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BLUENE BLUe ENErgy for Mediterranean

Value chain scheme for cooperation

Project BLUENE

Contract No. 1M-MED14-01

Work Package 2 - Action 2

Responsible partner:

Hellenic Centre for Marine Research

June 2015

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This report has been prepared by the scientific team of the Institute of Oceanography of the Hellenic

Centre for Marine Research (HCMR) and collaborators. The project is funded by Med transnational

cooperation programme-Maritime call.

The content of this publication can in no way be taken to reflect the views of the European Union.

Neither the MED JTS nor the European Commission is responsible for any use that may be made of

the information contained therein.

The sole responsibility for the content of this publication lies with the authors.

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CONTENTS

Summary .............................................................................................................................................. 5

1. Introduction .................................................................................................................................. 7 1.1 General ....................................................................................................................................... 7 1.2 Economies of Renewables – Key determinants for value chain ................................................ 8

1.2.1 Technology.......................................................................................................................... 8 1.2.2 Economic environment ....................................................................................................... 9

1.2.3 Legal and regulatory framework ......................................................................................... 9 1.2.4 Public support schemes ..................................................................................................... 10

1.3 Cost structure ........................................................................................................................... 10 1.3.1 General .............................................................................................................................. 10 1.3.2 Offshore wind energy........................................................................................................ 11 1.3.3 Wave energy ..................................................................................................................... 13

2. Market data ................................................................................................................................ 14

2.1 Offshore wind energy............................................................................................................... 14 2.1.1 General .............................................................................................................................. 14

2.1.2 Geographical extent .......................................................................................................... 16 2.1.3 Key market players ........................................................................................................... 17

2.1.4 Interdependence of cost, infrastructure and technology elements .................................... 18 2.1.5 Operation and maintenance ............................................................................................... 19 2.1.6 Conclusive remarks ........................................................................................................... 20

2.2 Ocean energy ............................................................................................................................ 20

2.2.1 General .............................................................................................................................. 20 2.2.2 Market development ......................................................................................................... 21 2.2.3 Future perspectives of ocean energy ................................................................................. 23

2.2.4 Status in the Mediterranean ............................................................................................... 25 2.2.5 Further remarks ................................................................................................................. 26

2.3 Market development: concluding remarks ............................................................................... 27 3. Value chain analysis................................................................................................................... 29

3.1 General ..................................................................................................................................... 29

3.2 Value chain analysis for blue energy ....................................................................................... 31 3.2.1 General .............................................................................................................................. 31 3.2.2 Offshore wind energy........................................................................................................ 32 3.2.3 Ocean energy..................................................................................................................... 34

3.3 Job creation .............................................................................................................................. 35

3.3.1 Offshore wind sector ......................................................................................................... 35 3.3.2 Ocean sector ...................................................................................................................... 35 3.3.3 Conclusive remarks ........................................................................................................... 36

3.4 Mediterranean basin ................................................................................................................. 37

3.4.1 Blue energy development in the member countries .......................................................... 37 3.4.2 Feed in tariffs .................................................................................................................... 38

4. Clusterisation ............................................................................................................................. 40 4.1 Introduction .............................................................................................................................. 40 4.2 Towards a mega-cluster ........................................................................................................... 41

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5. Final conclusions........................................................................................................................ 43 6. References .................................................................................................................................. 45

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Summary

The Hellenic Centre for Marine Research is responsible for coordinating the Work Package 2.2

entitled “Mapping strategic actors and building value chains” of the BLUENE project and the

preparation of the corresponding deliverables. The present report describes value chain and

clusterisation strategy and activities that could take place within the frame of Blue energy at the

Mediterranean basin. Following the mapping process on actors and technology developments at the

sector (included in the relevant deliverable report of HCMR), a value chain system was built for

managing all collected information and create a scheme of potential actions of clusterisation.

This report is partly based on the existing experience as regards the market development of offshore

wind, wave and tidal energy production at European level, and highlights-extrapolates the relevant

key issues for market development at Mediterranean level. Market dynamics are analysed at European

level as regards the different blue energy subsectors (offshore wind and wave-tidal energy

production) and the main elements for further market development are determined. Technology

drivers that determine the added value of each energy production are distinguished and the key drivers

are pointed out for further development. Hereupon, the different elements of the value chain are

described (for EU) along with their respective contribution to the size of the chain.

Critical to the analysis is the geographical segregation between “mature market fields” (North and

Baltic Seas) and “new market fields” (Mediterranean Sea), where the key drivers for development are

described. Based on the relevant analysis and the existing developments at each blue energy sector,

the ideal, so far, pathways of development are proposed for the Mediterranean basin. Mediterranean

prevails as an attractive territory for blue energy development; hence, it contains certain

characteristics that determine the final investments decisions.

The extensive value chain analysis leads to the key pathways for clusterisation at Mediterranean level

in order to facilitate an effective organization of respective actors involved. The process for value

chain analysis required the preparation of the following procedure: the literature review, the

identification and collection of available economic data and finally, the consolidation of the results.

In this respect, value chain analysis helps to:

1. define and describe the current situation and visualize the demands of blue energy chain in the

Mediterranean basin;

2. assess potential implications or anticipate future synergies among market players;

3. identify and evaluate scenarios as regards blue energy development in the Mediterranean basin,

and

4. propose the suitable clusterisation organization at Mediterranean level. At this extent, we describe

the clusterisation, which will be comprised by different public and private entities, clusters and

associations, so to build competencies and lobby for the boost of activities at national and

Mediterranean level. The successful cooperation of actors (in the form of a mega-cluster) would

lead to the acceleration of reforms of national regulations, contribute to the increase of social

acceptance of blue energy and, in overall, contribute to the further market development of Blue

Energy.

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The main finding of mapping analysis of stakeholders at Mediterranean level (1) claiming that “The

contradiction as regards the current situation in the Mediterranean Sea, is that the most important

blue energy actors exist and act in other fields of renewable energy activities, while their specific

activities to blue energy development are at the minimum stage” could be also true for the value chain

analysis. Furthermore, at Mediterranean level, key determinants for the organized economic

development of the sector are the general macro-economic environment, which would constitute a

favourable investment field, healing any potential conservations of banking sector to support blue

energy projects, market development of sub sectors and logistic issues in sites.

As a very general approach to the issue, the more favourable places for blue energy investments are

the Gulf of Lions in France, the Messina Straight in Italy, and the coastal areas of the Aegean and

Ionian Seas; see Pérez-Collazo et al. (2015). In addition, ecological and environmental issues arisen

in the Mediterranean basin impose impediments to social acceptance of blue energy. Proposed

scenarios for blue energy market development at the Mediterranean basin refer to the establishment

of hybrid systems of offshore wind and wave energy production, as well as the development of

“energy islands” (combining onshore-offshore hybrid installations).

(1) this task was carried out at the same work package by HCMR

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1. Introduction

1.1 General

At a worldwide scale, the use of the term “Blue Energy” refers to all forms of renewable energy

production from sea, including ocean energy (i.e. wave and tidal energy production, thermal energy

conversion) and offshore wind energy production, and relevant technological developments (2).

Offshore wind power is developing fast due to the maturity of technologies (stemming mainly by the

maturity of technologies of onshore energy production), followed by ocean energy production, which

is steadily developing, though more research is required at the corresponding technological,

environmental and economical facets. The thermal energy conversion technologies are, in the best

case, at early stages of commercialization. In general, Blue Energy, in order to face a full economic

exploitation, needs to reach cost efficiency, profitability to investor schemes, under the condition of

a stable regulatory environment, which affects directly the cost of installations (licensing, costs of

energy production, energy prices, and prices of other energy production technologies, such as onshore

fossil fuel production, oil prices).

Blue Growth aims to define smart, sustainable and inclusive economic and employment growth

coming from oceans, seas and coasts. Maritime economy consists of all sectoral and cross-sectoral

economic activities related to the aforementioned spatial scales. This includes also job creation to

relevant industries, which are related to blue energy production. Blue Growth includes all economic

activities that lead to sustainable outcome and synergies among actors in order to create a critical

mass. Innovation is a critical issue, combined with increased support to Research and Development

(R&D) that can lead to the decrease of development and production costs, combined also with the

adequate support from regional, national and EU policies.

European Commission anticipates that final power demand in 2020 will be 11% lower than 2009.

Furthermore, the target for 2020 sets that 35% of electricity will be generated from renewables, while

12% will come from wind power installations. Fundamental elements to achieve these goals and

assure sustainability, acting as catalysts to the process, are the following: i) the security of supply and

sustainability of technologies and installations, and ii) the stable political and regulation framework

upon the energy production from renewables. In addition, the EU-27 baseline scenario anticipates

that renewable energy share will be of the order of 20% of total energy demand in 2020. Additional

estimates suggest that the goal will be exceeded by more than 1%. Renewable energy will supply

1.217TWh of electricity, meeting 34% of electricity demand, see EWEA (2011) (3), while wind

energy will supply 14% (464.7TWh from 213GW of installed capacity). The annual net installations

of wind turbines (for both onshore and offshore installations) will increase from 11.5GW (in 2011)

to 15.4GW in 2020. See also EWEA (2014). The 2020 Scenario set by the European Commission is

stipulated in Figure 1.

(2) In the following, the general term “blue energy” will be used indiscriminately for all types of renewable energies in

sea (wind, waves, tidal, current and thermal), and the term “ocean energy” will be reserved for wave and tidal/sea current

energy. Offshore wind energy and thermal energy conversion will be mentioned explicitly.

