Green Economy in a Blue World-Full Report

• Higher consistent wind speed than onshore locations: wind-speed intensity is steadier and greater in deeper water, producing higher output per revolution. An increase of about 20 per cent in wind speed at some distance from the shore is not uncommon. Moreover wind is less turbulent at sea than over land which results in consistent energy generation. • Close to load centres: offshore wind farms are usually located near to cities and load centres, minimizing transmission losses. • Favourable to public acceptance: as these sites are located far from land they have less visual impact which helps with public acceptance issues. Moreover, wind turbines emit a whirring noise which has led to problems people with living nearby. Project finances dominate the financial structure of the offshore wind-energy sector, because of the highly predictable nature of wind-farm cash flows. Over the past couple of decades, the vast majority of commercial wind farms have been funded through project finance. Project finance is essentially a project loan, backed by the cash flow of the specific project. Recently, companies’ own financing has also become common for financingwind-farmprojects. This means that the owner of the project provides all the necessary financing for the project, and the project’s assets and liabilities are all directly accounted for at company level. Structured finance markets (such as bond markets) in Europe and North America have also been used, but to a more limited extent than project finance transactions. Commercial-scale offshore wind facilities are currently in operation in shallow waters off the coasts, but further technology development is needed for use in the deeper waters of the high seas. Offshore wind, currently around 3 000 MW, has mainly been concentrated in northern European countries, around the North Sea and the Baltic Sea. Europe’s leadership is primarily attributed to public policy and a thriving wind energy industry. EU legislation mandates significant reductions of carbon emission, requiring, among other measures, greater usage of renewable energy resources. As of 2011, around 69 wind farms were installed or under construction in the EU. Europe has a total offshore wind-energy generation capacity of is 3 000 MW (EAI). Other countries worldwide are also exploring offshore renewable energy including the Japan, USA, India and Eastern and Southern Africa (Wilhelmsson, et al., 2010).

industry has surged forward in recent years; there has been an increase in installed wind- energy generation capacity from 136 MW at the end of 2000 to 2 300 MW by 2010. This is partly spurred by a government requirement for electricity companies to source an increasing percentage of their supply from renewable and partly by the introduction of market incentives, both in terms of output price subsidy and capital grants. Similarly, wind-energy generation capacity in the US increased by a factor of 15 over the same period from 2 500 MW in 2000 to 40 100 MW in 2010 (GWEC, 2010). Wind energy now is generating around 2 per cent of US electricity needs; however the potential is much greater. In 2008, the US Department of Energy released a report, predicting that wind power could provide 20 per cent of US electricity by 2030. Offshore wind-energy generation is taking off in the US, albeit slowly. The Obama administration has unveiled a plan for fast-tracking offshore wind-energy projects, releasing US$50 million for R&D in offshore wind energy in the USA (Ecopolitology). The Indian wind-energy sector has an installed generation capacity of 14 158 MW (March, 2011), which is ranked fifth highest in terms of wind-power installed capacity in the world. The majority of this capacity is drawn from onshore projects. The offshore wind-power potential for India has been estimated as 15 000 MW. A huge potential remains untapped due to the high capital cost of offshore wind projects and lack of the necessary supply chain. Tamil Nadu, a southern state in India, will have the distinction to have India’s first offshore wind project (EAI). The highest country level growth rate for wind- energy generation capacity was seen in China, in the past decade. The wind-energy generation capacity in China doubled every year between 2006 and 2009, and it has been the largest wind- energy generating country in the world since 2009. There is one operational offshore wind farm in China, as of 2011. The figure below shows the cumulated capacity of offshore wind farms in selected European countries from 2011 to 2020. It can be seen that the total capacity for offshore wind is still limited, but growth rates are high. Offshore wind farms are installed in large units – often in the order of hundreds of MW. Presently, higher costs and temporary capacity problems in the manufacturing stages, as well as difficulties with the availability of installation vessels, are causing some delays, and hence slow expansion growth. Several countries are nevertheless

in a Blue World

According to the Japanese Wind Energy Association (JWEA), Japan’s wind-energy

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