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Offshore Wind Outside Europe, Future-Proof or Not?

5 december 2019

With the world moving away from fossil fuels such as oil and gas, interest in wind energy in general and in offshore wind energy, in Europe and the rest of the world, in particular has considerably increased. Interest in offshore wind is part of a broader movement to increase the share of renewable energy in the energy mix and to reduce gas emissions. What are these new offshore wind developments outside Europe? What are the main issues to be solved?

The offshore wind industry was until now dominated by European countries. The UK and Germany have installed a fair amount of offshore wind capacity, with respectively more than 8GW and more than 6GW. Installed capacity outside Europe has been limited to China (more than 5GW installed), with only small developments in other countries such as Vietnam, Japan, South Korea, Taiwan, and the US.

 

Offshore Wind Outside Europe, Future-Proof or Not?
As of 2019, there is one offshore windfarm commercially operational in the United States, namely the 30MW Block Island Windfarm off the coast of Rhode Island. Photo: Ørsted.

United States

As of 2019, there is one offshore windfarm commercially operational in the US, namely the 30MW Block Island Windfarm off the coast of Rhode Island. State policies of, for instance, Massachusetts, Rhode Island, and New York are important drivers for future offshore wind development in the US. Despite President Trump, these so-called blue states have a green agenda and are able to execute them. Furthermore, the development of a supply chain in the US will be very important.

The Department of Energy has calculated that with the right policy and supply chain, the US could install a total of 22GW of offshore wind projects by 2030. Important stakeholders are governmental institutions, research institutions, trade associations, and developers.

China

China is rapidly moving towards renewable energy and is expected to continue this growth in the upcoming years. In this respect, China is one of the world’s fastest growing offshore wind markets. Several targets for renewable energy deployment until 2020 were established in China’s 13th renewable energy development five year plan (2016 – 2020). Key objectives of this plan include:

  • Increase share of non-fossil energy in total primary energy consumption to 15% by 2020 and to 20% by 2030;
  • Increase installed wind capacity to 210GW;
  • Promote offshore wind and ocean power development.

 

According to the National Energy Administration, China plans to install 30GW of offshore wind power capacity by 2020. An example of a development area is the Jiangsu province, where offshore wind projects totalling more than 6GW will be realised in the coming years. China has its own companies focused on offshore wind, such as turbine manufactures, but international organisations have also shown interest in offshore wind development in China.

Examples include:

  • GE Renewable Energy in June 2019 announced that it will open a new offshore wind factory and operation and development centre in Guangdong province;
  • The uk and China have opened a joint offshore wind research centre in Yantai City. The centre will support the growth of offshore wind in both countries;
  • There is an agreement between Denmark and China for the development of offshore windfarms in China.

 

 

Offshore Wind Outside Europe, Future-Proof or Not? 1
CTG’s offshore wind power project in Fujian province, China. Photo: CTG.

Bringing Down Costs

Important prerequisites for new offshore wind developments are cost reductions in both construction, operations, and maintenance phases of an offshore windfarm. This can be realised by:

  • Learning from developments elsewhere in the world, such as Europe;
  • Optimising the offshore wind supply chain;
  • Increased size of windfarms;
  • Increased size of turbines.

 

Offshore wind outside Europe will likely continue and become more mature in the upcoming years. Lessons will be learned from European offshore wind development, and developments will probably take place faster.

 

Offshore Wind Outside Europe, Future-Proof or Not? 2
Mirthe Lantman is Senior Strategy Consultant at JBR Strategy, Corporate Finance & Restructuring.

 

Download the pdf of this article in Offshore Industry, issue 6, 2019