(Source: Datamonitor)
According to newspaper Les Echos, the French nuclear reactor maker Areva and utility GDF SUEZ are shortly set to announce a partnership in offshore wind energy, following a similar agreement between Alstom and EDF Energies Nouvelles. Datamonitor believes market consolidation in the area of offshore wind is set to intensify, as the larger players seek to grow their market shares.
The proposed collaboration between Areva and GDF SUEZ, which is rumored to also include Vinci, a major construction and concessions group, and possibly DONG Energy, the world's most experienced offshore wind developer, would bring together technical expertise and a balance sheet that few can match.
If confirmed, the Areva/GDF consortium is then expected to bid for a slice of France's upcoming tender offer of 3,000MW of wind power, which is worth slightly under E10bn according to Datamonitor estimates, and has every chance of being awarded a healthy proportion of this very lucrative deal.
Of all the forms of renewable power generation, offshore wind represents the strongest long-term market growth potential in Europe. According to information contained in EU member states' national renewable energy action plans, the offshore European wind energy market will grow rapidly and will quickly become a mainstream energy source, with nearly 37GW of offshore wind power generating capacity by 2020.
This capacity will lead to annual production levels of 132TWh across Belgium, the Netherlands, Luxembourg, Germany, France, Denmark, Sweden, the UK, and Ireland. In the next nine years, Datamonitor expects most of the growth in the renewable power industry to come from offshore wind, concentrated in Germany, Spain, France, and the UK.
For the world's nuclear giants, such as Areva, infrastructure investments in more established technologies involve comparatively low technical risks and low nominal capital costs compared to third-generation nuclear power plants. Areva, Alstom, GDF, and EDF are well placed to capitalize on the development of large-scale, low-carbon infrastructure technologies that require large amounts of long-term reasonably priced debt and equity finance, even if funding has become more expensive as a result of financiers being more risk-averse than they were a few years ago.
There is a large amount of evidence that the wind industry's global scaling is instigating record levels of mergers and acquisitions activity, with International Power and Trinergy Wind; SSE and Airtricity; EDP and Horizon Wind Energy; and Iberdrola and CPV Wind being examples from only the last three years. In addition to these, Areva and GDF now look set to take a big slice of the French market.
Common sense dictates that their efforts will not be limited to France, a theory which fits in well with Areva's strategy "to become a major player in this rapidly growing sector." The industry can therefore expect more consolidation across the wind energy supply chain and big players growing their market share even further, as the industry looks for scale and progressively moves away from reliance on subsidies.
A service of YellowBrix, Inc.