New tech boosts offshore wind growth potential

August 13, 2018

The momentum in the offshore wind industry is continuing with more than 18 gigawatts (GW) of capacity installed globally by the end of 2017. Although the size of the offshore wind market is far behind that of the onshore equivalent, offshore capacity has seen a much higher growth rate during the last ten years. By 2023, we forecast that there will be 64 GW of offshore wind capacity, which entails a yearly growth of nearly 23% between 2017 and 2023.

Geographic distribution

Until now, Europe has been the main hub for offshore wind with installed capacity amounting to more than 15.8 GW by the end of 2017. This made up approximately 90% of the global capacity at that time. The United Kingdom has been in the forefront of the growth, followed by Germany, Denmark, the Netherlands and Belgium. We forecast that these five countries will add another 19 GW to their offshore wind capacity by 2023. Moreover, the United Kingdom set a goal earlier this year to increase its capacity to 30 GW by 2030.

However, Europe is not the only established region in the offshore wind industry as China is currently trailing behind Germany as the third-largest market for offshore wind in terms of installed capacity. Although the country had to revise down its previous 2020-target of 30 GW, we see it in line to reach and even surpass its new target of 5 GW. And with large growth expected after 2020 in countries such as Japan, South Korea, Taiwan and Vietnam, Asia has a healthy existing market and promise for growth.

One region with unexploited potential is the Americas, especially North America. At present, the region has just one project above 1 MW located in the United States, but by 2023 we expect an additional 1.2 GW of new capacity in the United States, Canada and even Brazil.

Europe in focus

It is not surprising that Northwest Europe has emerged as a leader in offshore wind. The region has provided the necessary policies and political stability, in addition to having the financial ability and willingness to back a technology that is still considered relatively costly compared to other energy solutions (despite zero-subsidy bids delivered both in Germany and the Netherlands). Furthermore, the high demand for energy coupled with high population density provides an incentive to move the wind turbines out to the sea.

Aside from this, the region fulfills several of the technical requirements for successful offshore wind developments: good wind conditions and shallow waters. Until recently, offshore wind developments were limited to depths less than 50 meters, however, with the introduction of floating wind farms new areas will open up, especially in the deeper waters around the US and Japan. Even though several floating demonstration projects existed prior to 2017, the year marked a milestone for the industry with the startup of Equinor’s Hywind wind farm. The farm was the world’s first floating, grid-connected offshore wind farm and is located of the coast of Scotland. Going forward, we expect increased capacity of floating wind farms though the majority will still be grounded.

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Contacts

Iben Frimann-Dahl
Analyst
Mobile: +47 93 49 94 61
iben.frimann-dahl@rystadenergy.com

Julia Weiss
SVP, Head of Marketing
Mobile:  +47 48 29 87 61
julia.weiss@rystadenergy.com

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