Active partnerships are vital in offshore wind’s new era

Offshore wind faces challenges as the sector enters a new era of global growth. Our chief executive Michael van der Heijden explains why Reventus Power is well-suited to tackle these with its blend of skills and commitment to being an active partner.

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The potential of offshore wind is incredible.

In the last decade, we have seen the industry expand from its heartland in northern Europe to countries across the world. Fixed-bottom and floating offshore wind now feature prominently in the discussion between businesses and politicians on how to work together to make the energy mix greener. This industry’s future is bright.

But we are also seeing that the global expansion of offshore wind is posing a host of new challenges for developers and investors. These include seabed and climate conditions; new turbine and foundation types; and the regulatory, legal and financial frameworks too. 

Success in the offshore wind sector requires the right mix of technical and commercial skills to thrive – and partnering with industry experts is one way to access these skills.

This is where Reventus Power will play a vital role. We specialise in originating, co-developing and investing in offshore wind farms globally and, in partnership with other developers, we are now working on projects in countries on three continents. To accelerate our growth, we have also recently doubled the size of our expert team to around 50 people. 

Furthermore, as CPP Investments’ dedicated global offshore wind platform, we benefit from the strong backing from a global investor. This means we can participate in large projects when we see a compelling opportunity, while enabling CPP Investments to further expand its existing global footprint and tap into the significant growth opportunities in offshore wind. Offshore wind is a key renewable energy resource, and it needs long-term and flexible capital to achieve its global potential. We are confident that Reventus Power can do exactly that.

Our ambitions are global. We have recently announced that we have entered into a partnership with EDF Renewables UK and Irish utility ESB to develop the up-to-1.5GW Gwynt Glas floating offshore wind farm in the Celtic Sea, where we own a one-third share. 

And on the other side of the world, we are delighted that the Australian government has this month awarded a feasibility licence for a 2.5GW fixed-bottom offshore wind farm that we are developing in the Gippsland Skies Offshore Wind consortium, alongside our partners Mainstream Renewable Power, AGL Energy, and DIRECT Infrastructure.

We expect to announce further projects in the months and years ahead.

But with so many opportunities out there, being selective is more important than ever, as that will drive success in the next phase of this industry’s global growth.

Core markets

Countries around the world are trying to unlock the potential for offshore wind in their waters. This is hugely exciting, but also means it is not realistic for a single developer to try to do it all. Each market brings with it unique dynamics, and we will increasingly see that the developers that thrive will be those that can navigate those dynamics.

One of the big challenges is the increasing size of offshore wind projects, both in mature and nascent markets. Headline capacities have increased significantly, with over 1GW becoming the norm in established markets – and now more common in nascent markets as well. This means that the potential rewards of those projects are larger, but so are the risks.

In Taiwan, for example, we have seen projects face severe construction issues because of conditions that turned out to be much more complex than initially estimated. By contrast, developers in Finland may need to take into account the effect of ice floes in their design. We must keep updating our industry playbook as many of the new projects coming through will be more difficult than those in the last decade.

On top of that, the technology used in fixed-bottom and floating offshore wind continues to evolve. New technology is always a risk, and that risk is exacerbated by slim profit margins that in turn has taken a toll on the operations of some major manufacturers. We have also seen supply chain disruption, inflation, and other macroeconomic changes. 

And yet, even though the nature of offshore wind is changing, I am optimistic in both the industry and our capacity to deliver, with great support from CPP Investments.

For developers, I believe these challenges show two things.

First, companies must be selective about which projects they take on. At Reventus Power, we are investing in three regions – Europe, North America and Asia-Pacific, with a clear sense of priority in terms of the countries we target today and those that we believe will become attractive in the medium term.

And second, developers must be willing to tackle these challenges by working with expert partners. This helps spread the risk and, more importantly, stimulates innovation. The size and complexity of new offshore wind projects will challenge the entire industry to bring the innovative thinking needed to take projects to final investment decision and, ultimately, completion. Reventus Power, with its deep expertise and a track record of getting things done, is a strong partner.

The future is bright, but we will only get there if we can work out how to navigate unique challenges in new markets. The right partners can make all the difference.