Project development, turbine, foundation and cable supply is concentrated in only a few companies in Europe’s offshore wind sector, according to industry figures.
However, even though WindEurope argues that competition is important, it does not believe a lack of it will derail offshore wind build-out.
By the end of 2020, seven developers and investors – Ørsted, RWE Renewables, Vattenfall, Macquarie Capital, Iberdrola, Global Infrastructure Partners and Northland Power – owned 51% of Europe’s operational offshore wind capacity.
And just two turbine manufacturers – Vestas and Siemens Gamesa Renewable Energy – account for 92% of Europe’s operational offshore wind fleet, according to WindEurope’s offshore wind statistics report for 2020.
Market concentration was also seen further down the supply chain last year.
EEW and Sif provided 80.5% of all foundations installed in 2020. TFKGroup and Nexans supplied 68% of all inter-array cables energised last year, while NKT Group and Nexans were provided 66% of export cables.
WindEurope’s offshore wind analyst Lizet Ramirez suggested that sometimes market concentration can be due to the large scale and lower number of offshore wind farms: nine wind farms in European waters were connected to the grid last year, with an average capacity of 788MW.
She added: “Competition is important and is crucial for delivering cost reductions. But the industry is confident that we can deliver on this.”
Economies of scale
A WindEurope spokesman told Windpower Monthly that the industry body has always argued in favour of economies of scale and added: “Only when OEMs reach a certain size, they can make use of economies of scale and supply chain synergies, for example.
“These economies of scale have played a very important role in the cost reductions Europe’s offshore wind industry could deliver in the past decade. European OEMs also need to reach a critical size to compete with international competitors from Asia and America on the growing global markets for offshore wind turbines,” he said.
Ten out of the 15 offshore wind farms currently under construction in European waters are using turbines with higher power ratings than the 8.2MW average rating brought online last year, Ramirez told reporters and analysts in a webinar. She also pointed to various 14MW-plus models now on the market – including Vestas’ new 15MW turbine, unveiled yesterday (10 February) – as being potential drivers of cost reductions.
Using fewer, more powerful turbines can help to reduce the levelised cost of energy (LCoE) by making more efficient use of cables and other components, as well as reducing operations and maintenance (O&M) costs.