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The tides are with offshore wind as big oil scrambles aboard

OPINION | As new markets and the global oil industry embrace offshore wind, the future has never looked better for a power source whose time has come, writes Darius Snieckus

Ten years is a long time and a short time — and nowhere more so than in the global energy industry. In 2007, when I was an oil journalist, the Beatrice offshore wind demonstrator — a pioneering jacket-based project that marked the start of the energy transition offshore by opening up market-expanding deep water to wind developers — came on line off the UK. The oil industry reception was low-key. Peak oil and decommissioning were the talking points in Aberdeen and London then.

Today, with global investment in renewables casting an ever-longer shadow over fossil fuels, it feels a foregone conclusion that, on land, storage-backed solar, wind and geothermal will eventually take over completely from oil & gas. And in the world’s waters, the same will happen via tidal, wave, ocean thermal and — most of all — offshore wind.

New lows mean new highs for offshore wind in 2017

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Offshore wind is now fast becoming a mainstream energy source. Led by the UK and Germany — and new world number three China — the global fleet grew by a further 2.2GW last year, to almost 14.5GW. 

A saga in itself. But one that will likely look a slim chapter in the wind industry annals if the current build-out continues in line with projections that see 100GW spinning offshore — at $75/MWh — by 2030 and 400GW within three decades.

The offshore wind industry is inventing itself in the seas off Europe, China, and now the US, devising the technologies — often adapted from offshore oil concepts such as jackets and floating foundations — that will ramp the sector up towards plant-scale mass production and so further drive down the cost of energy, something already happening at a rate of knots.

Off Britain, the government’s 2020 target of £100 ($122) per MWh was hit four years early, with prices having fallen by 32% since 2011-12 to £97/MWh. Projects in UK waters had a total value of £4.1bn last year, with only growth in prospect.

Growth is not a capitalist article of faith here. The tenders held last year in Denmark and the Netherlands, where winning bids came in as low as €49.90 ($52.50) per MWh, point the way forward. Now the question is how low prices can go.

There are other reasons to believe in offshore wind’s future. One is France. Long stuck in harbour, France will soon start adding significantly to the emerging industrial reality off Europe, with a further 1GW-plus in acreage being tendered in the coming months and a first 100MW of floating wind projects under way that would make a small but symbolically resonant contribution to ambitions of having 3GW turning by 2023.

Perhaps the surest sign offshore wind now has a place at the global energy table is oil

Another reason is Taiwan. Called an “emerging” offshore market, it might soon shrug off that moniker. The country’s government wants 4GW installed offshore by 2030, but with developer Dong Energy’s sights already trained on a multi-megawatt play, many are betting Taipei’s target will be overreached by some 3GW by then.

Perhaps the surest sign offshore wind now has a place at the global energy table is oil. Dong — formerly Danish Oil & Natural Gas — has dumped its hydrocarbon assets in favour of a full-throttle campaign to build 12GW of offshore wind by 2025; Norway’s Statoil — the world’s largest offshore oil operator — says 20% of its capital will be go into offshore wind by 2030; and Anglo-Dutch supermajor Shell has given in to the “unstoppable shift” offshore, starting with 700MW off the Netherlands.

The offshore wind industry is floating out onto what Shakespeare called the “full sea”, a place where “we must take the current when it serves or lose our ventures”.

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