November 21, 2014 / 8:55 AM / 5 years ago

UPDATE 2-Denmark's Dong Energy banks on larger offshore turbines

* EU offshore wind leader Dong opts for larger turbines

* Vestas-Mitsubishi wins first order for 8 MW turbine

* Dong wants to diversify from sole supplier Siemens

* Alstom, Areva, Gamesa new players in offshore (Adds E.ON board member, EWEA comment, new players)

By Geert De Clercq

PARIS, Nov 21 (Reuters) - Dong Energy, Europe’s largest offshore wind farm developer, plans to make the switch to giant wind turbines in a move that could signal a breakthrough for a new generation of products.

The mega-machines, double the size of the current standard, had not been a commercial success, but that could be changing after Danish utility Dong signed an order in August for 32 of them developed by Denmark’s Vestas and Japan’s Mitsubishi Heavy Industries.

Dong’s decision to favour the new 8 megawatt (MW) offshore turbines is the consequence of a relentless drive to cut costs which it says is essential to the survival of an industry that relies on subsidies.

Dong is putting pressure on suppliers to cut offshore wind costs to 100 euros per megawatt/hour for investments from 2020, from about 125 euros now.

The August deal was for the relatively small British 256 MW Burbo Bank farm, which Dong hopes to start building in 2016.

However, its choice of turbine for three larger British farms could set the tone for the industry — the 580 MW Race Bank, 660 MW Walney Extension and 1200 MW Hornsea farm, which will be world’s largest.

“We prefer bigger turbines, 5 megawatts or more, going forward as they are a big lever in reducing costs,” Samuel Leupold, CEO of Dong Energy’s wind division, told Reuters.

Dong has not yet chosen the turbines for the three projects, but it is unlikely to go back to the 3.6 MW Siemens turbines it operates in most of its wind farms.

On two farms under construction, Westermost Rough and Gode Wind in Germany, Dong is installing 6 MW Siemens turbines, but with several manufacturers now developing even bigger machines, Dong is ready to diversify.

“Siemens was first with a good offshore product, but, in the future we do not want to rely on one supplier,” Leupold said.

CHEAPER FORMAT

The jumbo turbines — the 8 MW Vestas has a 164-metre rotor diameter — are cheaper as they need only one foundation and one subsea cable for the same power as two medium-size turbines.

Siemens, Vestas, Suzlon and others offer 5 MW-plus turbines, but few have been installed, as many utilities chose models with proven reliability.

The average offshore turbine built in 2013 was 4 MW, similar to 2012, European Wind Energy Association (EWEA) data show.

“Investors don’t necessarily want to be first to put their money on a new technology,” EWEA’s Oliver Joy said.

German E.ON for instance has not decided on turbine size for its 400 MW Arkona and Rampion projects.

“We’ll see whether we will do those with the 3 MW generation or move to the 5 MW class,” said E.ON board member Mike Winkel.

France’s drive to develop offshore wind will bring two more mega-turbines into play, Alstom’s 6 MW Haliade and the 8 MW Areva-Gamesa model .

EWEA expects that as installed offshore capacity triples to 25,000 megawatt by 2020, Siemens may lose some of its 60 percent market share, but not volumes.

“There is room for all,” said EWEA’s Jacopo Moccia. (Additional reporting by Christoph Steitz, editing by William Hardy/Keith Weir)

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