypt, US development bank International Finance Corporation is financing an onshore project of UAE developer AMEA Power that will use turbines from Chinese turbine maker Envision Energy.
Panellists mooted the inclusion of non-price criteria for European auctions, possibly around greening, supply chain development, community benefits and technology innovations like hydrogen or floating.
On one hand, some criticised the non-price factors for excluding small developers who don’t have the resources to invest in innovation and cautioned against French non-price criteria that incentives non-existent large turbines that may be undeliverable. But the floating wind industry counters that certain criteria is enabling them to participate in auctions for the first time, for example in the UK. Countries will implement criteria in auctions differently.
Financing Wind Offshore Conference
We’re returning to the USA!
Join us in Boston, Massachusetts on November 16th to discuss the current state and future of the offshore wind industry in the United States. With insights from industry leaders and networking opportunities throughout the day, this event is a must-attend for anyone interested in the offshore wind sector.
US offshore wind is beset by economic challenges, but this shouldn’t blind the sector to the potential for incorporating green hydrogen production into project plans