The supply chain bottlenecks and rising costs that are currently afflicting many offshore wind projects and recently prompted oil giant Shell to end its involvement in the high profile Thames Array project are likely to be resolved in the near future, according to representatives of the UK wind industry.

Dr Gordon Edge, director of economics and markets at the British Wind Energy Association (BWEA), said that while the sector was currently experiencing a "supply crunch", new manufacturers were fast emerging to meet growing demand for both onshore and offshore wind turbines.

"There are now 20 wind turbine manufacturers in China, and we know of seven new companies in development specifically targeting offshore wind," he observed, adding that the emergence of Chinese manufacturers, who are primarily focused on onshore turbines and boast relatively low cost bases, will also force established operators to increase their focus on the offshore market.

His comments come just days after a report from analyst firm Cambridge Energy Research Associates warned that increased raw material costs and supply chain bottlenecks, such as a shortage of the barges required to install offshore turbines, would drive up capital costs for offshore wind projects by a further 20 per cent.

Rising costs were identified by Shell as the primary reason behind the company’s decision to divest its stake in the London Array offshore wind farm, while leading Danish wind turbine manufacturer Vestas last week argued that the high cost of offshore projects should lead to an increased focus on onshore alternatives.

Angus McCrone of analyst firm New Energy Finance agreed project costs were rising, driven by a combination of increasing steel prices and the fact that the next generation of offshore wind farms tend to be located in deeper water. However, he insisted that with the government set to increase the subsidy on offer to offshore wind energy operators through its Renewables Obligation mechanism from next year, projects were well positioned to turn a profit.

BWEA chairman Adam Bruce also argued that current "pinch points" in the offshore wind supply chain were being addressed. He cited the example of one barge operator focused on the North Sea oil and gas industry, which had recently commissioned five new vessels for laying cables on the sea bed, primarily to meet demand from offshore wind farms. "If you look at where the oil and gas industry was 30 years ago you have a model for how quickly a sector can scale up," he added.

Peter Hodgits of offshore renewables services specialist SeaRoc agreed that concerns over supply and skills shortages had been overblown. "There are the resources and the skills out there," he said. "The log jam is with installation vessels, but it is worth noting that the time it takes to build one of those vessels is a lot shorter than the time it takes for a project to get through the planning system and the sector is already attracting the attention of ship builders."

Source: BusinessGreen.com