The Arkona wind farm in the Baltic between Germany's Isle of Rügen and the Danish island of Bornholm has been generating electricity for some months, but was officially inaugurated on Tuesday in the presence of German Chancellor Angela Merkel.

She said renewables had made it onto the center stage of energy supply policies. By 2030, 65 percent of all electricity generated in Germany is to come from renewable sources.

The new offshore farm has a capacity of 385 megawatts — enough to provide some 400,000 households with electricity. Building the Arkona wind farm involved a workforce of roughly 5,000 and total investments to the tune of €1.2 billion ($1.36 billion), shared between German utility E.ON and Norwegian energy company Equinor.

Reshaping the energy market

Wind energy in general has become a pillar of Germany's energiewende, the nation's large-scale and closely watched energy transition policy. It involves the gradual increase of renewables in the overall energy mix, while phasing out nuclear energy by 2022 and coal by 2038.

In 2018, renewable sources accounted for 35.2% of the country's energy mix. Within renewables, onshore wind claimed 14.5%, while offshore wind accounted for only 3%. But this is likely to change in the years ahead.

The utilization of offshore wind in Europe's biggest economy dates back to August 2009 when the Alpha Ventus farm in the North Sea recorded it first feed-in to become fully operational in 2010. E.ON, EWE and Vattenfall pumped some €250 million into the farm, with Berlin adding another €30 million in state aid.

Investment risks

Similar projects had experienced their share of problems as initial investments were huge and challenges such as hooking up offshore turbines to the land-based electricity grid resulted in temporary setbacks.

According to the Clean Energy Wire (CLEW) network, The UK and Germany have been at the forefront of bringing down costs for offshore wind operations by steadily adding capacities. The two nations together account for well over 60% of all offshore capacity installed globally, a CLEW dossier points out.

It also notes that the recent offshore wind push was largely helped by Germany's first offshore wind power auction in 2017 where bidders offered to build new facilities without receiving any financial support. Three years earlier, potential investors were still wary about costs and grid connection delays that left them wondering about the future of offshore power generation in general.

Although conditions for generating power at sea remain difficult, offshore wind farms have now become a viable business, which — as CLEW puts it — "can fully compete with other forms of power generation."

Onshore wind power facing resistance

What's also contributed to the latest push is that offshore wind projects have not nearly faced the same level of public protests that has often delayed or even thwarted onshore expansion.

The German Wind Energy Association (BWE) and the VDMA Power Systems association told reporters in January of this year that businesses in the onshore sector were expecting severe headwinds in 2019 and beyond, saying that they would only be able to add about 2,000 megawatts in onshore wind capacity throughout the current year.

They said this was because of the problems arising from an increasing number of complaints by individuals and communities concerned about nature conservation and animal protection.

This is not to say that offshore projects are completely unproblematic. While environmental pressure groups welcome the use of the clean energy source involved, such offshore farms are more often than not built in fragile marine habitats "and are largely hidden from public scrutiny," says CLEW.

Nonetheless, the advantages should not be underestimated. An average offshore turbine already produces up to twice as much power as its onshore counterpart, and new and even more powerful models are in the pipeline.

The future speed of offshore wind expansion will hinge on how fast Germany can connect is northern parts (where wind power generation is strongest) with the industrial hubs in the south (where huge amounts of energy are needed).

"Only then can offshore wind unleash its full potential as a grid-stabilizing energy source that provides baseload power."