Global investment in offshore wind power will surge in the next several years, resulting in a steep rise in power-production revenues and translating into profits for project developers, concludes a new report from Pike Research.
According to the report, revenue from offshore wind power production will reach $104 billion by 2017, representing a 53% compound annual growth rate over the next six years. Under a more aggressive scenario, offshore wind power revenues could reach $130.5 billion.
Pike Research cites several reasons for the growing interest in offshore wind. For instance, some of the world's best wind resources are located offshore, and many of the best land-based wind resource sites located close to urban centers of demand have already been developed. Moreover, high-potential coastal areas are often found in shallow ocean waters relatively close to urban population centers.
Despite these advantages, there are many challenges associated with developing offshore wind power that are very different from those affecting land-based projects.
‘The world's best wind resources are largely untapped because they are located at marine sites that cannot be owned or controlled in the traditional way,’ says senior analyst Peter Asmus. ‘At the same time, interest in freshwater offshore wind is also picking up, especially in the Great Lakes in the United States and Canadian Midwest.’
According to the firm, roughly 70% of an offshore wind project's cost is not the wind turbine, but other infrastructure, installation and maintenance costs – the exact opposite of onshore wind projects. In addition, the cost of offshore wind generation is significantly higher than that for onshore wind – in some cases, two to three times higher – driving the industry to deploy larger turbines in larger arrays.
As a result, the long-term fate of the offshore wind industry likely hinges on driving down the cost of energy closer to $0.10/kWh over the next two decades, the report states.
The largest markets for offshore wind through the remainder of this decade will be in Western Europe, which as a region will account for 75% of global installed capacity in 2017.
The full report is available here.