Frost & Sullivan expects offshore wind to become a more substantial contributor of electricity generated from wind by 2020. As per its estimates, installed capacity of offshore wind is expected to grow from 1,276 MW in 2008 to 18,769 MW by 2015.

With increase in the number of Renewable Obligation Certificates (ROCs) from 1.5 ROCs/Wh to 2 ROCs/MWh outlined in the budget in April, the UK government has given a huge boost to the offshore wind energy industry. (The Budget proposes to review the support given to the offshore wind from Renewables Obligation Certificates by £525m. Electricity supply companies currently receive 1.5 ROCs for every megawatt hour (MWh) of energy they buy from offshore wind farms, which they can then sell on. As per the plans, this will rise to 2 ROCs for the financial year 2009-2010, and fall back to 1.75 ROCS in 2010-11).

Frost & Sullivan’s Industry Analyst Gouri Kumar believes that “after a string of bad news in the industry, this is a significant change that will provide a stimulus to investors in the UK as well as in the rest of Europe.”

The investment costs for offshore wind energy projects are almost double that of onshore projects, said Kumar. They have also risen substantially over the past two-three years due to increase in raw material costs and demand-supply situation for turbines and some components. The economic crisis is expected to slow the progress of projects for the next few years, but the decision to go ahead with the London Array project shows that governments are doing everything in their power to make sure the policies in place will spur the industry on, added Kumar.

An important way of cutting costs is to invest into R&D of technology, installation and O&M.