Cost Reductions Crucial For Successful Development of North Sea Offshore Wind Hub

More than 40 companies are now involved with the Norstec partnership, which aims to turn the North Sea into a offshore wind hub and link countries together in a super grid. It would
reduce the cost of offshore wind substantially and promote new investments worth $630 billion by 2035.

The partnership – spearheaded by Vestas Wind Systems (CO:VWS) and Siemens AG (NYSE:SI), the dominant manufacturers of offshore turbines – is patterned after the visionary Desertec initiative which will bring solar from Africa’s Sahara Desert to Europe.

Norstec wants to drive development of offshore wind farms and their related infrastructure – 5,000 miles of high voltage transmission cables in Europe’s northern seas by 2022.

In doing so, its goal is to reduce the cost off its electricity to $161 per megawatt-hour (MWh) by 2020, versus $226/MWh today. That compares with $85/MWh for land-based wind turbines, $82/MWh for coal and $70/MWh for natural gas, according to Bloomberg New Energy Finance.

Those cost reductions are seen as critical for harnessing more than 40 gigawatts (GW) of offshore wind capacity from Europe’s Northern Sea, says Norstec in its vision statement published this week.

Development of a super-grid in the region could create 185,000 wind jobs in the UK alone and provide enough power to eliminate the need for 1 billion barrels of oil annually, says Norstec. The cumulative investment involved could reach $630 billion by 2035, it says.

Norstec is closely aligned with the UK’s wind strategy – the country’s target calls for 18 GW of offshore wind by 2020, up from 2 GW now.

“I continue to be strongly supportive of the UK offshore renewables sector and am delighted to see Norstec rising from the waves," says British Prime Minister David Cameron. "As I said when I launched this network last April we are on the cusp of a second, clean energy revolution in the North Sea. Close collaboration between industry and government will be critical to making this happen.”

Here are Norstec’s objectives:

  • Ensure that large-scale deployment of offshore wind in Europe’s North Sea is fully under way by 2020
  • Position offshore renewables as the "largest new source of competitive sustainable energy to 2030 and beyond"
  • Leverage the skills, technologies and expertise gained from this offshore development in projects around the world – creating new export opportunities for Norstec members

Norstec’s members include a cross-section of the wind industry,  from turbine makers to developers and supply-chain firms.

Europe’s wind capacity recently reached a record 100 GW, despite minimal offshore development so far, says the European Wind Energy Association (EWEA). That’s about twice the current US wind capacity.

The US is also looking more closely at its offshore wind development potential – despite the market uncertainty created by the looming expiration of the US wind production tax credit  (PTC) at the end of 2012.

Read the Norstec vision statement:

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