(Updates with comment from energy secretary from fourth paragraph.)
Feb. 9 (Bloomberg) -- The U.K. opened the world’s biggest offshore wind farm today, marking the start of a 33 billion- pound ($52 billion) push to expand sea-based generation more than 10-fold by the end of the decade.
New Energy Secretary Ed Davey inaugurated Dong Energy A/S’s Walney farm, located in the Irish Sea about 9 miles off the coast. The 367-megawatt project will produce enough power for 320,000 homes, according to Fredericia, Denmark-based Dong.
Britain, with more than 1,500 megawatts of offshore wind, plans to boost capacity to 18,000 megawatts by 2020 to meet rising energy demand, European Union renewables goals and cut emissions 34 percent from 1990. The government says at least 110 billion pounds is needed by then to replace aging power plants, upgrade the grid and build renewable-energy projects.
“Offshore wind can make a real contribution to our renewable energy target,” Davey said at the opening ceremony in Barrow-in-Furness. “The government wants this country to be a leader in the renewables sector. It is great news for our economy in terms of jobs that we create and exports.”
The Walney farm, which Dong co-owns with SSE Plc, PGGM NV and Triodos Investment Management BV, cost about 1 billion pounds and employed more than 5,000 people, said Helen MacBain, a spokeswoman for the Danish company. Dong installed 51 3.6- megawatt turbines in 5 1/2 months in Walney’s second phase. Together with the first 51-turbine phase, linked to the grid a year ago, the offshore farm is the world’s biggest.
‘Really Important Signal’
Davey said that since April, about 1 billion pounds has been invested in offshore wind in Britain including a Jan. 31 announcement that Samsung Heavy Industries Co. will base a 100 million-pound offshore wind project in Scotland, creating more than 500 jobs.
“We’ve seen investment from pension funds, that’s a really important signal, and I think it shows the confidence that we have a long-term strategy and that there’s money to be made,” he said.
Faced with rising development costs and slowing economic growth, wind companies are reducing construction times, shortening supply chains and installing larger turbines to boost the energy yield, said Christian Skakkebaek, a vice president at Dong’s U.K. unit.
“2012 through 2014 will be about delivering the industrialization of offshore wind,” he said in a phone interview. “You will see the first steps” in cost reduction.
Dong will begin testing two Siemens AG 6-megawatt turbines this year as well as a Vestas Wind Systems A/S 7-megawatt blade, almost double the size of those installed at Walney, Skakkebaek said. “The benefits come from a larger rotor and larger machine, built for the offshore market,” he said.
Centrica Plc and Abu Dhabi’s Masdar are among companies planning wind parks in British waters over the decade. The U.K.’s offshore spending may grow to 33 billion pounds by 2020, about eight times its 2010 level, according to the Carbon Trust.
Installing turbines offshore costs about 3.3 million pounds a megawatt, Bloomberg New Energy Finance data show. Costs are likely to rise by about 200,000 pounds through the middle of the decade before dropping to 3 million pounds, according to the London-based researcher. That compares with about 1.25 million pounds a megawatt to build a turbine onshore.
--With assistance from Alex Morales in London and Randall Hackley in Zurich. Editors: Amanda Jordan, Reed Landberg
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