Growth for the global offshore wind industry is expected to remain solid and lead to 25 GW of new capacity from 2013 to 2020, according to a new report from MAKE Consulting.
Short-term demand in Europe – the main market region for offshore wind – is set to stabilize pending policy clarification and implementation. However, MAKE notes the outlook beyond 2020 remains highly dependent on timely clarification of long-term policy commitments to offshore wind and progress in reducing the levelized cost of energy.
According to the report, policy changes and grid-connection delays in Europe continue to challenge offshore wind development in the region, and all eyes are on Germany and U.K. as targets have been reduced or delayed. Recent developments such as the new feed-in-tariff-based CfD support scheme in the U.K. and the extension of the Stauchungsmodell in Germany, however, have allayed fears and renewed investor confidence in the midterm, the report adds.
MAKE says that while European leaders remain ambivalent about their 2030 targets, China is expected to race ahead and spearhead development toward the end of this decade and beyond. The Chinese National Energy Administration has already mapped out a long-term plan for wind power by 2050, and MAKE expects offshore wind to play a prominent role in the region post-2020. The report notes development in the Americas will be limited to a few demonstration projects this decade, with significant growth expected only beyond 2020.
The report says offshore asset ownership will remain dominated by European utilities and developers, with DONG Energy, Vattenfall and E.ON at the forefront. European utilities' weakened balance sheets will usher in an emergence of new and innovative project financing models over the next few years, the report continues. As the traditional norms of financing evolve, MAKE expects capital injections from unconventional sources such as banks and pension funds to increase and the trend of utility/independent power producer co-ownership to intensify.
Globally, a number of next-generation 5 MW+ turbines were tested this year, and MAKE estimates the global average offshore turbine rating to increase from 3.8 MW in 2012 to almost double that in 2017. The report says Siemens maintained its strong offshore market leadership in 2012, but competition will intensify as other players such as Areva, Alstom or the Vestas/Mitsubishi Heavy Industries joint venture rush to commercialize their 5 MW+ offshore models. Furthermore, relatively flat near-term growth is expected to prompt competition as turbine original equipment manufacturers race to secure orders.
The report also says the trend toward larger projects in deeper waters further from shore continues to drive technology changes. MAKE expects jackets to overtake monopiles as the dominant offshore foundation structure from 2016 and high-voltage direct-current (HVDC) export cable technology to dominate offshore transmission by 2017. However, the report notes bottlenecks in HVDC technology continue to impede offshore development in Europe, as multiple offshore projects with finished installation during 2013 stand idle due to extensive delays in offshore grid expansion.