Business Irish

Thursday 18 April 2019

Richard Curran: Floating wind farms could anchor our bid to meet EU's renewable energy targets

Wind energy from offshore platforms could mean Ireland’s renewables future is ‘all at sea’
Wind energy from offshore platforms could mean Ireland’s renewables future is ‘all at sea’
Richard Curran

Richard Curran

Meeting our renewable energy targets may well be quite literally all at sea. As more and more wind farms have appeared around the country, they have sparked a lot of controversy about planning, community reactions and the level of subsidy they have to receive.

But now the ground is shifting to offshore as the government looks towards the potential of developing wind farms located at sea off our coast. Details emerged this week about a meeting between Norwegian energy giant Statoil (recently re-named Equinor) and Energy Minister Denis Naughten.

The Norwegians see an enormous opportunity for offshore wind energy in Ireland. And they could be right. But they are not alone in trying to make offshore wind farms in Ireland a reality.

There are several projects that have been in the pipeline for many years, including Oriel Wind Farm, which is proposed for Dundalk Bay. The only offshore project to have been built in Ireland was the Arklow Banks wind farm which only made it to phase one.

The problem has been the cost of the technology, the level of subsidy required and, of course, the very large numbers of potentially unhappy residents living along the east coast who might not like the look of them.

But a lot has changed. The technology has improved to such an extent that the cost of offshore wind energy has fallen dramatically. Since 2010 it has fallen by an estimated 62pc and is literally falling every year as technology improves.

The big players in Europe are the UK, the Netherlands, Germany, Belgium and Denmark. The UK has 43pc of all of the offshore wind energy produced in Europe with 6.3GW of power generated at 29 farms. Germany is second with 36pc or 5.4GW from 20 farms.

But the Netherlands broke the mould last year when it awarded the first subsidy-free contract for an offshore wind project. Germany followed quickly afterwards. These offshore wind farms will not be up and running until about 2024, but they will not require an ongoing state subsidy.

This marks a new departure for the sector, and brings the possibility of subsidy-free wind energy sharply into focus. It is worth noting that in the Netherlands case, the state is covering the cost of electricity grid connection, but that counts as one-off capital investment rather than an ongoing annual subsidy which must be paid by customers.

The rapid changes in the technology bring about a new opportunity for offshore energy in Ireland. I am sure Mr Naughten would be very interested in any proposal that could deliver large amounts of renewable energy without subsidy.

But scale affects the level of subsidy required and Ireland is starting practically from scratch.

But this is where things get interesting. Equinor isn't really that big into offshore wind energy at home in Norway.

The Norwegians have so much oil and gas they didn't need to invest heavily in offshore wind farms over the years. In fact, in 2012 the Norwegian government put the development of offshore wind capacity on hold, arguing the technology was too expensive - especially in comparison to hydroelectric or onshore wind capacity.

But what Equinor has done, is develop the world's first floating offshore wind farm. In fact the only offshore wind farm in Norway is a small pilot floating platform. This is where the giant wind turbines are literally floating on the water and attached to the seabed by cables.

The wind turbine rises to 180m above the sea and about 80m below the water. A floating wind farm can be located in deeper water, which also means further from shore and it can also withstand higher wind speeds.

Given that 80pc of the world's offshore wind energy potential is in deep water, these 'floaters' are seen as revolutionary.

Equinor began generating electricity from its first commercial floating wind farm last October. Located about 30km offshore from Aberdeen in Scottish waters, it has five giant turbines and delivers enough electricity for 20,000 homes.

But there is a snag. The floating technology, while it may in time become the future of renewable wind power, is expensive and still needs higher subsidies. It is still very much in its infancy and more projects of scale would have to be built to reduce the subsidies required.

While conventional offshore wind technology is on the cusp of being subsidy-free, floaters still have a way to go.

The Japanese have signed an agreement with a French company to build its first floating wind farm project off the coast of Japan and as the technology evolves, in theory, these things could grab enough wind from the middle of large oceans to generate vast amounts of power.

Equinor is very bullish about the potential for floating wind farms. Specifically, the company predicts that Japan could have as much as 3.5GW worth of floating offshore wind by 2030, followed by France with 2.9GW. It estimates the US could have 2GW and the UK and Ireland could have 1.9GW.

These no doubt are estimates it shared with the Department of Energy in Dublin when they met up in recent months.

There is something of a gold rush on now to capitalise on this offshore wind opportunity. ESB has said it is looking at acquiring and developing projects in Ireland. SSE, the power giant which owns Airtricity is also keen. Oriel Wind Farm Ltd has received backing from international players, as well as investors like Glen Dimplex founder Martin Naughton.

The family of property developer Johnny Ronan are behind another offshore project in the Irish Sea that has the backing from Norwegian billionaire Fred Olsen.

Sometimes being late to the game can help, especially when the game keeps changing because of technology. In Ireland's case, we abandoned offshore wind developments some years ago because it seemed more efficient and less expensive to opt for traditional onshore wind farms.

Now the technology has improved and driven down the price, it is something that has to be seriously looked at by the Government to meet our renewables targets.

Ireland has set a target of meeting 40pc of electricity needs from renewable sources by 2020. We are nowhere near that. The Government is looking to renegotiate targets with Brussels for 2020 and 2030. But there is now this new tech on the block - namely floating offshore platforms. They may require more state subvention.

Equinor's chief executive Eldar Saetre told Reuters recently that if offshore opportunities are being opened in Norway with a relevant incentive structure that makes it profitable, his company would participate as long as they are subsidised for a long time. Presumably, his message to Denis Naughten would be similar.

Floating platforms have lots of advantages and may mean that offshore wind farms can be located further away from residents living in towns and cities. And it may mean they can be located in a variety of new places which would otherwise be prohibited.

Equinor is interested in developing all kinds of offshore sites and it bid for the subsidy-free project in the Netherlands.

The UK has become a major player in renewables. But it has come at a cost to consumers. UK Prime Minister Theresa May pledged to start cutting back on the subsidies to renewable projects in order to deliver what she said would be the cheapest electricity in Europe to consumers and businesses.

That cutback may affect two new floating wind farms proposed for off the British coast. A deadline for submissions for subsidies ends in October and these two projects may not meet the criteria, so they are looking for an extension.

Ireland has a long way to go to meet its stated aims on renewable energy. Failure to do so will result in enormous fines from the EU. Offshore wind farms are definitely part of the solution, especially as the costs come down.

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