German insurer Allianz will decide before the end of the year whether it will add offshore wind parks to its renewable energy portfolio.
"Offshore wind offers significant opportunities to deploy more capital and we're certainly looking at it," David Jones, chief executive of Allianz Specialised Investments, a unit of Europe's biggest insurer, told Reuters in an interview.
"We're currently studying the risk profile of offshore farms and hope to reach a decision before the end of the year on whether to invest or not," Jones said, adding that Allianz would only invest in offshore wind as a minority partner with a utility.
Since it was founded in 2005, Allianz Specialised Investments has poured 1 billion euros ($1.4 billion) into 31 onshore wind and solar parks, while offshore parks have so far not been part of the strategy. The unit does not invest in companies.
"We prefer larger projects. Our sweet spot would be 50-100 million euros per project," Jones said, adding that its current average investment per project was much lower, at around 35 million euros.
The offshore sector is expected to grow strongly in the future, backed by support of governments and larger utilities that have the financial firepower to finance such capital-intensive projects.
By the end of 2010, offshore wind power only accounted for 3.5 percent, or 2.94 gigawatts (GW) of total installed wind capacity in the EU, the world's largest wind market, according to the European Wind Energy Association (EWEA).
This share is expected to soar to 17.4 percent by 2020 and to 37.5 percent by 2030, EWEA added.
Sometimes built miles out to sea, offshore wind farms are seen as more efficient than onshore farms. They also face fewer objections from residents that they mar the landscape.
Offshore farms, like their onshore counterparts, are operated by big utilities such as Germany's RWE and E.ON, Denmark's DONG Energy, Swedish power group Vattenfall and British Centrica.
Investors have been cautious about the offshore sector due to a large numbers of risks, including installing and maintaining turbines in rough seas and high winds.
Even if Allianz decided against investing in offshore power for the moment, it could reverse that decision quickly, Jones said.
"It may be that we decide not to do it right now but wait to get a better understanding of the risk-return as several are constructed and put into operation," Jones said.
He added that while Allianz Specialised Investments was targeting primarily projects in countries within the euro zone, regulatory instability and the sovereign debt crisis had affected those investment decisions.
"We're currently avoiding investments in the euro zone periphery until conditions improve sufficiently. While we're considering the euro zone as a whole for potential investments, is has shrunk for us a bit."
