The recent launching of the world’s first hybrid offshore wind system by Dong Energy surely marks a new era in Offshore wind market. The Denmark-based energy giant is planning to integrate a battery system with the company’s 90 MW offshore wind plant, located in Burbo Bank. Reportedly, this is an initiative undertaken as a repercussion to the criticism that renewable power leads to flickering due to disruption in the grid frequency. It is profoundly one of the biggest breakthroughs in the renewable energy industry so far. Alongside, with a number of governmental initiatives favoring deployment of renewable energy sources, offshore wind industry is slated to exceed a capacity of 60 GW by 2024. The yesteryear valuation of the market was reported to be USD 60 billion by Global Market Insights, Inc.
Turbines, the mother component of the offshore wind industry, accounted for 30% of the global share in 2016. Notable investments in the development of large capacity advanced turbines across various geographies is in a way influencing the growth of offshore wind market. In this regard, it is important to note that floating turbines have been witnessing a popularity across emerging belts particularly in Asia Pacific and Europe. This is quite evident from the rising number of investments these belts are making in integrating high-grade wind based technologies in the turbine model to reduce the overall generation cost and also the pollution level.
Global Offshore Wind Market, By Region, 2016 (Cumulative Capex, USD Billion)
The first floating plant was developed in 2016 by a Norwegian offshore oil and gas group. The turbine was of capacity 30 MW, and a sum of USD 199 million was invested in the plant, located in Scotland Aberdeenshire coast. Norway has continued to be a lucrative region for offshore wind market investors. For instance, under ‘Hywind Scotland’ project, Statoil and Siemens in collaboration have established a 30 MW floating wind farm across Norway. Such exemplary investments by the European countries are allowing the belt to stand at the forefront of the overall industry.
Offshore wind market over the past decade has witnessed a bifold growth. With the increasing regulatory norms regarding carbon emission abatement and rigorous effort toward implementing clean energy scheme, offshore wind market is deemed to record remarkable heights by 2024.
Below are the prime two topographies influencing the overall offshore wind market
Europe undoubtedly is one of the most outpacing regions partaking in the overall offshore wind industry. The European Union already positions itself as a forerunner in addressing the climatic changes, a profound factor driving the regional market demand. As Europe proceed toward a low carbon economy, with a target of 26% reduction in GHG emissions from 1990 level and concurrently achieving renewable energy targets of 21% by 2020, regional offshore wind market will prove to be a significant sector contributing to Europe’s energy objectives. Estimates depict that Europe offshore wind market currently holds a total installed capacity of over 12,000 MW. Reportedly, the yesteryear witnessed an additional installation of 1,558 MW grid-connected capacity.
The forerunners of the Europe offshore wind market development have been UK, Germany, And Denmark. The UK government’s encouraging investments in clean energy programs is impelling the increasing deployment of offshore wind plants. Offshore Wind Investment Organization is one such regulatory body in the country that promotes sustainable energy investment. Other than this, for ensuring long term revenues from power projects in the country, the regulatory framework in the UK have also introduced Contracts for Difference. Recently, a y-o-y decline of 32% reported in the offshore price cost is anticipated to act in favor of the regional offshore wind industry in the coming years.
Germany, another prominent shareholder of Europe market revenue, is also likely to carve an upward trend over 2017-2024. This is quite evident from the country’s initiatives in increasing the renewable energy power generation. As per records, Germany in the first quarter of the year generated a power of 4.8 billion kWh from offshore wind plants, an upswing of over 36% from 2016’s first quarter. On this note, recently, the German government has entered into an agreement with governments of Denmark and Belgium for adding an offshore capacity of 60 GW by the end of 2027.
Asia Pacific offshore wind market
Asia Pacific offshore wind market is mainly driven by China, with an expectation that the country's wind capacity will expand over 12 GW by the end of 2024. The demand for uninterrupted power supply subject to the growing population of the country has only increased over the years, a prime factor that has led to regional offshore wind industry expansion. The emerging economy is crossing milestones in terms of industrialization, economic growth, and urbanization. Increasing Chinese government’s involvement in financial leveraging facilities for the development of sustainable energy projects is playing a pivotal role in reshaping the offshore wind market dynamics. Recently, Chinese energy giant, State Power Investment Corporation has talked about their upcoming project of developing 800 MW wind power farm off the coast of Yancheng and Jiangsu. Reportedly, this would be the world’s largest offshore wind farm.
A preview of the financial investment in offshore wind industry
The World Bank, International Finance Corporation, and The Asian Development Bank are some of the key financial organizations actively partaking in the overall industry. Offshore wind has profoundly registered its name in the overall clean energy investment landscape as statistics depict. Sources cite that the capital spending commitments in advanced wind technologies had a record of USD 30 billion in 2016. Components price drop has significantly influenced the investments across the overall offshore wind industry. Researchers and developers are taking advantage of the upgraded technology to incorporate advanced turbine models with an aim to minimize the overall generation tariff. Some of them are readily integrating organic strategies in their business models to experience an upper hand in the competitive landscape. Prominent offshore wind industry participants include MHI Vestas, Senvion, Siemens, Doosan Heavy Industries & Construction, Sinovel Wind, and Adwen.
Written By : Satarupa De