(3) EWEA: European Wind Energy Association

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Figure 1: Renewable Agenda EU (Source: Roland Berger 2013)

The aforementioned goals were set upon the following key assumptions:

1. Offshore wind energy is the most mature renewable energy technology in operation;

2. There is limited growth potential in onshore wind due to high population density in Europe;

3. Offshore wind provides higher and steadier energy yields on average 4000 full load hours;

4. Offshore wind is a technology with significant potential for development on energy production

costs;

5. Offshore wind has a high potential for jobs growth on more than 35% by 2020.

1.2 Economies of Renewables – Key determinants for value chain

1.2.1 Technology

Blue Energy is essentially a technology driven sector; its development is heavily dependent on

technology developments to meet desired outcomes and goals. Technology developments provide

solutions, which facilitate investor’s interest to new projects and new territories. Specifically, it

provides cost-efficient and reliable solutions in order to decrease energy production costs, while it

also secures longer installations period and decrease risks on investment from the technical point of

view. Different technology solutions for energy production (offshore wind and wave energy

production, tidal barrages, thermal energy conversion) face different stages of technology maturity,

and this situation affects the competitiveness of the final investment, minimizes the investors’ risks

and offers different financial management strategies. Technology maturity and development may

provide a financial attractive scenario, which in turn will increase the value chain locally, regionally

and globally.

For example, to date, only offshore wind energy production can provide financial attractive solutions

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due to the maturity of technologies stemming from the onshore energy production development. The

development of offshore wind energy sector contributes to the increase of the added value of the

chain (supply - demand chain), increases the number of new jobs, value of transactions and economic

activities, and, finally, creates a new investment environment. The operation of offshore installations

at North and Baltic Seas have shown that economic regeneration and local economic boost has been

taken place to the greater territory of the investment (4), shaping a new investment environment at

every level of operation. The main advantage of this renewable energy resource, refers to the stronger

and more consistent offshore winds compared to onshore sites and thus the increase of the wind

energy capacity factor. In this way, the relevant activities shape a more sustainable energy production

scheme, which is available to the local economies. Furthermore, the absence of land use conflicts for

offshore installations could contribute to the increase of social acceptance at local level. The positive

outcome of North and Baltic Seas’ market development on offshore technologies shapes the paradigm

for the Mediterranean, where new technological solutions (onshore – offshore hybrid installations)

could be an attractive investment scenario to the local-regional economic environment.

1.2.2 Economic environment

The economic environment at macro-regional level (Atlantic Ocean, North, Baltic, and

Mediterranean Seas) plays (or is expected to play) also significant role to the development of the

value chain of ready-to-go technological solutions. The financial stability, the market organization,

the readiness of national renewables energy plans, and the public acceptance play influential role to

the increase of the value chain locally and at micro-region level. As mentioned above, the

development of offshore installations at North Sea created a new regional economic environment, in

which old harbour infrastructure was reengineered to the new economic reality and new jobs

opportunities have been created either to the supply chain or logistics and transportation. Investments

were created to all stages of power production, and, at the end, the new economic environment

reshaped transnational energy policies to the increased shared benefit. The final impact to the value

chain is the increase of value, dispersed to all actors involved, and, of course, to local economies.

1.2.3 Legal and regulatory framework

Critical to the development of blue energy production is the legal – regulatory framework for energy

production. All member states have developed National Action plans (5) in the form of a road map in

order to meet the overall goals at national level, and each EU country produced a renewable energy

forecast in advance of their action plan. Energy prices, in principal, are a major political concern at

national and European level, reflecting the market organization (entailing taxes and regulatory),

constituting a favourable or less favourable environment for private investments. Concerning

renewables, national regulation, licensing, cash liquidity costs and local prerequisites for

offshore/onshore installations, cause significant impact on the competitiveness of investments, and

determine the cost of energy production at national level. In general, at renewable energy sector,

national – regional policies, national energy market organization and licensing procedures are key

(4) by redesign of old ports and operation to serve offshore fields, reuse of existing of transport facilities, and creation of

assembling logistics and service infrastructure, etc.

(5) http://ec.europa.eu/energy/node/71

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determinants to the regional investment attractiveness and value chain development thereof.

The European Directive goals and the economic reality have also fed through the stability of

regulatory and market frameworks for wind energy for both offshore and onshore installations. This

causes significant impact on investment plans, existing new orders for new projects and licensing

procedures at new territories. One significant parameter is the financial support (assets availability)

to investment plans and develop new projects. Continuous changes on regulatory and market

frameworks play significant role to the assets management and support of new investments; therefore,

the maturity of the market of Blue Energy can be enhanced. Regulatory instability, in conjunction

with financial instability, leads to lower market development, causing the saturation of investments

to existing investment consortia. Financial instability to European markets and changes of national

policy frameworks for wind energy and market development at the “supply chain” of wind energy

play influential role to the development of value chain of the sector.

1.2.4 Public support schemes

Offshore wind energy is a public driven market depending highly on public support schemes and

needs to become less dependent on public support mechanisms, but maintain political support. New

players need to enter the market at all stages of supply chain, and the financial environment needs to

support more actively new projects, new technologies and new market consortia. All these end up to

improve risk – return ratio, so that the market will be able to develop new investment models upon.

The maturity of offshore wind energy market needs to entail the political support, cost efficiency and

competitiveness, which, at the end of the day, will contribute to the industry development (by

innovation and excellence).

Ocean Energy is also a public driven market depending on public support schemes. Up today, ocean

energy, in general, is less developed than offshore wind, and economic research has not provided yet

an attractive model for investments (6). Risk – return ratio is still significantly high and needs to be

substantially improved, so the market is able to respond and invest at high levels thereof. Ocean

energy can provide extensive possibilities on energy production, and its resource is estimated to

17TWh/year, albeit the uncertainties existing so far.

1.3 Cost structure

1.3.1 General

The organization costs of renewable energy production determines the overall energy costs and can

be divided into three basic categories:

Capital expenditure (CAPEX): the costs required upfront to construct an offshore renewable

(6) This is mainly due to suspending technological issues that need to be resolved, in order for the investment to reach

cost efficient outcomes

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energy structure including the entire project (e.g. planning activities, environmental and

engineering studies, etc.), turbine components, foundation, electrical systems (e.g. cables, sub-

stations), and installation;

Operational expenditure (OPEX): it is the cost related to the Operation and Maintenance (O&M)

of the offshore renewable energy structure including health and safety inspections, monitoring of

the environmental impacts, insurance premiums, etc.;

Levelised cost of energy (LCOE): it is an estimate of the cost of electricity from an offshore

renewable energy structure over an assumed financial life and duty cycle including CAPEX and

OPEX.

In Table 1, the cost organization is illustrated for ocean renewable energy production technologies,

while in Figure 2, the costs of energy production are depicted for alternative sources of energy,

including nuclear.

Table 1. Estimated range of CAPEX, OPEX and LCOE by technology (see Salvatore et. al. (2011), Astariz, Iglesias,

(2015))

TECHNOLOGIES EST. CAPEX € % OF TOTAL

COSTS EST. OPEX

% OF TOTAL

COSTS

EST. LCOE

€/KWH

Offshore wind energy 2800-4400 70-80 60-100 20-30 120-250

Wave energy 5200-10800 50-70 N/A 30-50 140-530

Tidal energy 5800-9600 50-70 N/A 30-50 110-220

Figure 2: Costs of energy production – renewables targets and pathways (Source:

Roland Berger, 2013)

1.3.2 Offshore wind energy

Regarding offshore wind energy, CAPEX consists in the 70-80% of total costs and OPEX in the 20-

30%. In this case, CAPEX includes the cost of turbine, gridding, construction and other costs

(licensing issues), while OPEX includes the O&M costs, land rental, insurance and taxes,

management and administration costs. Variations of costs exist between regions (i.e. Atlantic Ocean,

North and Mediterranean Seas). The major costs of wind energy projects appear at 80% at the initial

stages (licensing, planning, and installation) and at 20% during the rest stages. This causes the need

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for companies to insure assets availability at initial stages, risks minimization and good repayment

conditions. Costs of offshore wind energy need to be reduced at all stages of development and

production, expanding to new sea territories, facing a reduction (of costs) of the order of 20-30% and

this seems to be a realistic goal under the assumption of regulation and financial stability to EU-27

member states, see Roland Berger (2013). In addition, economies of scale need to take place, ensuring

competition among actors in order to minimize costs.

The maturity of offshore wind energy is focused mainly on two fundamental factors; i) political

support at national – regional level, and ii) industry/technological development. Figure 3 illustrates

the “maturity cycle” of offshore wind energy. Technology developments contribute to industry

developments; industry excellence contributes to cost competitiveness of the sector and increases the

added value of the entire chain; the industry development (at both supply and demand side) needs to

be supported by national – regional policies and political support; political support constitutes a

favourable investment environment, which contributes positively to industry development and

excellence. On the other hand, industry excellence plays a significant role at the increase of the chain

value at all stages or at the R&D part of the industry itself.

Figure 3: Technology maturity (Source: Roland Berger, 2013)

Key pathways for technology development at offshore wind energy are turbine and new material

technologies and relevant cost optimization, as well as the development of new technologies on

foundations. Underwater gridding is a key cost determinant and the timely grid connections are

related to the investments pressure in the area. The development of offshore wind turbine installations

pushes construction sector to specialization and cost competitiveness by reducing construction risks.

Market development and competition reduce operation and management costs provided by

specialized actors, while banking sector development and specialization at renewables (providing an

array of investment opportunities on vectors) contributes to the sector development and increase of

the value chain, respectively.

Cost effectiveness pathway of offshore wind energy needs to meet lower LCOE during the next years

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in order to reach higher levels of market exploitation. Market exploitation will lead to increase of

value chain, especially for the supply part, with the involvement of more investors’ consortia, but this

requires the more active contribution of banking sector on assets availability. To reach the target of

9€ct/kWh expected by Roland Berger (2013), it is anticipated that CAPEX will be reduced by 40%

(especially at territories with existing offshore installations), and this reduction will sweep OPEX.

The market maturity of the provision of services will lead to the decrease of costs (especially for

management), which plays influential role at OPEX.

1.3.3 Wave energy

Regarding wave energy, CAPEX consists in the 50-70% of total costs, while OPEX cost is between

30-50%. In this case, CAPEX includes the costs for preparation of the investment (licenses and

permissions), costs of preliminary studies, Environmental Impact Assessment (EIA) studies,

consenting procedures, as well as direction and coordination. This cost category varies with the type

of installation, location and particular characteristics of the project related to the investment territory

and can reach up to the 10% of CAPEX; Astariz, Inglesias (2015). CAPEX also includes installation

costs, which are related to the type of equipment used, cabling and costs of electrical installations.

