Iberian offshore wind energy wins leaving manufacturers in the doldrums
Mar/Apr 2010

Energy companies now looking out to sea while producers are left stranded

The news that Spain’s Iberdrola Renovables and Portugal’s EDPRenováveis (EDPR) have been awarded a significant share of the development licences for the UK’s offshore wind programme has generated considerable excitement in Iberia.

Iberdrola, a global leader in wind power generation, and Sweden’s Vattenfall Vindkraft, leader in offshore plant projects, have teamed up to develop the Norfolk Bank Zone, which should be producing 7.2GW of power before the end of the next decade. Iberdrola, through its Scottish Power Renewables (SPR) subsidiary, hopes to have preliminary permits in place by 2012, which should allow construction of the 1,440 turbine field to begin in 2015. SPR is working on several offshore wind power projects in the UK, with a total capacity of 1,700 MW, including the 500MW West of Duddon Sands project. Iberdrola, through its subsidiary, SSE Renewables, is already the UK’s leading developerand generator of onshore wind energy and operates the largest wind farm in Europe, Whitelee in Scotland.

EDPR, the world's fourth ranked wind farm operator, successfully bid with British partner SeaEnergy Renewables for the smaller 260 turbine,1.3GW Moray Firth Zone. This will be EDPR's first wind farm in the UK. The total power to be generated from the third round of licensing by the Crown Estate (the state entity that owns the UK seabed) should reach 32GW, a quarter of the UK’s electricity needs.

Experts say that offshore generating costs can however be double those of onshore equivalents, but the maritime environment offers stronger, less fluctuating winds. An added advantage is that the seabed is owned by governments, not individual land owners.

Europe, by 2015, will commission an estimated 5-7GW of offshore plant per year and should have 120GW of capacity by 2030. Marine windfarms are already the principal source of electricity in Denmark.

In contrast, Spain, the third largest global producer of onshore wind-generated electricity, does not have a single MW of offshore plant installed and is unlikely to have any by 2020. The Government only recently published its environmental study of the Spanish coastline indicating possible areas for development. No further progress is expected until issues such as the impact of installations on the environment, tourism and fishing are addressed. Developers would then have to propose projects within the framework of Royal Decree1028/2007, of 20 July.

Spain’s Gamesa, a world leader in onshore wind turbine manufacturing has however only reached the prototype stage for an offshore turbine. Competitors like Germany’s Siemens, France’s Areva and Denmark’s Vestas are winning all the new, high-value turbine work, say experts. Without domestic demand to back their projects, Spanish turbine manufacturers therefore fear they may be squeezed out of the market as onshore wind farm project awards dry up.

Iberdrola’s Norfolk Bank licence will have brought useful work to its UK counsel McGrigors while EDPR used DLA Piper. Norton Rose advised the Crown Estate. The more profitable work is likely to come when the projects have to be financed, nonetheless some Iberian lawyers are anxious that their renewable energy experience may not count. Sector investors are already moving on to Italy and Greece after the decision by the Spanish Government to slash feed-in tariffs for new solar facilities.

With Iberian onshore wind project opportunities stalling and no medium-term Government commitment to offshore facilities, practitioners fear they may see relatively little coming their way from future waves of European offshorewind generation projects.