Brancheanalyse Ørsted

Kenneth Jensen Dall

Student thesis: Diploma thesis


The global electricity growth is primarily driven by developing countries. Due to a lack of long-term political stability and a lack of infrastructure, offshore wind is not present in these regions (excl. China and Vietnam). In regions with an established coal or gas industry the transition towards renewables is economically challenging due to already invested capital and path dependency. High-income countries have had a stable investing level in renewables and seem to follow this trend. Amongst the population in high-income countries there is a fairly high endorsement towards renewable energy. This, in terms, has resulted in political stated objectives on renewable energy and government incentives in terms of subsidies and purchase power agreements. Especially in regions with a certain combination of factor endowments and an absence in alternatives to electricity production , the political environment is motivated for the development of offshore wind power.
Institutional friction is a general challenge and causes uncertainty for wind farm developers and subcontractors. This could cause disappointing growth. This is primarily due to influential factions and a complex authorisation procedure. The construction of wind farms ties up a large quantity of capital. Several offshore oil and gas companies with a relative large cash position, has or are potentially on their way to invest in offshore wind. However, the supply chain industry is predominant in the EU and it is uncertain whether subcontractors can be sufficiently cost competitive due to an unrealiable market growth. This applies especially to new markets such as the United States. but also more mature markets such as Germany.Large up-front and long-term capital investments for suppliers as well as wind farm developers are a prerequisite for building cost competitive wind farms.
The threat of new entrants could negatively change the key success factors in the industry. One way to hedge this risk could be the strategic clustering of the offshore wind farms so that significant economies of scale can be gained. Investing in the downstream supply chain structure that can support the clustering of wind farms could be necessary. Also, strategic alliances for sharing capital-intensive assets could be essential. Investment in the operations, maintenance and service structure could be a key success factor and contribute to the cost competitiveness of multiple large-scale wind farms.
Due to the immature nature of the industry, technology disruptions in terms of hydrogen and battery storage should be monitored extensively. Furthermore, the impact, challenges and high potentials for offshore wind in regards to the Corona virus should be studied further.

EducationsGraduate Diploma in International Business, (Diploma Programme) Final Thesis
Publication date2020
Number of pages97
SupervisorsHenrik Johannsen Duus