Costs of wave energy need to be further reduced. This is related to the level of technology maturity

and the learning curve upon new technologies implementation in order to provide attractive

investment solutions. Wave energy technology maturity and learning on technologies include mainly

the installation part and the life cycle of installation system. In addition, the implication of LCOE

indicator in many studies shows that wave energy is economically viable only if subsidized, and

varies significantly from country to country within the European zone. However, over time, it is

expected that greater investments will take place based upon tested and more mature technologies; in

this way, economies of scale will be achieved. This would lead to cost reductions and increased

profitability, permitting thus operators to reach market prices similar to other renewables. Several

studies describe that the time frame needed for wave energy to reach commercial stages for

exploitation is a period of 10 years (learning curve of 10 years). Up to now, technology has not

“matured” yet, and technology risks are significant compared to other renewable energy resources.

The latter is key determinant for investment decisions, which in turn influence the value chain of the

subsector.

Conclusively, Blue Energy shapes an array of opportunities on renewables albeit the fact that offshore

wind energy and ocean energy face higher costs at initial stages of project development. Overall,

according to the accumulated expertise, planning restrictions, financial instability and regulation

uncertainties induce delays on wind farms development. Tidal energy production seems to be more

predictable than wind and wave, while and North and Baltic Seas and Atlantic Ocean seem to be more

attractive investment fields. Supporting innovation is the key driver for the market development of

wave energy (on devices supply and failure rate decrease), while hybrid energy plants (offshore wind-

wave energy) seem to be an attractive option for the Mediterranean basin, at present.

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2. Market data

2.1 Offshore wind energy

2.1.1 General

All over the world, the development of wind renewables follows the technology developments of this

sector. Figure 4 illustrates the distribution of wind energy resources at global level. Wind energy

resources concentrate at North Sea, Baltic Sea, Atlantic Ocean and Australia. Mediterranean basin is

among the least developed territories as regards wind and wave energy utilization.

Figure 4: Global distribution of wind energy resource (Astariz, Iglesias, 2015)

Market development on offshore wind energy (7), so far, shows a spatial diversification, which is a

result of country investment attractiveness and energy efficiency. Access to capital and investor

dynamics also play an important role on the market development, while economic situation influences

the development of investments. The recent rapid reduction of fossil fuel prices determines the

investors’ decisions on offshore wind energy, while the final outcome is yet to be seen by the end of

2015.

The market development of offshore wind energy, in principal, is a challenge for all actors involved,

which entails assets management and financial stability either at the side of public sector or at the

side of financial markets. The market is growing substantially with even more transactions taking

place. Financial choices to investors are also available at non-traditional sources. It is now possible

(7) We focus on European Maritime space not examining investments and market development in US, although we will

present key policy issues for market development in US

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for investors to take part in offshore wind projects undertaking part of the risk. Larger offshore

projects will open the opportunities for finance availability and therefore, expand the investment

outcomes towards offshore wind energy production.

Offshore wind energy production is evolving faster than wave or tidal for a set of reasons stemming

by the maturity of technologies and complementarity issues with onshore energy production.

However, energy from offshore wind farms needs a more efficient transmission system of subsea

grids to connect with onshore networks. Several approaches are developing to this pathway including

a mix scheme of offshore wind/wave-tidal farms, offshore/onshore wind farms. The industry still

faces the early stages of development and this issue acts as a “barrier” for market exploitation. At the

supply part, producers need to come up with more stable and cost efficient solutions in order to

provide added value to the final outcome (installation). The complementarities that arise at more

developed areas (i.e. North Sea, Atlantic Ocean – UK) on gridding and installations management

contribute to the overall competitiveness and cost effectiveness; hence, there is a long way to go due

to a variety of factors arising to the market development.

Offshore wind energy market in EU faces a constant growth, see Figure 5, and up to 2013 there have

been carried out more than 69 offshore wind farms. It is estimated that offshore wind energy is about

to reach the size of the onshore industry in the next years. In a global level, offshore wind energy will

be a sector of more than 130 billion € by 2020 with main focus on North Sea and Atlantic Ocean,

Asia and Mediterranean Sea. It is also considered that offshore wind would create globally three times

more jobs than oil and gas industry by 2020.

Figure 5: Cumulative and annual offshore wind installations, MW; EWEA (2015)

The current share of offshore capacity remains low compared to the onshore energy production for a

number of reasons related to technological issues, which influence the overall investment cost and

cash availability. The higher costs of offshore wind farms (compared to onshore), and supply chain

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bottlenecks (small scale production of turbines, limited availability of installation vessels and logistic

issues to certain territories, especially for the Mediterranean Sea) are considered the most significant

drivers behind this gap. The market consolidation at the supply chain and the expansion of market to

different geographical territories, such as the Mediterranean Sea, are about to contribute to the

development and sustainability, adding more value to the entire supply chain.

2.1.2 Geographical extent

63.3% of the total installed offshore

wind farms in EU is located in the

North Sea, 14.2% in the Baltic and

22.5% in the Atlantic Ocean; see

Figure 6.

In 2014, 408 new offshore turbines

were fully grid connected in nine new

wind farms and one demonstration

project, adding 1,483 MW to the

European system. The total installed

capacity for Europe stands at 8,045

MW in 74 offshore wind farms in 11

European countries. According to

Figure 7, the UK has the largest

amount of installed offshore wind

capacity. It is followed by Denmark, Germany, Belgium and Netherlands, which share a relatively

significant share. 512 projects are in the pipeline and 536 turbines were placed during 2014. Twelve

Figure 6: Spatial development of Offshore Wind Farms; Installed

Capacity, cumulative share by sea basin (MW). Source EWEA (2015)

Figure 7: Installed capacity, cumulative share by country

(MW); EWEA, 2015 Figure 8: Offshore territorial development; EWEA,

2015

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demonstration projects are planned to be partially or fully connected, providing 2900 MW of capacity.

It is anticipated that more pilot projects will be developed in the North Sea, while Baltic Sea and

Atlantic Ocean remain among the most attractive investment fields for the development of offshore

wind farms. See also Figure 8.

On the other hand, Mediterranean Sea is considered as a new territory for offshore wind farm

investments. Within the next five years, when a significant number of offshore wind projects will

have been completed, EU will continue to represent the bulk of global offshore installations.

However, as is suggested by EWEA, only 23.5 GW would be installed by 2020 in contrast to the

National Renewable Energy Action Plan (NREAP) target of 43.3 GW. This gap illustrates the market

delays on offshore wind energy sector (due to transmission issues and gridding) and delays at

investments in the Mediterranean Sea and new fields due to national regulation and licensing

procedures. Yet, investment dynamics at offshore wind energy are also influenced by economic crisis,

where banking sector follows (today) a more conservative strategy to finance new projects and energy

consortia at new markets and fields.

Mid-term period investments are foreseen for the North, Baltic and Mediterranean Seas with

consolidated projects (at territories where offshore fields exist) and with new projects at territories

with non-existing offshore fields.

2.1.3 Key market players

According to Figure 9, DONG Energy

maintains by far its position as the biggest

owner of offshore wind power in Europe

with 24.1% of cumulative installations at

the end of 2014. Vattenfall (10.5%) and

E.On (7.3%) also maintain their position

within the top three. RWE follows with

8.7%, Centrica with 5.5%, SSE with 5.3%

and BARD with 4.8% of cumulative

installations.

Key market players are SIEMENS and

BARD playing a dominant role on turbine

manufacturing. SIEMENS controls 69% of

market share, while BARD holds 15%, and

VESTAS 8%. New projects at the North Sea and Atlantic Ocean at larger depths and the entrance to

the Mediterranean Sea constitute an attractive scenario for the industry.

The market outlook for 2015 remains stable in terms of capacity to be brought online. There are

twelve projects under construction – representing 2.9 GW – in the pipeline for the next 12 to 18

months. Five of these projects had some wind turbines connected to the grid in 2014; once completed

they will result in a further 1.18 GW of capacity taking the cumulative offshore wind capacity to a

minimum of 9.2 GW in Europe. However, predictions of reaching 10 GW by 2015 are well within

industry expectations. It is also expected that in 2015, Germany will overtake the UK in annual grid

Figure 9: Market organization in offshore wind; EWEA (2015)

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connected capacity. The largest wind farms that will be fully completed will be RWE’s Gwynt y Mor

(576 MW) followed by Global Tech 1 (400 MW). However, in 2016, a market slump is expected to

take place, featuring a low level of wind turbines being connected. The UK is unlikely to fully

commission any

hundred-MW

scale offshore

wind farms,

though the 50

MW Kentish

Flats Extension

may be started

and

commissioned.

Except for the

UK, only

Germany and the

Netherlands are

expected to bring

capacity online

in 2016 with

DONG’s Gode Wind and Westermeerwind. Forecasts refer to 26.4 GW of consented offshore wind

farms in Europe and future plans for offshore wind farms totalling more than 98 GW (Source: EWEA

Market outlook 2015 – 2016). The competition over the turbine manufacturers is depicted in Figure

10.

2.1.4 Interdependence of cost, infrastructure and technology elements

Market organization indicates that there is a large number of new entrants, while big players still play

a dominant role. Market increase is anticipated in the forthcoming years with production overcapacity

in order to meet the increased demand. Regarding turbines, the industry development will ameliorate

the whole production side (supply chain), which in turn will push further the market into cost

effectiveness. New territories (e.g. the Mediterranean basin) become attractive to investments, while,

at the same time, the integration of renewable energy production induces further fields for investment

(e.g. Atlantic Ocean). Critical to the market integration is the turbine technologies used and the

respective associated costs. Larger turbines will improve the total CAPEX, the capacity factor and

the respective O&M costs. The integration of technologies used coupled with the turbine market

(more market players) will induce more stable and efficient constructions in larger sea depths. The

trend at this part suggests that, until 2020, offshore wind farms will be deployed at larger depths and

at greater distances from shore. This trend will improve LCOE at 17% on average, combined with

improvement of capacity factor, decrease of CAPEX and respective decrease of O&M costs.

