Offshore Wind Sector Faces A ‘Make Or Break’ Window To Cut Costs

Posted by NAW Staff on June 15, 2012 No Comments
Categories : New & Noteworthy

The offshore wind industry faces major challenges in delivering large-scale projects while cutting costs, finds a new report from IHS Emerging Energy Research.

According to the report, the sector faces a ‘make or break’ window until around 2016, by which point it will need to cut costs or it could face a rapid decline as a non-competitive technology.

Currently, most projects are built within a relative ‘comfort zone’ of depths up to 30 meters and around 30 km from the shore, but these developments will soon have to move out to deeper waters as easier sites get tapped, the report notes.

"The industry's challenge in the longer term will be to increase capacity additions at lowered costs, but in even more difficult conditions," explains Eduard Sala de Vedruna, a research director at IHS and one of the authors of the report. "Costs remain high at the moment, and financial backing for capital-intensive projects is needed as the next generation of offshore projects heads for uncharted territory."

Costs have risen in recent years, driven by competition to secure turbines and the development of more technically complex projects, as sites near the coast or in shallow water get developed.

IHS forecasts that global offshore wind investment, including transmission, is set to climb nine-fold between 2011 and 2025, rising from $6 billion to $52 billion.

Furthermore, the global offshore market is expected to reach nearly 95 GW of installed wind energy capacity by 2025, compared with the 4.2 GW installed currently, which accounts for just 2% of wind energy worldwide.

Europe will continue to lead the offshore wind market, with the U.K. and Germany both installing more capacity than China over the forecast period, IHS predicts. China leads the offshore charge in Asia, with more than 300 MW of installed capacity as well as aggressive targets and large projects in the pipeline.

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