Struggling with the offshore challenge

The word "distant" remains a fitting description of Germany's offshore wind power aspirations. Nearly all proposed projects are at great distance from the coast, have distant time horizons for construction and distant hopes of securing cabling and wind turbines any time soon. But some major barriers are coming down, not least of all financial hurdles, and installation of wind turbines on one project could start next year.

The word "distant" remains a fitting description of Germany's offshore wind power aspirations. Nearly all proposed projects are at great distance from the coast, have distant time horizons for construction and distant hopes of securing cabling and wind turbines any time soon. But some major barriers are coming down, not least of all financial hurdles, and installation of wind turbines on one project could start next year

Germany, the world's mightiest wind power nation, is at long last moving into offshore generation. By this time next year, construction will have begun on its first wind station at sea, a 60 MW demonstration project sponsored by the state and known as Borkum West Test Field. It will be online six years after Britain made its first move into utility scale offshore wind with the North Hoyle 60 MW facility in the Irish Sea and fully 18 years after Denmark led the world with the 5 MW Vindeby facility of 450 kW turbines, installed in the Baltic Sea between southern Denmark and northern Germany in 1991. Britain and Denmark have since built about 400 MW of offshore wind capacity each, the Netherlands has more than 100 MW and is well on the way to doubling that with a 120 MW project going up, and even Sweden has more than 100 MW. Germany has yet to pass go.

For a country that has long said it is running out of space on land for wind plant -- Germany has more than 21 GW in operation, much of it in areas of relatively poor winds -- the slow warm up to utilising its much better offshore resource seems incongruous. But the same land-locked geography that limits Germany's wind resource on shore also makes going offshore that much more difficult than in countries surrounded by water. Germany's coastline is a precious commodity. It has just 150 kilometres of North Sea coast and little more than 200 kilometres stretching along the Baltic Sea. Offshore real estate is in short supply, heavily guarded by nature protection laws and much sought after by conflicting interests, tourism being one of them.

What it all means is that wind power stations off the coast have largely been banished to the outer reaches of German territory. While British, Danish and Swedish wind farms are well within site of land so far, in Germany the closest of the big projects are planned for more than 25 kilometres from shore, and the furthest up to 100 kilometres away. As a result, the high cost of getting electricity to land has been a major obstacle. To be economically viable that far out at sea and in relatively deep water, wind farms need to be large, use big machines, and share cabling to shore. In other words, the business development plan for harnessing Germany's marine wind resource has been tougher in the making and more demanding of technology advances than in neighbouring countries.

Over the past year, however, things have been falling into place. A law passed in December 2006 requires transmission system operators to take on the job of getting offshore wind power to shore and instructs them to pass the cost straight through to consumer electricity bills. That pragmatic solution to the offshore transmission knot has significantly reduced the cost of all projects, making financing for offshore wind farm development relatively available. What is more, the government recently indicated that it will be raising the purchase price for offshore electricity. On land in Germany, wind power purchase prices are fixed by government and that standard offer system is to be continued offshore.

Securing transmission

In practice, the December "infrastructure acceleration" law dictates that cables for all offshore wind projects sited more than three kilometres from land and starting construction before the end of 2011 must be provided by the nearest transmission system operator (TSO) by the time the plant is ready to commission. The cost, says the law, which goes by the catchy name Gesetz zur Beschleunigung von Planungsverfahren für Infrastrukturvorhaben is to be shared across Germany's four TSOs. They will pass it on to electricity consumers as part of standard network usage charges. Of the four, just E.ON Netz and Vattenfall Europe Transmission have substantial coastlines within their traditional network areas.

The first cable contract under the law was recently agreed between supplier ABB and transmission operator E.ON Netz. ABB will lay a 400 MW cable to bring power to customers from a wind farm cluster known as Borkum 2, to be built 90 kilometres north of the island of Borkum (box). If all goes according to plan, Borkum 2, with a rated capacity of more than 1 GW when complete, is likely to be the second German offshore wind development after the Borkum test field, although work could start on offshore projects in the Baltic Sea before then.

E.ON Netz is faced with balancing its obligation to provide offshore transmission with safeguarding its investment should a wind farm project or projects collapse. Without a customer to use capacity on the transmission line, the TSO would find itself landed with an expensive stranded asset. At the same time, it must also gain approval for the entire cable project from the federal network agency, the Bundesnetzagentur, which is charged with protecting the financial interests of the consumers who will ultimately pay the bill.

It looks as though E.ON Netz could be providing land connections for up to 3.1 GW of offshore wind power in the German North Sea by the end of 2011, though the TSO indicates that a more realistic count is closer to 1.6 GW. The company has just completed an assessment of which projects will need cable connections to shore by that date. Vattenfall Europe Transmission is expecting to connect about 1.3 GW by 2011. Altogether, it says that a combined capacity of 2.3 GW at ten locations is likely to need a land connection.

In making these projections the TSOs have taken into account current bottlenecks in turbine supply, in the ships and equipment needed to install wind turbines offshore, and in supply of the 33 kV cabling to internally link the turbines within a wind farm, says E.ON Netz.