Similarly, foundation technologies are another critical element to the integration of offshore energy

production. The shift to larger sea depths demands different and more sustainable foundations;

shifting from gravity based foundations (GBF) to floating foundations, which is subject of intensive

R&D for the industry today. Nowadays, GBF and monopiles are the most widespread foundation

Figure 10: Competition between wind turbine manufacturers (Source: Roland Berger, 2014)

19

technologies, while jacket and floating foundations are in the pipeline for intensive

commercialization.

Gridding is another cost element of offshore wind energy development and operation. Gridding costs

integration will improve substantially the market development of the offshore wind energy sector.

Connectivity (availability and liabilities for use) and operation issues of converters and transmission

systems are key elements to the overall costs organization and integration thereof. HVDC connections

cause significant delays and cost overruns at established wind farms, contributing significantly to the

overall costs of offshore wind farms. The main bottlenecks are: i) the development and operation of

offshore converter stations (servicing certain number of wind farms), ii) the offshore HVDC cables

and cable laying, and iii) the availability of cable installation vessels and the transmission systems

operators. The aforementioned issues become even more significant cost contributors to new

territories, like the Mediterranean Sea.

Installation vessels and logistics infrastructure are factors that are subject to development following

the demand at European level. This issue (especially for the Mediterranean Sea) is of most

importance, since it influences installation costs and time. Installation vessels costs are significantly

high and, in many cases, non-accurately predictable, while availability of vessels for Mediterranean

is rather restricted. In addition, logistics are another issue where transport networks and ports need to

be adjusted to support offshore construction and eventually operation. In many cases, the lack of

infrastructures restricts investments, and the potential investors need to facilitate market synergies

with local actors for ports modification and/or storage so as to organise construction and an economic

efficient manner. Even at the operation stage, infrastructures (8) need to be established in order to

support maintenance while maintenance services provision need to be established nearby.

It is anticipated that the increased demand will push the development of more installation vessels,

which will decrease costs. Similarly, logistic issues (especially in the Mediterranean) will be resolved

due to the investors push and local markets’ maturity (modification of transport networks, ports

modification, etc.). National regulation effectiveness on local policies and social acceptance at local-

regional level will contribute significantly to the adjustment of construction and O&M costs.

2.1.5 Operation and maintenance

Operation and maintenance of offshore wind energy sector is a key value driver, since it contributes

to the profitability and sustainability of the investment (25-35%). Cost reduction of O&M at 10%

delivers 4% additional to EBIT (9) of the operator. Up today, efficient proven O&M concepts are still

not available due to the developing technologies routines and new experience of all actors.

Key issues in O&M are:

a) the location of services delivery (service station);

b) the logistics management on shore (coastal management and transportation costs of personnel to

the platform) and

(8) For example, helicopter fields nearby the offshore field

(9) EBIT: Earnings (loss) Before Interest and Taxes

20

c) the availability or large components replacement.

Critical for determining the O&M costs are the distance of the wind farm from the coast and the

architecture of the wind farm, providing – or not – the availability of trespassing and maintenance at

site. Drivers for the integration of O&M are: i) the increase of the offshore capacity, which in turn

reduces O&M costs per kWh, ii) the increased reliability of turbines and components, which will

need less unplanned service activities, and iii) the geographical clustering of offshore, which will

create business synergies among actors.

2.1.6 Conclusive remarks

Offshore energy market development needs to challenge certain financial issues regarding access to

financing at pipeline (10), new investment models with improved risk – return ratios in order to attract

more financial investors. At this part, financial engineering models exercised at the UK shows the

pathway; hence, the economic instability at EU level plays determinant role at all levels. Technology

development coming by industry’s excellence and R&D investment will be able to provide financial

sustainable opportunities to market players; market development thereafter will lead to sector

competitiveness. Offshore wind sector needs to raise its cost competitiveness, which will be reflected

into substantial lower LCOE. Costs reduction by 20-30% in overall, and 40% reduction at CAPEX

will drive LCOE at 5-9€ct/kWh at mid-term, see Roland Berger (2013).

Offshore wind energy is the driving force for blue energy development, setting a course towards

product development excellence leading thus to cost competitiveness. More investments need to be

utilized at the last end of R&D in order to maximize effectiveness and derive market profitable

solutions. The value chain of the sector is expected to grow significantly, at all stages, albeit the

economic instability and financial risk.

2.2 Ocean energy

2.2.1 General

Regarding ocean energy production, there are more “barriers” for development, i.e. there are

uncertainties regarding coastal and marine impact and they are still considered an “uneconomical –

non significant profitable” investment at regions. The latter issue is of significant importance for the

Mediterranean Sea due to the impact of ocean energy installations to the tourism added value of the

territories (11). Public acceptance (especially in the Mediterranean) plays significant role to the

provision of big scale investments. Up today, ocean energy production seems to be the energy

production solution, which needs to be subsidized (12) by the state due to the costs of development

and operation. To date the costs are significantly higher relevant to the energy price. Mixed/hybrid

(10) R&D optimization and excellence at all stages of value chain

(11) However, this is expected to be one of the main problems for offshore wind energy as well.

(12) subsidy issue prevails as a quite ambivalent scenario for EU at the current economic momentum

21

energy production solutions (e.g. offshore wind – wave, or onshore – offshore wind energy

production schemes) seem more feasible especially to the more consolidated energy production fields

(e.g. North Sea). The idea of taking advantage of different renewable ocean resources at the same

offshore installation gains significant importance for a number of issues, e.g. the co-location of wind

and wave energy installations, the use of hybrid converters and the development of energy islands

using common gridding installations.

2.2.2 Market development

Market development of wave and tidal technology has made significant progress the last years, and

a number of installations have been developed in Europe. Further development is necessary in order

to secure a reliable and cost-effective deployment, which will lead to a full exploitation of the market.

Wave energy is even

more at initial stages of

development (in

comparison with

offshore wind energy),

albeit that wave energy

farms have been

funded for

development at the UK

and Australia. Until

today global wave

energy resource is

estimated to

17TWh/year, with

largest capacity

between 30o-60o

latitude; see Figure 11.

A number of EU

Member States have indicated that part of the renewable energy contribution within their National

Renewable Energy Action Plans by 2020 will come from the ocean energy sector, see Figure 12.

Figure 11: Global distribution of the wave energy resource (average wave power in

kWm-1); Source: The Economics of Wave Energy: A review, Renewable and Sustainable

Energy Reviews, 45(2015) 397-408

22

Figure 12: National targets for Ocean Energy in Europe. Source:

National targets for Ocean Energy in Europe; European Ocean

Energy Association (2011)

Many prototype devices have

been deployed within Member

State territorial waters, and have

put in place incentives in terms of

both revenue support and capital

grants, with the aim of achieving

the 2020 ocean energy targets set

out in the Member States

National Renewable Energy

Action Plans. To support this,

Member States have also

developed world-class testing

facilities for ocean energy, as is

shown in Figure 13 (mainly the

UK, Denmark, Spain and

Sweden).

The main barriers for further

market development are:

1. technology development that is still at an early stage (regarding converters, mooring systems,

gridding connectivity, electrical installation methodologies and organization);

2. uncertainties regarding coastal and marine impacts of wave farms. This issue prevails as one

of the top at the coasts of the Mediterranean Sea;

3. many countries in EU do not have a clear and defined policy for ocean energy;

Figure 13: Overview of European Ocean Energy testing facilities.

Source: Wave Energy Centre

23

4. lack of Maritime Spatial Planning, which hinders any investment idea/venture at certain

territories and, consequently, results to complex licensing procedures (13);

5. lack of social acceptance of wave farms installations at small sea areas;

6. wave/ocean farms are perceived as an uneconomical field for intense investments.

Technology solutions towards full commercialisation and the respective technology providers are

very few, and this keeps costs at high levels. At all stages of an ocean energy farm, costs for project

planning are significantly high (due to regulation and legislation delays), costs of construction are

higher than offshore wind farms due to the weak technology supply either in terms of market players

(which will steam competition) or in terms of actual technology solutions. Furthermore, and at the

same line, construction costs are high while operation and project support costs (from the coast) are

at respective high levels due to the lack of critical market players to steam competition to all levels

of operation. Finally, water salinity issues (especially for the Mediterranean) place uncertainties to

the life cycle of the ocean (wave) farm, and this in turn determines decommission costs as an

incremental – rather undetermined cost.

Taking into consideration the above mentioned uncertainties (on costs and profitability), in relation

with the fact that such project ventures are very demanding regarding assets availability at the early

stages of project development (14), leads the fund managers and banking sector to be very careful to

proceed on funding, restricting investors to move to more mature and profitable ventures (i.e. offshore

wind energy).

2.2.3 Future perspectives of ocean energy

More EU policy initiatives need to be undertaken in order to induce convergence among member

states and regions to a common understanding of ocean energy potential to resolve energy and

economic issues. National and regional public authorities need to resolve local reservations on

legislation and regulation in order to establish a more attractive and stable framework for private

sector engagement and operation. The Public Administration needs to take over initiatives to promote

ocean energy production, and steam research and industry in order to end up with economically

attractive investment proposals. European funding needs to fuel market intake of technology

readiness solutions to the sector.

The UK is the one paradigm to wave development sector, where energy prices (set by the state) are

the key driver for investments of energy consortia. Main incentives are the energy prices, government

support and perceived ROI (Return on Investment); these lead the investors to include wave farms

into the energy portfolio. British Government decided to promote investments of 2,3b€ to the period

2013 – 2020 to the UK and Commonwealth states (Australia) providing all necessary support to

potential investors. UK’s Renewables Roadmap estimates that up to 300 MW (producing

approximately 0.9 TWh) could be deployed in the UK by 2020, with much larger-scale deployment

anticipated in the period beyond 2020. Relative to overall population, countries including Ireland,

Portugal and Denmark have set very high ocean energy targets, potentially involving a significant

proportion of the overall budgets available to support renewable energy.

(13) Clearly, the lack of solid and clear regulations at national level causes significant delays on project development

(14) almost 80% of costs are requested at the initial stages of the project

24

Since wave energy technology is at initial stages of commercialization and many issues are not fully

analysed, this creates insecurity to investors and the banking system reacts accordingly ( 15 ).

