Offshore wind energy development and applications

Offshore Wind Energy

Wind Energy

(Facts and Features, Usage, Future Prospects, Strengths and Weaknesses, Recommendations)

It is an undeniable fact that human activity needs energy as a basic requirement. Energy input is a fundamental need for transportation, water and food provision and mobility services. In the contemporary energy system, non-renewable fossil fuels are the principal resources that satisfy the global energy needs. They are preferred due to their dependability and low-cost. On the contrary, wind energy, hydroelectric power and biomass are also used as energy resources all over the world, especially in developing countries (Edinger & Kaul, 2003, p. 43).

The exchange of goods and energy has become an imperative process as globalization has been pursued trendily. This trade guarantees efficient production and advantageous exploitation of proportional costs. On the other hand, the need for energy in the developing countries is increased continuously as they put efforts to strengthen their industries and improve their living standard. Consequently, the switching over of these countries from energy exporters to energy importers means the lessening of the fuel and raw material exporter countries. This is a critical situation as not all countries could ever be the ones importing and not exporting energy. The primary basis of our current energy system is the inadequate fossil fuels. It is undeniably based on fact that the trend toward global economic growth will surely and necessarily compel the countries to use economic and political pressure. This pressure will assist them to protect their energy sources. Moreover, they will be in a state to safeguard their position and condition as net-importers of energy (Edinger & Kaul, 2003, p. 48-49).

The present era we are breathing in is one in which our energy requirements have caused a constant reduction and exhaustion of energy resources. This energy consumption has done a great damage to the environment never witnessed before. Unfortunately, human beings are continuing to live and operate blindly as if this situation is normal and we have infinite energy resources available. We have closed our eyes to the fact that the depletion of energy resources and constant energy utilization has brought us to an edge of great environmental damage. Though, in today's world, the availability of technical and political alternatives is unbounded but still no policy decisions have been made and no plans have been derived to ensure a sustainable future. We are in great need of energy policies that answer all our queries regarding the compatibility and well-suited nature of energy systems, resources and the environment (Williams & Uqaili, 1999, p. 59).

It is natural that every country has difference in the availability and contribution of energy sources. The main factors of this difference are the nature and amount of available natural resources, the complexity of technology used for generation and utilization of energy and geographical locations as far as oil and gas are concerned (Williams & Uqaili, 1999, p. 61). It is a global acknowledgment that the importance of energy determines the excellence, standard and quality of life. The majority of nations who have achieved an exceptional improvement in their living standards are the ones who exploited and grew their energy demands (Williams & Uqaili, 1999, p. 60).

However, the increase in energy consumption has given rise to a number of environmental issues. According to the common man, decision makers and experts worldwide, sustainable development and sustainable protection of the environment are the most critical and concern concerns in today's world. Sustainable development is highly imperative to ponder over as it guarantees safe and sound supplies of energy at competitive prices with least inauspicious and critical ecological impact. Here, it does not mean that economic development has t be reduced. Conversely, a healthy economy ensures the superior and better ability to spawn the resources so as to meet people's demand, requirements and needs. Environmental development and improvement is interrelated with the new investment. Optimized energy tactics and pollution control systems are increasingly important and are the need of the hour (Williams & Uqaili, 1999, p. 61).

There is an agreement on the notion that the speediness of technological change should be well matched with the rising concern for environmental change. This is especially needed when the energy requirements are observed. Major instabilities and vacillations have been suffered by the globally increasing energy consumption rate although it has been positively affected by political and industrial changes. It is an astounding fact that developing countries have a much higher rate of faster energy consumption as compared to the industrialized countries who are the largest energy consumers. Crude oil, coal and natural gas are likely to be exhausted sooner or later. Reason of the exhaustion of these energy resources is the fact that some major fields will surpass their peak production levels shortly (Williams & Uqaili, 1999, p. 59). Thus, it makes us think that the ultimate solution for satisfying the ever-growing demand of energy may be lies in the development, generation and consumption of renewable energy resources that have no danger of shortage and are also not the contributing causes in environmental damage.

