By David Craik

Last November energy analyst firm Douglas-Westwood declared that the UK would retain its position as the leading European market for offshore wind over the next five years. It was a confidence, it said, based on the strength of the UK’s structured licensing rounds.

“Activity on Round 2 projects is ongoing until the end of the period in 2015, at which point extensions to Round 1 and 2 projects are due to come online,” it stated in its offshore wind report. “These extensions will help bridge the gap before the first Round 3 and Scottish Territorial Waters (STW) projects come online.”

Despite the optimism it was the analysts prediction that this road to 2015 would not always be a rosy one that grabbed the headlines. It said that installation rates around the 2013 and 2014 period would be “slightly lower” ahead of the first Round 3 and Scottish Territorial Waters Projects.

Indeed it forecasted a 93 per cent drop in the number of new offshore windfarms being commissioned in the UK compared with the amount being commissioned in 2012. If true this would mean only 90 megawatts of new capacity that year down from 1,368Mw the year before.

Impact overstated

Douglas – Westwood analyst Ian Jones tried to mollify the impact: “2012 is quite a big year for commissioned projects and we do see a drop-off from that figure in 2013,” he said. “But the number picks up again in 2014 and 2015. Indeed if a couple of projects from 2012 slip or those from 2014 come early then the situation in 2013 could change.”

Some industry experts, concerned about a potential drop-off in wind farm projects in the long lead up to Round 3, seized on the forecast. They worry that a 2013 fall in installations may result in a similar slump in orders for wind turbine components. As these orders have a long lead-time of two to three years then wind turbine component manufacturers may begin to feel the squeeze as early as this year. 

The pick-up in 2014 and 2015 is also, they say, reliant on future projects being given the go-ahead in a climate of restricted credit and planning problems. So are wind turbine component manufacturers set to face a challenging few years for orders and if so how are they preparing for it?

The reaction is a positive one.

Marc Muhlenbach, European wind energy analyst at IHS Emerging Energy Research, sees little change.

“I think the 93 per cent drop forecast is an outdated assumption based on the lead time to bring projects online and the issues of financing UK projects when Sterling dropped during the onset of the economic crisis and before the 2ROC scheme was issued,” he says. “With the project size we are dealing with none will begin and finish construction in a single year. It doesn’t make analytical sense to single out an isolated year for installation drops of this magnitude. There will not be a slump so component manufacturers will not face challenges beyond what they would normally be.”

Chris Springham, vice president global communications at wind turbine blade manufacturer LM Windpower, also cautions about the danger of focusing solely on one year’s figures.

“It may be correct statistically that orders will begin to slow this year but we have to be very careful. There is volatility but the overall outlook for offshore wind development in the UK is very positive. There is a considerable appetite in government and around the regions for offshore farms given the economic benefits they will bring,” he states.

He sees little change to LM’s preparation this year.

 “We monitor the position in the UK market extremely closely,” he states. “We have a very active dialogue with all our customers as these projects move from being aspirations to being actual plants on the ground. We are very optimistic about the overall UK outlook and our plans are based on offshore wind in the UK really kicking off in 2015.”

More efficient processes

Adding to his confidence is the response the industry as a whole took in 2009 to over-capacity. Then the wind turbine component manufacturers focused on component redesign, reconfiguration of component production lines, realignment of manufacturing locations and more conservative capacity addition.

 “These have been the right measures to enable companies to continue to survive and thrive in what remains a relatively buoyant sector. However the biggest secret lies in understanding what the challenges of offshore wind are and producing really innovative products,” he states.

Frost & Sullivan energy research analyst Neelam Patil also sees an industry standing in good stead no matter the uncertainties of the future.

“In 2009 and 2010 some wind turbine manufacturers focused on operating more efficiently by employing cost cutting measures and reducing capacity. However it is the companies that invested in R&D activities for Off-shore technology during this time period that will see the pay-off in the long term".

Despite the likely shortfall in orders it seems that component manufacturers are resolute in their belief in the long-term future of the industry. They have coped with volatility before and are confident they will do so again.

To respond to this article, please write to: David Craik

Or write to the editor: Rikki Stancich

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