Furthermore, the cost structure of wave - ocean energy is still under research in order to determine

profitability. At many issues of wave energy production chain, technology solutions stem by a few

number of constructors (i.e. mooring systems produced by only two corporations) and a small array

of technical solutions. This situation shapes a non-profit efficient solution, due to the fact that sets

CAPEX and OPEX to non-manageable rates, guiding the industry to anticipate that the sector will be

subsidized to go on commercialization. Recent studies set LCOE costs at significant high rates and

the implication is that at present, wave energy is only economic viable, if subsidized. However,

overtime, it is anticipated that promoters will realize greater investments based upon tested new

technologies, which will lead to economies of scale (at a greater energy portfolio). This would lead

to costs reduction and investors will realize grater profits, therefore promoters could operate at market

prices similar to other renewables.

It is expected that the commercialization will be improved within ten years. Actions to be taken on

fully commercialization of ocean energy include:

1. Development of full-scale range ocean energy devices: a R&D programme focused on new ocean

energy conversion designs with scale capacity of MW, materials and components addressing cost

reduction and improved survivability, coupled with a demonstration programme dedicated to the

development and testing of a large-scale prototype (1-2 MW).

2. Ocean energy technology development targeting improved generation capabilities, though a

development and demonstration programme for new ocean energy devices.

3. Grid integration techniques for large-scale penetration of variable electricity supply. Identify best

ocean energy resource locations and match them with the available transmissions infrastructure.

Assess best connection methodologies for connecting moving ocean energy devices with the

electrical export cable.

4. Resource assessment and spatial planning to support ocean energy deployment within sustainable

development.

5. A R&D programme for forecasting distribution of ocean resources and energy production that

includes: ocean measurement campaigns, database on ocean data, environmental and other

constraints, spatial planning tools and methodologies for improved designs and production.

6. Policy and regulatory framework on ocean energy development in the Mediterranean Sea.

Mediterranean countries need to organise Maritime Spatial Planning studies, and improve national

legislation for Maritime Environmental Assessment in order to provide a stable regulatory

environment for the potential investor. In addition, regulation, implementation and licensing need

to be short in time in order to avoid incremental time delays to investments approval.

7. Economic research on the following topics: cost structure and value chain analysis, marketability

and commercialisation of technologies, hybrid scenarios economic impact assessment.

Assessment of the economic impact of policy impediments to the investments development and

assets leverage.

8. Studies on social acceptance of technologies to territories with complex coastal activities (tourism,

commercial) in order to examine levels of acceptance, increase information level of public at

(15) Economic uncertainty at EU level is perceived as a significant drawback on market development and the banking

sector operates at a conservative approach to the financial management of this kind of investments

25

territories and induce market uptake measures at local and regional level for the new technologies.

Costs saving solutions are to take advantage of different ocean renewable resources with hybrid farms

of wave and offshore energy production. Under this approach, there are different possibilities to

facilitate synergies for wind and wave resources exploitation; a) co-located wind and wave energy

production, b) existence of hybrid converters and, c) development of “energy islands”. In all cases,

wave energy increases the availability and smoothens energy output by compensating in part for the

variability of offshore wind power.

Furthermore, ocean energy development is anticipated to open an array of job creation opportunities

at different levels of engagement: research to contribute to the development of technologies to move

to commercialisation levels (Technology Readiness Levels 8-9), R&D for industry (synergies of

private sector with Research Institutes), experimentation of technology by industry, legal advice to

public sector on the implementation of measures to promote ocean energy, provision of services on

planning studies (preliminary studies) for investor schemes, environmental impact assessment

studies, specialised experts to the industry (construction), provision of maintenance and operation

services, provision of support services on the coast, part time employment to the construction of

offshore wind farms at territories, experts and consortia to the construction of transmitting stations at

the coastal area, specialised experts (of multidisciplinary competence) for consultancy services to

provide technical assistance to investors at local level, etc. It is expected that job creation within

Europe at ocean energy will reach offshore wind energy levels focusing (at EU level) primarily on

the UK and Atlantic while, at a later stage, on the expansion to other territories as well (i.e.

Mediteranean).

Overall, wave and tidal energy production show significant potential in terms of market development;

hence, technology needs to provide cost effective solutions in order to meet competitive energy

prices. Research needs to undertake issues regarding successful commercialization at all stages of the

value chain; pre-operation phase, construction phase, operation, management and decommission. In

addition, technologies need to provide cost effective solutions on converters, mooring systems,

transmission and gridding. Wave Energy Convertors (WECs) need to reach more commercialisation

with more players entering the market (manufacturing), tidal stream technologies need to reach

maturity, tidal barrages have to reach a more sustainable (at commerce terms) outcome, grid planning

processes have to reach a sufficient and attractive time frame (reduce delays). Economic research has

to analyse in more detail sectors competitiveness to reach significant profitability and attract

investors. Up to date, geographical expansion of wave energy resources exploitation could be

achieved with hybrid wind – wave energy farms or alternatively with energy islands development.

2.2.4 Status in the Mediterranean

Mediterranean is a closed sea with deep waters and up today is the least developed for both wave and

wind energy production. According to HCMR (16), the overall offshore wave potential of the basin

ranges close to 3-5 kW/m, while the extended area between Balearic Islands and Sardinia, along with

the Ionian and Levantine basins are characterized by the highest values of mean offshore wave

(16) Final Report HCMR Study on Relevant territorial Actors, 2015

26

potential (above 6 kW/m) (17). Nevertheless, Mediterranean Sea presents weak potential for viable

conversion and the combined wave/wind energy resources exploitation seems to be a favourable

scenario. The most favourable sites at this basin for hybrid energy farms are the French Blue Coast,

Sicily straight, and Greek Islands. Hence restrictions on market – investments development prevail

mainly due to the tourism orientation of sites, public acceptance and national regulatory drawbacks,

which in turn mitigate investors’ interest. Further studies indicate that wave energy production would

be at the areas with rather high resource, which are the straits of Gibraltar, Messina and Dardanelles.

2.2.5 Further remarks

Studies have shown that among renewables, onshore wind energy production gains significant

maturity and commercialization, followed by offshore wind and latter ocean energy. The following

figure (Figure 14) illustrates also technology and market development in due time for each economic

sector (18).

Figure 14: Onshore, offshore wind and ocean energy projected growth; Source: EU Energy Trends to 2030

Overall, ocean energy (wave and tidal) resources globally exceed the present and future energy needs.

At EU, the highest potential for the development of ocean energy is on Atlantic Ocean, Mediterranean

and Baltic basins and in outermost regions. The exploitation of these resources would help EU to

mitigate dependence on fossil fuel and enhance energy security. Ocean energy sector will become in

the future an important subsector of Blue Economy by fuelling coastal regions with economic growth

as well as islands (especially in the Mediterranean). In addition, ocean energy electricity output could

help to balance the output of other renewable energy sources (i.e. offshore and onshore wind energy,

solar energy) to ensure a steady aggregate supply of renewable energy to the system. To this extent,

the scenarios of hybrid installations (especially for the Mediterranean) gains vital importance to

market development. European supply chains could be developed as industry expands, involving both

innovative SME’s and larger manufacturing companies with relevant capabilities (i.e. shipbuilding,

mechanical, electrical and maritime engineering). Increased demand for specialized sea vessels is

(17) In the same report it is seen that the eastern Mediterranean Sea may be a favourable area for the potential development

of salinity gradient installations.

(18) Source: Oceans of Energy; European Ocean Energy Roadmap, 2010-2050

27

also expected, as well as sea platforms infrastructures and gridding equipment.

Up to now, European industry holds a strong position, albeit the fact that technology needs further

advancements to meet cost commercial market requirements. Most of technology developers are

based in Europe, while competition from China and Canada is expected (e.g. the competition from

China in the offshore wind sector is growing steadily as regards equipment and turbine

manufacturing). UK Carbon Trust estimates that wave and tidal energy market could reach the

€535billion up to 2050 (19).

2.3 Market development: concluding remarks

Market development for offshore wind and wave energy resources follows developments at the

production level, where the stability and market development of supply chain determines the

competitiveness and the investment attractiveness. Higher and steadier offshores at deeper water

depths would make farms more productive (higher energy capacity, smaller back up costs). In

contrary, costs of building are significantly high, and there are bottlenecks in the supply chain that

maintain CAPEX at significant high level. Industry development at supply chain at the perspective

of offshore wind and wave energy production development will determine the construction and

maintenance costs, shaping a more attractive investment option. Hybrid energy farms are also an

attractive development scenario, most applicable in the Mediterranean basin.

Key drivers for market development on renewables will be the development of technology and the

solutions that will stabilize the overall installations in terms of financial capacity and competitiveness

(especially, for offshore wind energy). On the contrary, technology maturity will be the key driver

for the market development of wave and tidal energy production, providing cost efficient solutions.

Substantial role to the market development plays also the national and international public context

regulation and the internal energy production and distribution organization at national level. Different

policies have been implemented to support the market development and increase of added value at

all stages of the value chain. Positive examples from the national policies, implemented at Denmark,

show the positive pathway for market development; the explicit segregation of energy actors provide

significant market incentives for pioneers and investment schemes of low capacity to enter the

market, while the partnership with the World Bank provides significant assistance to the

competitiveness of the market (20). On the other hand, the significant costs of licensing, regulations

implementation and gridding permissions, at national level, act as impediment to the market growth

at regional-national level, causing the deployment of significant capital from actors; the latter issue

may be the case only for big scale investment consortia, which may dominate the market at national-

regional level. The consolidation of a small number of (important) players to all levels of energy

production cannot provide significant added value to the energy production chain, affecting the

overall sector competitiveness. The active involvement of banking sector to the cash flow provision

determines the market organization and sustainability; stable economic environment contributes to

the sustainability of investments, and market development through the entrant of new players at all

(19) Source: Carbon Trust (2011) Maritime Renewables Green Growth Paper

(20) World Bank. Sustainable Energy for All: http://blogs.worldbank.org/energy/

28

stages of energy production.