Problem Statement

Creating the Wind Energy Industry as a center of attention for more investment

Purpose of the Study

The Wind Energy industry is well thought-out to be a highly unstable industry internationally. This volatility for higher profits means that there is a high risk to invest money in this particular industry. Thus, this unpredictability puts a stop for angel investors and venture capitalists to invest capital in the wind energy industry. This research will reveal the factors that make the offshore wind energy industry a highly volatile industry in countries (Saudi Arabia, Bahrain, Iran, Iraq, Qatar, and United Arab Emirates) located on the Persian Gulf. The mentioned countries depend on conservative energy resources i.e. crude oil and natural gas. However, those conventional resources will run out in the near future. Thus, it is the need of the time to make it certain that renewable resources must become available and developed to reduce the consumption of conventional energy resources. They could most probably swap the non-renewable energy resources in the future. Regrettably, the countries on the Persian Gulf have deferred their consideration, evaluation and estimation of renewable energy. Therefore, this thesis would make suitable recommendations to attract investors for the growth of wind energy industry in the above mentioned countries.

Significance of the Study

The projected research holds significance it tries to find out the current status of wind energy usage and predict the future of wind energy usage across North America, Europe and rest of the world. The research will be a comprehensive study of new technologies and trends that shatters the long-established parables of only using large wind mills in farm lands. This will help the reader to understand the new technological advancements presently prevailing in the wind energy industry. The research will also study potentials and disadvantages that companies and governments across the globe are facing with regard to using offshore wind energy. Readers will be able to identify the advantages of renewable wind energy in contrast with the non-renewable oil and natural gas resources. This research will document the findings and put forward recommendations for governments and companies in order to attract more investment into the wind energy industry which has an immense potential for development and expansion.

Rationale and Scope of the Study

This research is intended to explain the wind energy/power as a significant means of fulfillment of ever-increasing energy demands. Renewable wind power, if developed in the Persian Gulf countries, would help them to be self-sufficient in the achievement of locally produced energy. The oil and gas resources will soon deplete in the said parts of the world. These countries would be able to obtain energy locally and would be able to become energy exporters everlastingly if they provide capital to be used up in the wind energy sector. The research, thus, proposes ideas and recommendations to attract investors for spending money in wind energy industries.

Limitations

This research will deal with offshore wind energy development possibilities in the countries located on the Persian Gulf. Recommendations and suggestions will be given keeping in mind the status of energy consumption and the future prospects in the same countries only; not for other parts of the world. However, the research is conducted on the basis of the number of site locations required for the investigation purpose.

Overview of the Paper

In this chapter, we will discuss the potential of wind energy industry; its usage, strong and weak features and future prospects. We will be studying about the factors that make this industry highly unpredictable but at the same time, highly advantageous for meeting energy demands. Recommendations would be given at the end for the investors so that they may be attracted towards investing in the highly profitable industry.

Terms of Reference

1. Renewable or Alternative Energy: "any energy resource that is naturally regenerated over a short time scale and either derived directly from solar energy (solar thermal, photochemical and photoelectric), indirectly from the sun (wind, hydropower, and photosynthetic energy stored in biomass), or from other natural energy flows (geothermal, tidal, wave and current energy)" (Cleveland & Morris, 2006, p. 371-372).

2. Wind Power: "air that is in motion in relation to the earth's surface, especially in a horizontal direction."

3. Wind Energy: "the energy contained in the movement of air masses; in human energy use traditionally captured by means of the sails of a ship or the vanes of a windmill, and currently by mechanical blades similar to air plane propellers" (Cleveland & Morris, 2006, p. 485).

4. Wind Turbines: "a wind-driven machine containing curved rotors or blades inside a wheel set vertically on a revolving shaft; wind or air pressure against the blade turns the wheel, and the rotating shaft may then drive a dynamo to produce electric power" (Cleveland & Morris, 2006, p. 487).

5. Wind Farm: "a wind farm (often also called a wind park) is a cluster of wind turbines that acts and is connected to the power system as a single electricity producing power station. Generally it is expected that a wind farm consists of more than three wind turbines. Modern wind farms may have capacities in the order of hundreds of MW, and are installed offshore as well as on land" (Cleveland & Morris, 2006, p. 486).

Wind Power is an important energy source. As the definition suggests that the winds are a circumlocutory type of solar power. For the past many centuries, they are used as a source of energy. In recent times, wind power has developed into one of the thriving renewable energy technologies. Wind projects are present in many parts of the world (Elliott, 1997, p. 88). The main usage of wind energy or wind power has continued to be the pumping of underground water. Topography and weather conditions have a drastic effect on wind power. It is also affected with seasonal, daily and hourly dissimilarities. Recently, wind power is used to generate electricity by using wind turbines. This energy generation is enough to meet the requirement of a local electricity grid (Williams & Uqaili, 1999, p. 73).

