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U.K. Offshore Wind Power Developers Need $46 Billion, PWC Says
2010-07-25 23:01:00.6 GMT
By Alex Morales
July 26 (Bloomberg) -- U.K. offshore wind power developers
need 30 billion pounds ($46 billion) of financing to build the
turbines required to help the nation reach its renewable energy
objectives by 2020, PricewaterhouseCoopers said.
Sea-based wind farms play a "make-or-break" role in the
U.K.'s goal to derive 15 percent of energy from renewables by
2020, the global accounting firm said today in a report. A total
of 12 gigawatts of offshore wind capacity is needed by then, and
just 0.3 gigawatts was installed last year, PWC said.
"Companies themselves are proceeding at a pretty slow
rate," PWC Global Energy Advisory Leader Michael Hurley said in
a telephone interview. "For the country to meet its targets,
that rate has to be significantly higher."
Current incentives for building renewables aren't enough to
help utilities secure the funding needed for the capital
expenditure, Hurley said. With banks and governments short on
funds, the industry should tap into pension funds to secure the
cash needed to build wind farms, he said.
The U.K. in April reached a total of 1 gigawatt of offshore
wind generating capacity after projects by E.ON AG and Dong
Energy A/S began producing electricity, according to the
industry group RenewableUK. Farms with 4 gigawatts of capacity
have planning permission or are being built and in January, the
government awarded licenses for 32,200 megawatts of projects to
companies including Centrica Plc, RWE AG and Statoil ASA.
Development Time
Murley said that because offshore wind farms take about
three years to develop, companies would need to secure about 10
billion pounds initially, and in three years time, they would be
able to use the newly built assets to secure the next 10 billion
pounds of lending.
PWC proposed four mechanisms to make the industry's returns
more predictable, making it more attractive to pension funds.
They are: a charge to electricity customers to cover the capital
expenses, transferring ownership of the farms to the grid
operator, which would recover costs through electricity
providers and their customers, increasing the number of tradable
Renewable Obligation Certificates awarded to offshore wind
power, and making investments in the technology tax-free for the
general public.
"This is about getting the momentum going to start to
build the industry," Hurley said.
For Related News and Information:
Top renewable energy stories: GREEN <GO>
U.K. power-market stories TNI UK PWRMARKET <GO>
Today's top energy news ETOP <GO>
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--Editors: Reed Landberg, Mike Anderson
To contact the reporter on this story:
Alex Morales in London at +44-20-7330-7718 or
amorales2@bloomberg.net.
To contact the editor responsible for this story:
Reed Landberg at +44-20-7330-7862 or landberg@bloomberg.net.