"The infrastructure law was a breakthrough," says Gernot Blanke, head of wind project developer WPD, which is progressing around 5 GW of offshore wind capacity around Europe. "Removing EUR 200 million in grid costs opens up new possibilities. We no longer have to use the large five megawatt machines. We are now thinking about using 2.3 megawatt machines, depending on what is the most economic model. The turbines need to be technically proven and available in large numbers. The banks have to be happy with them and the manufacturers need to want to make them. We then have Vestas, Siemens, Repower and Multibrid to hand," he says, referring to wind turbine manufacturers currently offering machines commercially for offshore use.

With the exception of Vestas, which for the time being has taken its 3 MW turbine off the offshore market, offshore turbines from all those companies are a good deal larger than 2.3 MW. Siemens offers a 3.6 MW and the Multibrid and Repower turbines are both 5 MW machines.

WPD expects to build its 21-turbine Baltic 1 near-shore project in 2009, for which it received both construction and cable permits last year, followed by 80 turbines at Kriegers Flak in 2010, which also has a cable permit. The Baltic 1 cable will be extended out to Kriegers Flak. Both projects are located in the Baltic Sea. These will be followed by Hochsee Windpark Nordsee with 80 turbines in 2011, says Blanke.

Financing offshore

He welcomes the broader horizons for independent development of offshore wind power that the arrival of project finance in the sector represents. Until a year ago, offshore wind construction was entirely reliant on the capital strength of big utilities. For this reason, back in 2005 WPD sold its Kriegers Flak project in the Swedish Baltic Sea to Vattenfall Sweden. "The market was quite different then. There was no project financing, offshore was only financed on balance sheet," says Blanke.

That changed with the trail blazing project financing of the Q7 wind station in Dutch waters (Windpower Monthly, July 2006). Q7 is now under construction using Vestas 2 MW turbines and is scheduled to be fully online in March. Lenders have not only taken on the operational risk of Q7, but also the construction and commissioning risk. Similar non-recourse financing was also closed in May for a second offshore wind plant, Belgian C-Power's 30 MW project of Repower 5 MW turbines, scheduled for construction next year. Even with the availability of project finance, however, WPD has hesitated at the water's edge. "If technology prices had not risen so sharply worldwide we would have moved on projects already, but the price situation has changed," says Blanke.

Recognising the problem, the German government has strongly indicated that it will raise the purchase price for offshore wind power as part of a revamp of the national renewable energy law, to be implemented from the start of 2009. Blanke anticipates a price of EUR 0.14/kWh, which he says will be enough for projects to proceed.

The current rate is EUR 0.091/kWh for 12 years for projects commissioned by 2010. After that the basic offshore tariff applies, which is EUR 0.0619/kWh for the rest of the 20 years of guaranteed payment. The 12 year period is extended by 0.5 months for each full nautical mile a wind farm is located beyond the 12 mile zone and for 1.7 months for each additional full metre of water depth beyond 20 metres at the site. As with the standard offer prices onshore, the rate drops each year for new plants coming on line -- in the case of offshore by 2% each year from 2008.

The federal government's draft of its revamp of the renewable energy law proposes an offshore purchase rate of EUR 0.11-0.15/kWh for the first 12 years, but a reduced base rate of EUR 0.035/kWh after that. The 12 year period is again extended according to distance and water depth. An annual reduction in rates for new plant does not kick in until 2013.

Current status

So far, 19 large scale offshore wind farms have gained permits from the federal shipping authority, the Bundesamt für Seeschifffahrt und Hydrographie (BSH), for construction far from shore in German waters (table). Their combined rated capacity is 6.25 GW. Sixteen are to be sited in German North Sea waters and three in the German Baltic Sea. Of the 19 projects, permits for cable links to shore have been granted to no more than four in the North Sea and one in the Baltic Sea (table previous page). Including the 19, BSH is currently dealing with 41 permitting procedures, of which 35 are for projects in the North Sea and six in the Baltic.

Beyond the offshore projects far from land, two near-shore projects are in the works within the 12 nautical mile zone: WPD's Baltic 1 project of 21 turbines off the coast at Darss; and the GeofreE demonstration project of 5 MW turbines off the east Holstein coast, proposed by a company calling itself Geo. GeofreE has a construction permit and received its last cable permit back in February. Site work is scheduled to start next year.

Meantime, E.ON Energy Projects, Vattenfall and north German utility EWE are busy progressing the Borkum West Test Field under a joint venture they have named Alpha Ventus. It has all its permits in place, although no cable contract has been announced.

The first machine, however, is scheduled for commissioning in late summer 2008 with all 12 turbines, six Repower 5 MW units and six 5 MW turbines from Multibrid, to be running by summer 2009. Two of the Repower units are already operating in deep water off the west coast of Scotland for Canadian oil company Talisman (Windpower Monthly, June 2007). Multibrid, recently bought by large French engineering company Areva, best known in the energy business for its nuclear technology, operates two prototype of the 5 MW turbine onshore, commissioned at sites near Bremerhaven in December 2004 and in March this year. According to E.ON, use of the two turbine types "will allow the project partners to gain operational experience from various power plant variants."

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in