Offshore Wind Energy

Renewable energy has been given this name as it depends on natural energy flows and sources in the environment. As these sources are which, since they are endlessly and incessantly replenished, they are not in any danger of ever running out. Thus, from the sustainability point-of-view, they are our first decisive factor (Elliott, 1997, p. 85).

We already know that wind is air in motion. The earth's surface is not flat (because of diverse land and water formations) and due to its uneven topography, the radiations from the sun are absorbed disproportionately by it. Thus, the production of wind is due to the irregular heating of the earth by the 'big star' at the center of the solar system. It has been more than 2000 years that the wind energy consumed for power generation onshore. However, in today's cotemporary world, the main purpose for producing energy from wind is to generate electricity by using wind turbines principally (Offshore Wind Energy, para. 2-3).

The Persian Gulf Scenario

Most of the countries that produce oil are located on the Persian Gulf. Those include Saudi Arabia, Bahrain, Iran, Iraq, Qatar, and United Arab Emirates. Despite of the fact that these states have adequate supplies of oil, they are presently experiencing a very low rate of oil production. Their economies are completely dependent on oil. This situation has led them to come to the point where they should start moving towards new energy resources to face the forthcoming oil exhaustion (Cinti, 2008).

It has been analyzed by experts that countries that are in possession of adequate oil resources offer better education to the people. Also, their economic policies are more market oriented. If compared with other developing countries, such countries have more beneficial and complimentary investment saving attribute. It is also said that oil rich countries have more facilities available for the detection, discovery and exploitation of natural resources (Cinti, 2008).

On the contrary, many researchers suggest that it is not necessary that a country rich in natural resources would have a better economy than a country that have no or less natural resources. History provides evidence that those countries that had less natural resources did better than the ones that possessed ample quantities. This phenomenon has been given the name of resource curse. The same is the case with oil-rich Middle East countries who haven't achieved higher rates of growth regardless of the fact that they export oil globally (Cinti, 2008).

The oil-rich countries are not growing due to the following factors:

i. Swarming out manufacturing sector that is the one leading growth and development.

ii. Institutions are given a central role that becomes a reason for the worsening condition f a country. Ineffectiveness and incompetence is increased and competition is lowered in such a situation.

iii. Political inefficiency by reimbursing high salaries to the public employers. This is done so as to get elected again by 'buying' people.

In order to develop and overcome inefficiencies and the approaching oil supply collapse, the mentioned countries are striving hard to update their financial systems. The common circumstances are presenting that the resource on which everyone is relying its way of living is diminishing continuously at this instant (Cinti, 2008).

The Middle East countries should consider development and advancement of technologies instead of dropping price precariousness and overworking of basins. This area has been observed as the one which does not concentrate on developing wing energy industry as this industry is thought to be the one with a highly volatile nature. As the economies of this area are completely dependent on oil, they should start considering investing in the wind energy industry as it will benefit them in more ways than oil does. It seems as if these countries on the Persian Gulf do not care much about the future and their irrational thoughts and hopes have been the cause of their present situation (Cinti, 2008).

If the Middle East countries manage the extraction of oil, only then they would be able to manipulate the markets and performance of other countries in the world. This is because the world is becoming more and more dependent on the oil-rich countries. However, as there is not enough oil, the Middle East countries are developing their internal consumption radically. They are keen to extract oil that is necessary for their own development rather than extracting it for exporting purposes. This situation could lead to a political fight as a rickety global scenario may cause a reduction of the production (Cinti, 2008).

It has also been observed that the quality of oil has changed too, specifically in Saudi Arabia. Much of the produced oil is of such a low quality that it is entirely impossible for most of the importing countries to refine it. Thus, in order to utilize this oil, Saudi Arabian government has started investing in new refineries. However, investing in refineries is not easy. Huge investments are needed for the purpose. As Saudi Arabia is the only country that has the power and money to invest in oil refineries, it gives her an edge over other Middle East countries (Cinti, 2008).

The question arises that what should be done? The most important thing now is to give attention to the accurate management and proper organization of the resources that are in no danger of exhaustion. Thus, wind energy is one of the vital resources that can help countries to develop and prosper. These countries should avoid thinking only in terms of the short run and must make plans and take actions that could make things get better. The need of the time is that these countries should change their behavior of depending solely on oil. Instead, they must use alternatives such as wind energy to elevate their levels of economy (Cinti, 2008).

