vestas.com How Can Offshore Wind Contribute To The European Energy Portfolio? Uffe Vinther Schou, Sales Director, Vestas Offshore A/S

2 | How Can Offshore Wind Contribute To The European Energy Portfolio, September 3, 2015 Introduction to Vestas Wind Systems and Vestas Offshore A/S Future expectations to the European offshore wind market Offshore wind drivers Offshore wind barriers Future offshore trends and challenges Recommendations for the support of offshore wind Content

3 | How Can Offshore Wind Contribute To The European Energy Portfolio, September 3, 2015 Facts Vestas Wind Systems: Employed 21,000 people by the end of 2008 Delivered 6,000 MW Target: Manufacture, ship and install 10,000 MW in 2010 Vestas Offshore: Global headquarters in Denmark Independent business unit since 2006 Offshore focus only Sales, construction and O&M Offices in DK, UK and NL – more to come Has grown from 50 to 400 employees in 4 years “People before MW”: No specific allotment of turbines for offshore projects I.e. no restrictions to no. of MW! Need people before ramping up on projects

4 | How Can Offshore Wind Contribute To The European Energy Portfolio, September 3, 2015 W Under construction Service 180 MW Under construction 528 MW Under 5-year service 182 MW in operation for 5+ years In operation for 5+ yrs Vestas Offshore – Track Record 321 MW Contracted Service In operation for 5+ yrs Contracted

5 | How Can Offshore Wind Contribute To The European Energy Portfolio, September 3, 2015 Future Expectations to the European Offshore Wind Market Offshore wind will gain a higher share of the total European wind portfolio The European offshore wind market will grow at a steady pace – faster than on shore Main future markets: UK (~20GW by 2020) and Germany (~17GW by 2020) Additional focal markets: North Sea and Baltic Sea Emerging markets: Mediterranean, China/ASP, US/Canada Third-blade installation, V90-3 MW Robin Rigg, UK

6 | How Can Offshore Wind Contribute To The European Energy Portfolio, September 3, 2015 Two Main Drivers for Offshore Wind Political Support: Political support for offshore wind has never been better! The European Commission: Proposal to invest € 3.5 billion in energy in €500 million earmarked for offshore wind National initiatives (examples): UK renewable legislation package Increased German offshore tariff National credit agencies backing large infrastructural projects, e.g. offshore wind Committed Customers: Improved cooperation and learning Improved organizational skills Are earmarking capital specifically for offshore wind V MW, Q7, The Netherlands

7 | How Can Offshore Wind Contribute To The European Energy Portfolio, September 3, 2015 Barriers to Offshore Wind Financial crisis The credit crunch will leave a stronger and more stable industry Prices will stagnate or even decrease Legislation and political framework Lack of effective, tangible support mechanisms Long, complex and uncertain permitting procedures Resources Lack of people, knowledge and skill sets Supply chain elements Long lead times and supply shortage for components, cabling, etc. Lack of suitable installation harbours Lack of installation vessels V90 Turbine

8 | How Can Offshore Wind Contribute To The European Energy Portfolio, September 3, 2015 Moving further up the learning curve Benefit from previous experience – implement Lessons Learned Increased efficiency (design, construction) Development of new ideas, methods, tools etc. Investment in innovation/infra structure Installation vessels, production facilities, harbour areas Attraction of new players to enter the market Mitigate bottle necks Increase competition Industrialisation and standardisation of products and methods Increased efficiency, cost-effectiveness and speed Attracting qualified and experienced staff Staff will continue to be the bottleneck Current and Future Challenges for the Offshore Wind Industry V90-3 MW, Robin Rigg, UK

9 | How Can Offshore Wind Contribute To The European Energy Portfolio, September 3, 2015 Looking Towards Future Trends in the Offshore Industry Cost of Energy (CoE) A narrowing gap between CoE for onshore and offshore wind Total CoE more important than MW rating More reliable and robust WTG’s. The industry will mature and move up the learning curve Health and Safety Safety is key when going offshore. Industrial injuries down by 47% since 2005 in Vestas. V MW, Kentish Flats, UK

10 | How Can Offshore Wind Contribute To The European Energy Portfolio, September 3, 2015 Recommendations for the support of offshore wind Sustainable market: Clear, well defined and short permitting process Committed targets Transparent development process: Political priorities – Radar, marine traffic, defence, aviation etc. Infra structure: Onshore grid connection capacity (e.g. UK and Germany) Suitable harbours (UK) Economics Appropriate subsidy systems and suitable tariff levels (e.g. DK, Sweden) Protectionism (local requirements) => sub optimisation Attract new players and increase competition Industrialise products and methods -> improve efficiency and decrease costs Push investments in innovation

11 | How Can Offshore Wind Contribute To The European Energy Portfolio, September 3, 2015 Recommendations to wind farm developers: Focus on reducing rather than splitting risk Sub contractors must be allowed to make a profit Price pressure increases the risk of sub contractors going into administration Offshore wind is competing against offshore oil and gas for the same suppliers. Only competitive prices and terms will attract large and professional players Increased staying power enables a move up learning curve, investments, innovation etc. Impose demands on H&S, planning, contingency plans etc. Recommendations for the support of offshore wind Turbine pre-assembly, Ijmuiden, Q7, The Netherlands

12 | How Can Offshore Wind Contribute To The European Energy Portfolio, September 3, 2015 Offshore wind will gain a higher share of the total European wind portfolio ‘Cost of Energy’ is more important than turbine size Political support is needed to create market growth and business case certainty Certainty attracts more players, enables innovation, drives industrialisation and creates learning A more professional supply chain is required to fulfil the potential of offshore wind In conclusion V90-3 MW, Robin Rigg, UK

vestas.com Thank you for your attention Copyright Notice The documents are created by Vestas Wind Systems A/S and contain copyrighted material, trademarks, and other proprietary information. All rights reserved. No part of the documents may be reproduced or copied in any form or by any means—such as graphic, electronic, or mechanical, including photocopying, taping, or information storage and retrieval systems without the prior written permission of Vestas Wind Systems A/S. The use of these documents by you, or anyone else authorized by you, is prohibited unless specifically permitted by Vestas Wind Systems A/S. You may not alter or remove any trademark, copyright or other notice from the documents. The documents are provided “as is” and Vestas Wind Systems A/S shall not have any responsibility or liability whatsoever for the results of use of the documents by you.