In overall, the weak public policies of member states to facilitate an attractive investment

environment, complex regulation, absence of MSP, absence of licensing procedures, the absence or

weak defined policy for ocean/wave energy production, send “negative” signals to the industry to

invest on new technologies and R&D on cost efficient solutions. The absence of technology uptakes

to steam the market, leads industry to invest in more profitable areas of Blue Energy, leaving behind

this sector, while the banking sector and Fund operators follow technology and market signals to

guide investment assets to more “ready-to-go” technologies and solutions. While hybrid scenarios

(ocean – offshore) are proposed to resolve capacity factors issues, however, technology does not

provide cost efficient evidence to attract investments assets. Last but not least, we need to mention

that due to the current economic climate, several member states have substantially scaled back plans

to support investments at renewables, and in many cases introduce at short term retrospective

changes. Such developments erode investors’ confidence putting further development of the sub-

sector at risk. The lack of financial support to the technology development can lengthen the time

necessary for potential projects to move towards acceptable profitability ratios.

Further economic research needs to be undertaken in order to evaluate strengths and weaknesses of

this sector, analyse in depth the costs determinants and profitability of associated technologies, while,

at the same time, industry needs to provide more cost efficient solutions to the whole chain of energy

production. Technology developments need to resolve issues regarding the cost operation of blue

energy farms, leading more players to the market. Market uptake to new technologies needs to take

place so as to drive producers to provide cost efficient solutions and decrease installation and

operation costs.

29

3. Value chain analysis

3.1 General

A value chain reflects most of the life-cycle of an energy project, starting with the necessary

preparatory works and studies to develop the project (e.g. local resource assessment, EIA studies,

planning of infrastructure, approval processes, etc.), the construction processes (e.g. installation,

connection to the grid, transmission infrastructures, etc.), the O&M of the project and finally, the

decommissioning actions. An example of typical product requirements for the case of wind farms are

listed in Table 2.

Table 2: Typical requirements for wind farm development

DESIGN CONSTRUCTION OPERATION

Feasibility studies

Site assessments

Testing

Environmental assessment

Design Studies

Project development

Licensing

Financial services

Turbine construction

Rotor components

Foundations of turbines

Access platforms

Transmission cables

Heavy lifting facilities

Logistics

Inspections

Monitoring

Repair & maintenance

Painting – coating

Value chain analysis includes also the analysis of the framework conditions (i.e. regulations, financial

opportunities, support by the banking sector to organise investment portfolios and funds, logistics,

market dynamics, consulting services, etc.). All the processes are of supporting nature, but need

necessarily to be taken into account for the successful implementation of the project. Value chain

analysis for Blue Energy allows an assessment of functions across different sectors pointing out

synergies that can occur at supply chain. It also describes the impact of sectors to the local and

regional economies (e.g. by creation of new jobs), while it also highlights the issues to be improved

and the targets to be met in the future. Core activities of each function (mainly for wind and wave

energy production) are shaped identified as upstream and downstream: Upstream activities of value

chain are suppliers of equipment and downstream activities are processing sectors and, subsequently,

distribution and sales.

The analysis that follows is mainly focused on offshore wind energy, while wave and tidal energy are

expected to follow, more or less, the same path. However, let us point out that the economic potential

is different for each type of blue energy technologies. For example, the technology costs at wave and

tidal energy production, up to now, are significantly high and the development of the relevant

technology needs to provide less expensive solutions. On the other hand, the overall costs (including

technology) for offshore wind energy are significantly lower and industry (at the equipment part) is

leaded to more cost efficient outcomes, which lower the overall costs and increase the value of

investments (in terms of ROI and IRR – Internal Rate of Return).

30

Combined offshore wind and wave

energy production are proposed to

meet cost targets and facilitate

financially sustainable projects. The

estimated added value of various

forms of ocean energy (renewable and

non-renewable) to the EU market (as

a part of maritime economy) is shown

in Figure 15 (21).

Up today, Blue Energy holds a small

share, but with steady growth at

energy sector, it is expected to reach

the target of 130 billion € by 2020.

Main risks to global and EU

development growth are economic

stability, lack of grid connections

among blue energy farms, and the

need to reduce the cost of energy production.

The cost for offshore wind farm development is comprised by CAPEX and OPEX. Based on these

measures, cost construction

for offshore wind farms is

illustrated at Table 3.

According to this table, the

key parameters as regards

cost construction are:

Cost of turbines;

Foundations: the cost depends on water depth and construction principle and may vary from 4-6%

up to 21%;

Construction costs (including licensing and EIA studies);

O&M costs (<30%);

Gridding (21%);

Capital costs and financing;

Labour costs.

For CAPEX, it is estimated that the labour costs are at 38%, while for OPEX is 44%. The market

development of subsectors (turbine construction, foundations, etc.), the specialization of market

players and competition among actors will significantly reduce costs. Technology and regulation play

influential role on the final cost of offshore wind farms, while the minimization of risk revenues (due

to regulation) is a key parameter for investors and financial institutions to provide with capital or

partially participate in the consortium. As regards wave energy, the picture is quite similar, although

the costs of technology solutions seem up to now to be higher than offshore wind energy.

(21) Evidently, the cost and the respective added value at each stage determine the final added value of the value chain.

See also below.

Figure 15: Current size of Energy in EU; Source: Blue Growth

Scenarios and Drivers for Sustainable Growth for Oceans Seas and

Coasts, DG MARE, 2012

Table 3: CAPEX and OPEX for offshore wind farms

CAPEX (70-80% OF TOTAL COSTS) OPEX (20-30% OF TOTAL COSTS)

Cost of turbines & foundations

Gridding

Civil works and licensing

Capital costs (assets managements

and financial costs)

Operation & Maintenance

Lands rental

Insurance costs and taxes

Management and administration

31

3.2 Value chain analysis for blue energy

3.2.1 General

Value chain analysis for

Blue Energy is relatively

more focused on offshore

energy production due to

that market development

and economic research

provide a significant

amount of tested

information. On the

contrary, for wave, tidal

and OTEC energy

production there is rather

lack of data on economic research, and thus value chain development cannot be clearly illustrated

(22). It is expected that value chain analysis will follow the same pattern for all Blue Energy

subsectors. As a first approach, value chain analysis at Blue energy (offshore wind and ocean) is

focused on the following parameters, see also Figure 16:

the framework conditions (access to capital, investors availability, regulation, and availability of

farm territories as aftermath of MSP at national level, social acceptance, financial conditions);

the backward links and the associated activities (supply and availability of technology);

the core activity (energy production by offshore wind farms or hybrid systems)

The forward links (comprising the input services provision to energy production).

Framework conditions are fundamental to shape an attractive field for development of investments.

Offshore projects need to meet assets availability at early stages of the project and this parameter

plays significant role on financial engineering. Projects need to be more “bankable” and attractive to

investors by minimizing the risk factor. Risk is related primarily on licensing and regulation at places,

while, at the same time, is also related to turbine models and its energy capacity factor, site’s technical

parameters and logistics. Cabling issues determine the delays thereof, and the associated costs are

related to the existence of other wind farms and/or the potential of territories at technical level.

Regulation and licensing of the projects determines delays (and respective incremental costs) at

primal stages of project development, which in turn affects the overall project profitability. Overall,

the costs and value of backward links determine investors’ choice, the assets availability and cash

flows.

Backward links are associated to the technologies used and corresponding costs along with the

(22) It is thus evident that for ocean energy there is need for more research in order to illustrate in detail the dynamics of

the value chain

Figure 16: Framework conditions for the value chain analysis; Source: Value chain

analysis https://bettyfeng.wordpress.com/

32

respective value. Turbine technologies, foundation installations and its support services, gridding and

related logistic issues determine the value of the activity. The development of the backward links is

more associated with R&D for the provision of more efficient technology solutions and more

intensive R&D investments by the industry. Forward links are associated with energy distribution

and energy sales, synergies among distributors and national policies thereof.

Core activity and operation is related to O&M, service and repairs provision, insurance costs,

liabilities period and taxes of the overall investment.

3.2.2 Offshore wind energy

The aforementioned elements

determine the value chain of

the subsector, which is

comprised by five

characteristic stages that

determine the costs and added

value. Specifically, the general

project development includes,

at specific stages of

development, the wind

turbine, the foundations-

support structures, the

gridding of wind farm and

network, the logistics and

installation, and finally the O&M of the wind farm; see also Figure 17.

The time frame for project

development depends

also on the market

development at the wider

regions (i.e. Atlantic

Ocean, North and

Mediterranean Seas),

where the “mature”

professionalism, the

gained expertise and the

specialized operators can

decrease time required.

On the other hand, into

“new” territories lack of

expertise and lack of local

experience would induce

significant delays. The

“banking” element of the

Figure 17: Value chain for offshore projects; Source: Roland Berger 2014

Figure 18: Actions for project development (Offshore); Source: Roland Berger, 2014

33

project plays a determinant role to the access of capital at initial stages of project development, and

is related to the economic context of territories. Strategic partnerships among actors determines also

the time frame of project development.

Regarding the analysis of

value chain, the key issues

are categorized into the

following fields, see also

Figure 19: i) field

development and

licensing, ii) development

of transport solutions and

installation, iii) logistics

and transport and iv)

O&M.

The detailed development

of a wind farm (offshore

or hybrid) follows the

time frame shown in

Figure 20. The major finding is the fact that cost is saturated at the initial stages of the project (up to

80% of total), while the main revenues will come after the operation of wind farms (24-30 months).

Figure 20: Typical time frame for the development of an offshore wind farm; Source: www.gamesacorp.com

Table 4 summarizes the challenges and solutions to be undertaken at the value chain for wind energy.

Overall, as regards the value chain (mainly for offshore wind energy), the key determinants of the

size of the value are: i) the local economic environment and the interest of investors, ii) the project

development time, iii) the availability of key equipment at site (turbines and foundations), and iv) the

installation vessels availability and its respective costs and logistics at the onshore part to support

construction and maintenance. The development of offshore wind energy at new geographical

territories creates an array of opportunities to local economies and facilitates the creation of

subsectors at local/national level. The transformation of existing infrastructure to respond to the needs

of offshore wind energy would facilitate local development by increasing the size of value chain.