Why is investment in wind energy sector beneficial?

It is the high time to appropriately canalize investments in various energy resources sectors such as hydropower and wind power to create new capital markets and to develop and prosper. These sectors provide energy sources that are cost-effectively and reasonably competitive. The most important step that can be taken in this regard of exploitation of resources is that Middle East countries must initiate empowerment of the wind energy sector as an alternative for producing energy utilizing oil. Using renewable resources presently would surely make it possible that the necessity of oil is lessened. It appears as if this is the right time for the Middle East countries to start investing in the wind energy industry which would help them to engage in the prosperity and betterment of their countries. If truth be told, investment in the wind industry would certainly be a significant step taken by these countries to elevate their economic status (Cinti, 2008). However, industrial innovations, scale effects and learning curves of wind power shall provide evidence to the countries interested to invest in this industry that tapping this benign resource would be "cost-competitive without considerable subsidies and tax breaks" (Edinger & Kaul, 2003, p. 74).

Wind Energy Industry has developed to a large extent recently as an investment opportunity worldwide. Wind energy is gaining significant importance in the energy sector due to the fact that it is a renewable, dependable and boundless resource. It has been predicted that wind energy has the capability to supply an enormous amount of world's energy; far greater than its current capacity. Middle East countries should pay heed in investing in this industry as it has a vast capacity as a development option. It possesses the dual competence to generate wind energy and to be used as an alternative energy resource. Thus, investment in the wind energy sector has limitless opportunities for the countries to develop and prosper brilliantly ("Wind Turbines/Wind Farms," 2010).

There are a number of factors that makes investment in the wind energy sector beneficial for the investors. Wind power is on its path of significant growth journey thus making it a highly demanded resource for generation of electricity and other minor but useful purposes. It is an astounding and encouraging fact that our atmosphere has wind power availability in such a great amount that it is enough for the current total energy consumption needed for the world. Estimation states that emissions from power plants utilizing coal can be counterbalanced by producing energy from just converting 10% of the wind from the 10 windiest cities sin America. As coal fired plants are one of the contributing factors of CO2 on the earth, using wind energy could reduce pollution greatly ("Wind Turbines/Wind Farms," 2010).

When investment in alternative energy is taken into consideration, wind energy is a highly attractive and advantageous option for the investors. There are numerous reasons that make wind energy industry so attractive. Firstly, it is totally reliable. Secondly, it will not deplete with the passage of time as it is a never-ending renewable energy resource. Thirdly, it is highly favorable for the application of sustainable technology. Another factor that makes it such an attractive investment opportunity is the fact that it neither needs any transportation facility nor it requires ample amounts of water like other energy resources do. Thus, the mentioned factors are enough to provide evidence that wind power is correctly described as a money-spinning, profitable and rewarding emery investment ("Wind Turbines/Wind Farms," 2010).

Advantages of Wind Energy

The Wind Energy industry is incorrectly considered to be a highly volatile industry across the globe. In actual fact, it possesses an attractive, positive and beneficial potential for the angel investors and countries to put in capital. Wind turbine technology has experienced a boost in recent years as fossil fuels prices have continued to climb due to the approaching exhaustion ("Wind Turbines/Wind Farms," 2010).

Thus, it is an ideal situation for the Middle East to invest in the wind energy industry as it will provide them an excellent opportunity to face the oil crisis and to use the non-renewable resource as an alternative.

It has been predicted that soon wind turbines which have come to be known as one of the world's future precious commodities would be managed by the companies that shifted early towards investing in nonrenewable energy resources. The wind energy industry is also enjoying continuous growth with a fast pace. All the producers of these turbines are trying their best to cope up with the rising demand. If this rising trend continues, there is no doubt that wind turbine manufacturing will be one of the most revenue generating industry of the future (Hodge, 2008).

In addition to the above mentioned factors that make wind energy industry a means of an enlightening opportunity for the investors to put their money in, it also crates employment opportunities for the job seeking factory workers. Local utilities are also benefitted from the profits generated by wind farms. It is also an advantageous profit-generating source for companies like General Electric as well as for the local farmers, ranchers etc. (Gunther, 2010).

