Time for a sea change

Europe has 25 different countries and 25 different energy policies — there is no co-ordination among them. Even if we got together and pooled all our purchasing power we would still only represent about 450 million people. At this, we would not even have parity with China or India. The strategic implications are clear.

We in Europe currently import 50 per cent of our energy, and imports will inexorably increase to 70 per cent. We do this in direct competition with China, India and the US. We do this against a background of three barrels of oil being consumed for each new barrel found. We do this against a background where the peak of oil and gas is coming within the next five to 10 years.

We are heading into the future with the same vision we had a century ago — hydrocarbons, hydrocarbons and more hydrocarbons. We can't build a secure, environmentally-conscious and cost-effective energy system on imported hydrocarbons.

Our only European energy source that is both commercial and renewable is wind. We see [new exploitation of] wind on land slowing down — declining sharply in Germany and stopped in Denmark. The best sites in Spain have already been exploited. Whereas we will see wind farms built on land in Scotland, Ireland, Portugal, Italy and in France, wind will at best supply eight-10 per cent of European electricity needs. Wind on land cannot become mainstream.

But if we tear up the book and move offshore we do ourselves and the rest of humanity a great service. There is an infinity of wind reserves in the seas of Northern Europe. The only limit is the length of grids.

Harvesting electricity from wind is different to harvesting gas. With gas you must go to the gas fields. With wind it is possible to go anywhere in the North Sea, the Celtic Sea and the Bay of Biscay.

With gas you know that the fields will cease to supply product in 40 years. With wind you know that the electricity grids will go on supplying power indefinitely into the future. You will have to change some components, such as blades, nacelles and gearboxes, after 25 years, but having done this the harvesting goes on for another 25 years. The main elements of the infrastructure — the grids, foundations, towers, converter stations — all have much longer lives.

The wind flowing over our Northern seas is ours. It doesn't matter how much stress the Chinese or Indian economies put on the international traded hydrocarbon markets, the wind remains ours.

When wind is seen in this way, as the answer to our continent's energy crisis, wind is rightly structured as a continental rather than a national resource. This means that the variability associated with wind is eliminated when viewed as a continental phenomenon. Because we link up broadly disparate areas where the wind blows randomly, we turn wind from a variable resource into a firm and predictable source of power.

When big grids are built at sea, wind is thereby transformed from a weak variable national asset into a truly great continental one. The technology for achieving this transformation exists now. This is not to say that it won't improve with time. But the one strong point that needs making is that, right now, the technology is okay.

Wind power at sea costs €2m (£1.34m) per MW to build. The actual grid for 10,000MW would itself cost €2.5bn. That puts the total investment for our demonstration project at €22.5bn. If we assume that the project is funded using 90 per cent debt at a rate of 1.5 per cent interest above the interbank offer rate (EURIBOR) and equity at a return rate of 20 per cent, then we can deliver power for the first 25 years at 7.9 cents per Wh. For the following 25 years the price falls dramatically to 4.9 cents.

These prices are fixed. They can be planned for. We can build our industrial policy in the certainty of stable electricity prices. There are very few examples in history where a major consumable, like energy, is in effect delivered at fixed cost.

Energy is more than just another product — it is the lifeblood of civilisation. We are all now rich, compared to a century ago. But we cannot have civilisation without energy. What would happen if we became energy poor, or worse, impoverished? The only competitive, local, environmentally-friendly cheap way of securing our energy needs is to get on with building the supergrid and capture the infinite offshore energy mine.



Edited extracts of a recent speech given by Dr Eddie O'Connor, chief executive of Airtricity