At the downstream end, national energy market organization plays a deterministic role to the speed

of wind energy development. Market liberalization at distribution part and energy wholesaling

Figure 19: Key issues of value chain analysis; Source: www.wind-energy-the-

facts.org

34

provides incentives for market actors to invest, whereas regulation policies, which create regulatory

barriers to entry, create a reality at which only big market consortia will be able to respond, leading

the market to the creation of monopolies or oligopolies.

Table 4: Development solutions to value chain for wind energy

SUPPLY SIDE DEMAND SIDE REGULATION POLICY

1. Investment in turbine R&D

2. Assistance in regional grid

planning

3. Identification of synergies

with existing industries (i.e.

oil and marine based)

4. Creation of stimulus for

ship-building

5. Support of financing streams

for Investors

6. Identification or restructure

of existing businesses in

supply chain

7. Provision of workforce

training with local partners

8. FDI and promote

partnerships

1. Support innovation

for offshore wind

2. Structure incentives

3. Production incentives

provision

4. Government

procurement program

act as catalyst

1. Approval process

2. Coordinated

review provision

3. Tax credit

programs

1. Align communication

strategies

2. Use of proactive

growth strategies in EU

3. Public education to get

understanding and

support for offshore

wind

4. Stable regulatory

policy for all EU

3.2.3 Ocean energy

Regarding ocean energy, the elements that determine the value chain of the sub sector is comprised

by six characteristic stages that determine the costs and added value:

► the project development;

► barrages construction, mooring systems installation, Wave Energy Converters installation

transmission settling and support services;

► gridding of wave installation and network;

► logistics and power transmission system costs;

► O&M;

► Decommissioning.

The respective costs for project development are up today at high levels also due to the lack of

organised coastal – marine national policies at specific areas. In addition, the estimation time for

project development (only to the UK) is about 5-10 years. The lack of availability of commercial

solutions to tidal barrages and WEC devices (only 2-3 market players operate) keep at high levels the

respective costs, while issues on gridding of installations cause significant delays to the successful

commercial implementation of wave energy power production. Decommission of wave energy

devices (within a period of 10 years of operation) seems to be an issue, which needs to be resolved at

the direction of cost minimisation. Therefore, technology development in order to meet market

demands will determine the added value of the sub sector’s value chain, see Astariz, Iglesias (2015).

35

3.3 Job creation

Blue energy production investments do not only contribute to a greater energy security, cleaner

environment and economic growth, but they also generate social benefits with the employment

dimension receiving growing attention. Blue Energy provides a significant number of job creation

into all stages of a blue energy project development and a broad range of occupations can be found

along the various segments of the supply chain for each blue energy technology, specifically: at the

Project development stage where expertise (new jobs) is needed to be deployed, at the construction

stage where new companies are needed and expertise is sought to be engaged, at O&M stage where

expertise is needed. All these demands constitute an array of opportunities for employment either at

permanent base or at part time (at construction).

3.3.1 Offshore wind sector

It is estimated that offshore wind will create three times more jobs compared to offshore oil and gas

industries. EU target by 2020 sets the employment at the number of 400.000 new jobs, while the UK

expects to create between 1-1.7 full time jobs for each MW of offshore wind power installed. In the

Mediterranean Sea, National action plans foresee the creation of 50.000 new jobs, while the rest of

Europe will face job creation of 350.000, respectively. Up today, the industry development

(especially on turbines foundations and logistic) creates an array of new jobs opportunities due to

new market players, and the integration of new – more efficient – production models and final

outcomes. In addition, the redesign and transformation of onshore facilities (i.e. harbours and local

logistic facilities) creates an array of new jobs and services to be placed in order to provide cost

efficient services to wind farms.

3.3.2 Ocean sector

It is expected that wave and tidal energy would also create an array of job opportunities at

manufacturing, transportation and O&M; see Figure 21. Studies in the UK estimate that 10-12 direct

and indirect jobs will be created for each MW of ocean (wave and tidal) energy installed (23). Ocean

energy has the potential to create new jobs at project development, manufacturing and operations.

Indicative job estimates suggest that 10.000-26.500 permanent new jobs and 14.000 temporary jobs

would be created up until 2035, while, according to the European Ocean Energy Association, 450.000

jobs could be created by 2050, if the European target of 188GW installed capacity of ocean energy

will be fulfilled.

(23) Oceans of Energy, European Ocean Energy Roadmap, European Ocean Energy Association, 2010

36

Figure 21: Job creation per MW of Ocean Energy installed capacity by 2050; Source: European Ocean Energy

Association

3.3.3 Conclusive remarks

Table 5 summarizes some of the most

widely referenced projections for job

growth in the offshore wind and wave

energy industry in Europe and the United

States through 2020 and/or through

2030. The main purpose of this table is to

show the range of projections by industry

expert, establishing thereby a barometer

for the employment potential of the industry and a benchmark for analysis, since these numbers are

always being updated through several studies.

Overall, Blue Energy provides a new array for employment opportunities at all functions of value

chain, namely, project development, construction and manufacturing, support services provision,

transportation and logistics and finally, onshore support services at existing infrastructures (harbours,

port authorities, etc.). Europe will be a glooming employment market, followed by the USA, while

Asia (China) enters at the turbine construction market. Costs of labour are mainly focused at project

development and construction, while subsectors specialization will provide incremental employment

opportunities for all actors involved in the Blue Energy value chain.

Table 5: Job growth on the offshore wind and wave energy

industry; Source: International Economic Council, 2013

Place Job creation Capacity Jobs/MW

Europe 400.000 194GW 57

USA 70.500 38GW 50

Globally 470.500 232GW 107

37

3.4 Mediterranean basin

3.4.1 Blue energy development in the member countries

Mediterranean Sea is a deep water basin, characterized by suitable hot-spot areas for offshore wind

farm development and, in a lesser degree, for wave and tidal/current farm development. On the other

hand, it is a territory in which significant tourism investments take place, while it also hosts important

commercial, coastal and tourism recreation activities ( 24 ). Despite the immature stage of

implementation, it appears that Blue Energy would be well suited to the Mediterranean Sea and can

be combined with other (complementary) activities and sectors, such as construction of equipment,

aquaculture, transport activities, ports, etc. Nonetheless, progress has to be made in order to deal with

environmental considerations and social acceptance, as well as to increase involvement from

investors.

Since Mediterranean basin is tourism-oriented with significant investments to operate to all coastal

areas (including islands), the development of Blue Energy is expected to meet significant social

resistance by local environmental groups and societies. Strong opposition for the development of

Blue Energy has been already arisen in France and Italy, based on the assumption that Blue Energy

causes the deterioration of local landscapes and local economies. Reservations aim also to the

negative effects of Blue Energy on fisheries, mammals and migratory bird’s population, the

development of tourism industry at local level, the marine ecosystem effects, the disruption to

commercial and private vessels and the noise and visual “pollution” of renewable energy facilities,

especially at touristic sites. On the other hand, economic and political instability to the European

South, coupled with the lower renewables energy market development, constitutes a least favourable

investment territory for big scale investments. Demonstration projects took place in Spain and Italy,

whereas Greece and Croatia demonstrate rather slow development at this level. Up today, at national

level (for Greece, Italy, and Croatia) the existing development lags significantly behind the national

Energy plans goals. Regulation, harmonisation and licensing has not been fully developed, causing

severe uncertainties to potential investors. In parallel, the so called boom in “Green Economy” was

not coupled with the liberalization of the energy market (wholesale and retail distribution) and this,

in turn did not contribute to the overall market development of renewables. The significant regulation

instability, combined with the respective licensing and insurance bureaucracy, delays sign investment

decisions more to the north than to the South. Many actions need to be taken in order to boost further

the social acceptance at the Mediterranean Sea (where significant tourism activities take place) and

smooth prejudices related to the deterioration of landscape of offshore and ocean energy production

facilities.

On the contrary, research undertaken at the Mediterranean provides significant contribution to the

industry, shaping a competitive environment on technology expertise to the sector. A number of

entities at regional and national level are active in the promotion of Blue Energy, but local and

(24) Let us note here that many studies indicate that the hybrid renewable energy production model (combination of

onshore and offshore energy production) would be the ideal scenario for the coming years, especially for the Greek islands

of the Aegean Sea. The combination of onshore and offshore seems to deserve further assessment as a potential renewable

energy model.

38

regional administrations need to work more intensively to release local barriers for investments.

Bottlenecks at national markets on renewables need to be released in order to establish an attractive

investment environment. In this respect, clusterisation could contribute significantly to this pathway,

acting at regional and national level at the entire basin. The formation of a mega-cluster on Blue

Energy for the Mediterranean would undertake lobby and promotion activities to certain regions to

push social acceptance and formulate conditions for infrastructure investments of public sector. In

addition, the mega-cluster would facilitate the readiness of existing clusters with the aim of

diversification in order to boost competitiveness and market acceptance of new solutions locally and

regionally. The fragmentation of blue energy investments and pilot projects could constitute a

“critical mass” for the financial sector to organize venture funds and boost investments under the

condition that local regulations would not cause significant delays on investment plans.

However, for the rational assessment of the available blue energy potential in the coastal areas of the

Mediterranean Sea, further research is necessary. Relevant studies so far, provide general suggestions

as regards blue energy potential in the Mediterranean Sea, and are appropriate only for a first

assessment towards large industrial developments. In addition, uncertainties inherent to the specific

source of ocean data used in the analysis is another important factor very relevant to the economics

of blue energy installations, and should be taken into consideration in any blue energy project

development. Therefore, an in-depth analysis should focus on the local-regional level in order to

identify specific locations with utilizable resource and corresponding potential actors at this spatial

level (25).

3.4.2 Feed in tariffs

Feed in tariffs seem to be an attractive scenario for market development of Blue Energy in the

Mediterranean Sea. The implementation of such policy mechanism to the sector would accelerate

investments by providing long term contracts for developers to invest. Feed in Tariffs (FiTs) would

contribute to the development of the sector at a macro-regional level, as well as to the development

of blue energy subsectors (e.g. gridding, O&M). In many cases, these policy instruments were used

as a response to activate sector investments in an area, as a tool to response to financial crisis, but this

requires the support of banking sector. The model of implementation of FiTs to the development of

Blue Energy in the Mediterranean, is an attractive pathway with reference to the following: i) shorten

time of technology development, ii) the development of blue energy installations, and more specific

the offshore development or the promotion of hybrid renewables (onshore – offshore), iii) reach a

cost saving investment outcome and iv) improve the Risk ratio indicator.

