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When visitors fly into London for the Olympics in 2012 the first thing many of them will see as they approach will be the 100-square-kilometre London Array wind farm. A lot is riding on the first 630 megawatt (MW) phase of the project, and not just the €2.2 billion that is being invested by consortium partners E.ON, Dong and Masdar. The Array is the largest offshore project in the world and has the highest profile – long delays and cost overruns, a major accident, or large-scale turbine failures would have a big impact on the UK’s burgeoning offshore sector.

Green-lighted in May 2009 after battles over planning and the withdrawal of oil company Shell from the project in 2008, the Array is making steady progress and is on course to meet its end-2012 completion deadline, despite minor setbacks such as the late arrival of one of the main installation vessels from Asia. In early October, the site was bustling, with one of the two installation vessels getting ready to install the next monopile, two vessels installing array cables, and a number of smaller vessels active – tugs, transfer vessels, a flotel and a guard ship which warns approaching vessels of the construction activity on the site. Already, 70 of the planned 175 monopiles – 650-tonne steel tubes of up to 28 metres that are driven into the sea bed – and the transition pieces have been installed. The two massive, 1,260-tonne offshore substations were installed in July.

The consortium has so far been fortunate with the weather, but difficult days are now approaching. “We’ve had some pretty okay days during the summer period. But we are facing a difficult period coming up with the winter, and that’s clearly one of the bigger challenges that we have,” says the project’s commercial and operations manager Matt Britton.

Ready for prime time
London Array can be seen as a dress rehearsal for the huge Round III projects, which could see as much as 33GW of new capacity installed off Britain’s coasts, equivalent to about a quarter of the UK’s current electricity generating capacity. The areas were licensed in January 2010 by the Crown Estate, the government body that owns the sea bed in UK territorial waters. The largest of the zones, Dogger Bank, which was won by Norwegian energy companies Statkraft and Statoil, and German utility RWE, has an estimated potential of 9.2 GW. Britton points out that the projects in most of the zones are likely to be built out in 500MW blocks, saying, “We are doing that now, so this is a trailer for that kind of construction.” One of the key differences between Array and the earlier offshore developments and the projects that will follow is scale. Array has mainly used 3MW and 3.6MW wind turbines. The Round III zones have much deeper average water depths, and developers will deploy turbines in the 5-to-7MW range. The technology involved is untested and it will require a whole new industrial sector in the UK, including new port-side manufacturing facilities.

The opportunities are immense and one the government says it is keen to support. At the start of the year, German firm Siemens announced plans for an £80 million plant at the Associated British Ports site in Hull to build 6MW turbines. Denmark’s Vestas has secured land in Sheerness for a planned 7MW turbine facility, and Spain’s Gamesa is deciding between Dundee and Hartlepool for a factory to produce new 5MW and 7MW models. Meanwhile, French industrial conglomerate Alstom is also zeroing in on UK sites, as are Germany’s Repower and France’s Areva. Others with UK plans include South Korea’s Doosan, Japan’s Mitsubishi, GE of the US and China’s XEMC.

However, building an entirely new manufacturing sector presents significant challenges, with the possibility of bottlenecks interrupting progress as the big projects get underway in 2014-2015. Another big question mark is financing. Until now, most of the projects have been financed by the utilities on their own balance sheets, but analysts say this will no longer be possible for the big Round III projects. The Carbon Trust estimates the funding gap between what utilities can finance and what will be needed to install 20GW by 2020 will be about £20bn. There has been some progress attracting project financing, but banks are unlikely to be able to come up with the amount needed on their own, so the sector must tap institutional investors, such as pension funds. This will mean providing some kind of assurance that the projects are safe long-term investments, and the new Green Investment Bank could provide insurance-type products to “de-risk” the sector.

The workings of the government’s proposed Electricity Market Reform (EMR) will also be key and turbine makers are anxious to see it unfold quickly. “The release of the EMR framework and the raising of the official target for offshore wind (to 18GW by 2020) are very positive steps in the right direction,” says Vestas’ vice president for offshore, Anders Søe-Jensen, “but there are significant mechanisms that are not really usable yet.” He compares the current situation to a football game, “where you have the teams and the lines are drawn, but you don’t know how many points you get when you score a goal or who is the referee.” And he warns that Vestas will only go ahead with its planned factory if it has the certainty of a clear framework and customer orders. “If the government doesn’t do their part we can’t do our part,” Søe-Jensen says.

Decision time
While implementation of the new mechanisms may seem far away (after 2017), companies point out that final investment decisions on manufacturing facilities need to be made soon if the facilities are to be built and ready to produce turbines in 2014-2015. The reform process is already running behind the original schedule and the wrong signals from Westminster could still cause a significant setback.

For now though, confidence in the UK’s business environment for offshore wind is running high, and the successful build-out of projects like the London Array are giving it new momentum.

Ben Backwell is a senior correspondent at renewable energy newspaper Recharge