Generally, wind farms are constructed at country side and in villages or other small rural areas. The prime reason for construction of wind farms in these areas is the fact that they have vast land available and a welcoming attitude for wind turbines as a new "cash crop." However, what seems ideal is that these wind turbines should be installed near the areas which are densely populated. Conversely, the land costs are higher in the urban areas and the people too are not much interested (as farmers are) to have wind mills running in their backyards (Gunther, 2010).

Non-feasibility of installing wind mills near cities derives us to a suitable and useful alternate. It could be the use of very high capacity network and transmission lines which support long distance transmission to move the electric current (Gunther, 2010). Middle East countries are reluctant in doing so as this requires a lot of investment and constant supervision. Such a behavior needs to be avoided. It is the need of the time to develop an understanding of the necessity and long-term financial and other additional benefits of the wind energy.

It is also highly required that offshore wind energy is considered for investment. The Persian Gulf makes it such an easy task to install wind mills right in middle of the sea, far away from the land. In order to make profits in the wind energy sector, the countries located on the Persian Gulf should consider the past achievements and malfunctions of investing in this industry. This is necessary as the wind energy industry has simultaneous risks and opportunities associated with it.

Current and Future Status of Wind Energy Usage

Global wind installations have grown significantly from 2000 to 2007. This 426% rise from 17,502 MW to 91,993 MW is such a remarkable achievement. Among the leading installers were Germany, Spain and the U.S.A. However, Europe was on the top of the list by region. The credit goes to this continent with 61.4% of the total installations. Other regions that did well in the wind energy sector were North America and Asia-Pacific with 20.4% and 17.9% respectively. However, South and Central America along with the African continent and the Middle East had a very negligible contribution i.e. 0.3% and 0.1% respectively (Hodge, 2009).

A good number of connoisseurs have belief and confidence in the drivers behind the industry. They have trust that the industrialists behind the success of wind energy industry will inspire it to an equally impressive growth in the future. It has been predicted that by the next year i.e. 2012, the industry will grow to another 131% with a total installed capacity of around 264,705 MW. As the present figures and statistics reveal, the United States of America, Germany and Spain will still be on lead in the coming years. Other countries that have shown high potential are China and India (Hodge, 2009).

According to a lot of experts, prospects for the wind industry are tremendously well in the long-term. Accenture, a leading consulting firm, predicts that there could be a reduction of around 30% in the wind power capital expenditures. With the disappearance of the current global recession, it has been expected that the fossil fuels price will rise again. Energy security and climate change will again be considered for reorganization and reformation of the economies. Thus, it seems that the wise decision would be to invest in the wind energy sector which are once again a 'hot ticket' to purchase (Hodge, 2009).

Why to invest in Offshore Wind Energy?

It is an issue that is considered a problem by some of the countries including Middle East that wind farms take up a comparatively larger area for putting in place and operation. They find it hard to find land for wind farms in areas where population densities are high. Putting this issue into perception, the best solution to be used as an alternative especially by the countries which are located on the Persian Gulf is to invest in offshore wind farms. These projects have been taken into consideration and countries like Denmark, Germany and Sweden have invested heavily in the offshore wind energy sector. Offshore sighting and power transmission by marine cable back to the coast requires an additional handsome amount of money. However, the usually higher speed and more regular and constant winds offshore compensate the higher costs. Thus, for the countries located on the Persian Gulf, offshore wind could surely turn out to be a major energy alternative as finding land for wind farms onshore is somewhat difficult in the thickly populated urban centers (Elliott, 1997, p. 91-92). It is a great accomplishment that the shallow waters off the coasts of Europe are currently being used for operating commercial-scale offshore wind facilities. On the other hand, the deeper waters of the Outer Continental Shelf (OCS) need auxiliary technology development for offshore wind farms (Offshore Wind Energy, para. 1).

Most of the countries use offshore wind turbines with the purpose of harnessing the energy of the winds in the oceans and converting them to electrical energy. Onshore winds flow at slower speeds. Thus, offshore winds with higher speeds have the capacity to produce more electricity by allowing turbines to move more swiftly with continuity. Offshore winds with speeds of only a few miles per hour may have the ability to generate an extensively better amount of electricity than the winds that move over the land. Middle East countries are lucky enough as they have both money and water in their possession. They could easily put their capital in offshore wind farms with the intention of benefitting their major populated centers where the cost of energy is too high and the prospects of developing wind farms on land are inadequate (Offshore Wind Energy, para. 4-5).