With regard to wave energy, the lack of clear and defined policy by member states of the

Mediterranean, seems to act as an impediment to its development (26). On the other hand though, the

economic stability (of Mediterranean and EU in general) is the ultimate catalyst to reach successful

outcomes. According to European Ocean Energy Association (2010 Position paper Report), EU

member states have decided to place in action a set of support systems to promote all forms of Blue

Energy production. An overall table of support policies is illustrated in Figure 20, however figures

should be revisited under the new economic changes.

(25) HCMR Study on Territorial Actors, 2015

(26) Hybrid solutions (offshore wind – wave installations) seem to be more attractive to be financially supported

39

Figure 20: Overview of Member State Support Schemes (2010); Source: European Ocean Energy Association, Position Paper Towards European industrial leadership in

Ocean Energy in 2020

40

4. Clusterisation

4.1 Introduction

In the case of the Mediterranean region, clusterisation for Blue Energy should follow some basic

principles:

1. Technology maturity at all stages of offshore wind (and wave) energy production.

2. Regional outlines and readiness (i.e. the Mediterranean member states need to follow more

principal outlines than the states of the North Sea and Atlantic Ocean).

3. The readiness of key actors involved to activate synergies and partnerships.

4. The countries cooperation levels (i.e. the plethora of offshore wind farms in the North Sea can

provide valuable paradigms on countries collaboration).

Therefore, the main actors participating on clusterisation need to represent all fields of economic and

relevant activities, i.e. research and planning, financing, operation and services provision. Significant

liaisons need to be established among research institutions, academia and industry in order to

undertake R&D projects of added value. O&M innovations need to be integrated to the mainstream

methodologies to provide specialization at low cost and decrease the overall OPEX cost rates.

Synergies among actors is one of the top priorities in order to speed up project development

methodologies, tailor made to the local particular prerequisites of the coastal Mediterranean areas. In

addition, the participation of related clusters can contribute to the exchange of best practices thereof,

the mutual training among actors and synergies development on project basis. Another significant

task of the cluster is the innovation management and its translation to added value for the industry.

Clusterisation needs to entail public and private entities acting on the sector at any level of abstraction

and creating a dynamic framework. These prerequisites will end up to the promotion of technologies,

market solutions and public regulation issues.

At this level, there are three distinctive categories of actors participating to the cluster:

I. Regional and National Energy Authorities

a. Universities and Research Institutes

b. Public entities at wholesale and distribution of electricity

c. National-Regional Energy Centres

d. National Energy Agencies and Organizations

II. Private companies (at any level of supply chain)

a. Companies undertaking projects at renewables

b. Service provision companies and start ups

c. Digital economy companies

d. Media companies (specialized at Energy issues)

e. Banking sector

41

III. Independent bodies (i.e. private clusters, energy chambers, conglomerations)

a. Mediterranean Renewables Energy Clusters

b. Non-Mediterranean Energy Clusters

c. European industry associations

d. National Technical chambers

As Blue Energy is a technology driven sector, value increase stems mainly from technology

development, which leads to technology and know-how transfer and dissemination. Maturity of

technology transferability leads to commercialisation by industry players – members of the cluster.

The market development thereafter provides new fields for research and feeds technology

development. Synergies among different actors of the public – private sector with Research Institutes,

Industry, energy associations and clusters is expected to raise opportunities for job creation, venture

capital developments (at technology part), industry partnerships and R&D projects (27). Essential

contribution to the value increase and effectiveness of the cluster is the participation of banking sector

to provide consultation to the “bankability” of proposed projects at local level.

For the Mediterranean Sea in particular, the aim of the clusterisation is mainly the creation of a think

tank supporting a private lobby so that the development of Blue Energy could be promoted. The

formation and development of the cluster would be the base for funding under H2020 EU programme

in order to undertake specific actions for knowledge and expertise dissemination, lobbying at national

level and settle training provision of staff. In addition, one essential task for the cluster would be to

undertake specific actions on downstream research (28) in order to provide specific sets of guidelines

to potential market stakeholders. Monitoring actions at the Mediterranean level is a key issue for the

cluster in order to promote Blue energy at every level of policy and market.

4.2 Towards a mega-cluster

Similar pathway for clusterisation would be the formation of a Blue Energy mega-cluster, which

would facilitate targeted actions at regional, national and international level. The diversification of

actions within the mega-cluster would boost training, mutual cooperation among partners and, in turn,

decrease the “cost of information sharing” among partners and actors at value chain. The mega-cluster

would promote R&D for the industry of the Mediterranean countries (29). The effective dialogue

among key actors of Blue Energy value chain with public sector and society (there after) would

release existing strong bottlenecks for investments provision (pilot – demo projects) and would

contribute to increase the value for money outcome of European supporting funds, which would target

the area (as macro-region).

The active operation of the mega–cluster would also promote the social acceptance in cases where

strong reservations exist for the development of tidal and wave energy production investments. The

promotion and the ignition of social dialogue on Blue renewables would be a field of action its

implications would push further investments development. Training programmes (in collaboration

(27) These aspects are expected to be also capitalised by the market

(28) e.g. social acceptance surveillance, assessment of the needs at the regional level, assessment of technologies for

specific technology issues, etc.

(29) industry’s response to localities of the Mediterranean basin

42

with Research Institutes) would be the subject of operation so as to boost employment of the sector

at specific areas.

The active contribution of the banking sector to the cluster is of major importance to the provision of

input for funding management of Blue Energy projects within the area. Banking sectors contribution

may ensure the following:

i) investments sustainability planning and management;

ii) economic sustainability of actions;

iii) the inflow of information on assets management;

iv) the private funds organisation to provide assets and leverage assets to insulate investment

proposals.

Banking sector would also provide significant input for start-ups (to the fields of service provision

and / or technology solution providers) to successful internalisation of activities, and to promote cost

efficient solutions to the sector.

In overall, the clusterisation of Blue Energy in the context of the Mediterranean basin seems to be a

pathway for the development of this sector. This, in turn, would disperse added value to all actors

involved and implement actions, which no other entity would undertake solely. The mega-cluster

would act as the point of reference for the development of Blue Energy in the area (as mega region),

built complementarities with European Energy Associations and implement training and downstream

activities to improve social acceptance. The successfully operation of the mega-cluster, alongside

with the development of synergies at the field of research, would act as a local level lobby to push

for national reforms on energy sector in order to constitute a favourable environment for investments.

Sustainability of actions of European projects and the capitalisation of the respective projects

outcomes would boost the effectiveness of actions and facilitate development at all levels of

abstraction (i.e. research, policy measures implementation, marketability of research outcomes, start-

ups promotion, and social acceptance).

43

5. Final conclusions

Based on the analysis presented on Blue energy Market development, value chain and clusterisation

some concluding remarks can be drawn. First, let us start with some general conclusions regarding

blue energy development in the Mediterranean Sea.

i. Blue energy production shows significant growth in EU; Europe turns to be the leading territory

to the development of the sector globally.

ii. Technology developers and research are sited in Europe providing a competitive research and

development environment for sector competitiveness.

iii. Blue energy production investments are mainly sited in EU and in particular, in Baltic Sea,

North Sea and Atlantic Ocean. Small scale investments are sited in the Mediterranean for both

offshore wind and ocean energy (pilot – demonstration projects, small scale commercial

investments).

iv. Mediterranean basin prevails as an attractive territory for blue energy development, hence

particularities related with the sea environment and tourism and recreation activities and the

relevant industries need to be taken seriously into account.

v. Common financial characteristic to the development of blue energy project is the assets

availability at the early stages of the project (70% of cash availability is demanded) and the

demand for a low risk factor of the project.

vi. A most important factor for market growth at Blue Energy is the support of financial sector,

which would develop attractive investment “proposals” for investors under financial

engineering schemes.

vii. Regulation, licensing and national legislation and procedures play also determinant role to the

attractiveness and the profitability of the investment; crucial element is the minimization of time

delays due to licensing and bureaucracy.

viii. Insurance and national tax policies play a key role on value chain development and, in a large

extent, determine the overall projects profitability.

ix. Economic stability at EU level plays determinant role for the pace of blue energy development.

The specific conclusions as regards value chain and clusterization can be summarized as follows:

i. The increase of value chain is dependent on industry excellence and political support (on

regulation and licensing).

ii. It is estimated that offshore energy production will reach the European Commission targets by

2020 mainly focused on North Sea, Baltic Sea and Atlantic Ocean, while Mediterranean Sea is

an attractive field for market development.

iii. Market development at offshore drives onshore local economic development on ports,

transportation facilities, logistics infrastructure, transmitters’ infrastructure and operation

services provision in site.

iv. Value chain at offshore wind energy includes project development, turbine manufacturing,

gridding and logistics including vessels availability and onshore infrastructures.

v. Blue Energy will contribute to job creation at all stages of value chain with significant number

of new permanent jobs.

vi. The main challenges for offshore wind energy include the market development in new territories

(such as the Mediterranean Sea), the decrease of the technology costs and the entrance of new

44

market players at all stages of value chain.

vii. Increased competition at turbine manufacturing stems from China, lowering the total CAPEX

and increasing employment opportunities of specialized staff.

viii. Ocean energy lags behind offshore wind energy due to technological challenges for cost

minimization in order to meet market demands.

ix. The main challenges that the ocean energy development has to deal with are the following: the

decrease of the technology costs, the lack of access to capital of private sector, the complex

licensing procedures (which frequently cause significant delays), the EIA studies of ocean

energy installations so as to take into account local needs and the entrance of new market players

on manufacturing of installations.

x. Clusterisation at the Mediterranean level could be foreseen as a mega-cluster (of existing

clusters and entities of public and private sector), which would act on lobbying for bottlenecks

release, training, and performing R&D projects to meet market demands.

45

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