Offshore Wind Energy in the U.K.

How to Profit from the Next Big Move in Offshore Wind Energy

Written by Brian Hicks
Posted May 24, 2010

Last Monday, I wrote to you about the UK's new “green” government.

With Conservative David Cameron at the helm, the UK is now going full force on clean energy integration, focusing heavily on offshore wind development.

Well, two days after that e-mail, we got a hold of a new study that could add even more validation to the potential of offshore wind production in the UK...


Check this out...

According to the latest industry economic valuation report, the UK's offshore renewable energy industry could generate the same amount of electricity — per year — by 2050 as one billion barrels of oil. And it could do it using less than one-third of the available space.

By utilizing less than 30 percent of the UK's practical wind, wave, and tidal resources, our friends across the pond could actually match the electricity generated by North Sea oil and gas production.

The report also noted that harnessing the full potential of offshore renewables could generate enough for the UK to power itself more than six times its current demand, thereby making it a potential energy exporter.

This is huge.

Today, most of the UK's renewable capacity comes from fixed wind turbines. But the study did predict that floating wind turbines would eventually have the most power generating potential.

A Very Profitable Flotation Device

We first told you about floating wind turbines last year, after it was reported that Siemens (NYSE: SI) had teamed up with Norwegian oil and gas player StatoilHydro (NYSE: STO) to build the first floating wind turbine for deepwater use.

The initial application for that particular turbine was to help power oil and gas rigs that sit above the North Sea's diminishing reserves. But since no seabed foundation construction is necessary with floating turbines, these things could ultimately have a significant economic advantage for offshore wind power developers.

And since floating turbines can be situated further from the shore — where the wind resource is stronger and more consistent in many cases — more undersea cable would be necessary. This would create a real benefit for companies like ABB (NYSE: ABB) and General Cable (NYSE: BGC).

Now while the concept for large-scale offshore floating wind turbines was actually introduced in the U.S. back in 1972, it looks like Europe is once again taking the lead on a potentially disruptive power technology.

The first fully deployed floating wind turbine was in Italy. A company called Blue H Technologies operated the prototype in 2007 and conducted extensive testing for about a year.

Principle Power, Inc. signed an MOU with Energias de Portugal (ELI: EDPAE) (EDPFY.PK) last year to develop a deep water offshore wind project in Portugal that would use the WindFloat technology. This is a patent pending floating foundation that was developed by Marine Innovation & Technologies, which is owned by Principle Power.

The project will take place in three phases, resulting in a 150 MW commercial floating wind farm.

And of course, in the UK, floating turbines are now gaining serious interest from the new coalition government which is quite bullish on offshore wind development — whether utilizing new or conventional technologies.

Although it should be noted that last week, the UK Treasury did ask for a full review of every spending approval and pilot project from the previous Labour government (only from January 1). This could include a $86.3 million competition fund for offshore wind port infrastructure.

That fund actually had a lot to do with General Electric (NYSE: GE) and Siemens setting up shop in the UK. So it will be interesting to see how this plays out.

I suspect that job creation and tax dollars will trump any argument for terminating that fund. But certainly as investors, we can't ignore these things.

In the meantime, we will continue to watch the evolution of floating turbines, new offshore turbine manufacturing deals, and even the developers operating in the UK.

One in particular that could certainly benefit from aggressive offshore wind development is SeaEnergy PLC (AIM: SEA) (SEYXF.PK). This particular company has interests in three UK offshore wind sites, and has also made some headway in Taiwan.

The company was formerly known as Ramco Energy; since the company's Board decided to start moving away from its oil & gas investments and focus primarily on offshore wind, SeaEnergy was born.

That's right, move AWAY from oil & gas investments.

I love it!

To a new way of life, and a new generation of wealth...

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