Uncharted waters lie ahead on offshore’s long journey

Dong has announced that it will decommission the world’s first offshore wind farm after 25 years of operation.

The Vindeby project was installed in 1991, with 11 450kW machines sitting in just a few metres of water less than 2km from the Danish coast, but I remember the excitement when it was commissioned, opening a new frontier for the blossoming wind industry.

In the intervening quarter of a century, the industry, both onshore and offshore, has changed beyond all recognition. Turbines now range up to 8MW, with dramatic increases in reliability, performance and sophistication. Last year’s global market was more than 63GW, with total installed capacity exceeding 430GW; numbers that we could only dream about 25 years ago.

Offshore still represents a small percentage of global wind capacity, growing from 1.9% in 2012 to 2.8% at the end of 2015. It was 5.4% of the market last year, up from 2.95% in 2012. It’s a different story in Europe, where offshore was nearly a quarter of the market last year and 7.8% of the EU’s total wind capacity — and it is larger than that in terms of the investment it represents and the electricity it generates.

But even in Europe, medium-term expectations have been scaled down by half. The National Renewable Energy Action Plans associated with the “20% by 2020” European legislation envisaged 43GW of offshore wind. The European Wind Energy Association’s (EWEA’s) latest projection is a much more realistic 23GW — which will probably be met, although not easily.

So is the industry on the verge of take-off? Or do continuing high costs, combined with the high risks, mean that it’s bound to remain a European niche phenomenon? What is needed to build offshore into a truly global industry? Of course, we could do it the easy way with a significant carbon price, but I’m not holding my breath...

There are three schools of thought.

  • Steady as she goes. The European offshore industry continues to work hard to drive down costs, while building projects in deeper water further out to sea. There is good progress, but what is really needed is strong demand and a growing market. The industry will need to install just over 2GW a year to meet the EWEA 2020 target, and has precious little visibility beyond that at the moment. Is that enough? Recent European investment (and political) trends are not encouraging, although it is worth noting that offshore wind accounted for €13.3bn ($14.8bn) in new renewables asset finance last year — 34% of the European total.
  • Chinese scale. Once China gets to scale, it will drive costs down across the industry, as it did for onshore wind and solar. Yes, that could work, although China’s offshore development has been far slower than expected. Its onshore sector has exceeded all its targets, usually by huge margins. Not so offshore, where targets of 5GW by 2015 and 30GW by 2020 have been revised to 2GW and 10GW. At the end of 2015, China had just over 1GW installed, mostly in intertidal projects. I’ve learned not to underestimate the Chinese industry, but we have been waiting for a while, and the focus remains on onshore.
  • A technological game-changer. Floating platforms? They are attractive in many ways: standard units, not dependent on the seabed topography/geology, and most construction and installation can be done at the dock. Best of all, projects could be placed where the best resources are, not just where the seabed suits. But there’s an awful lot of steel in those floating platforms, and although steel prices are low now, they are unlikely to stay that way.

Elsewhere, the Japanese government is spending a lot developing offshore projects, both bottom-mounted and floating. The New Energy and Industrial Technology Development Organization plans to support the development of two projects totalling 270MW in the north of the country.

The Global Wind Energy Council-led FOWIND project is gathering data on resource, ports, infrastructure and grids as part of a road map for the sector in India.

Korean industrial giants still have their fingers in the offshore business, although their enthusiasm has waned of late.

Finally, the US has five foundations in the water off Rhode Island, which will be fitted with 6MW turbines this summer.

But none of these new markets are going to develop much without some combination of the options listed above bringing costs down to a more competitive level. Which one will it be? The answer is probably “all of the above”; but in which measure and in what time frame?

The offshore wind industry has come a long way in the past 25 years, although not as far as we’d hoped when Vindeby was commissioned. Any bets on what it will look like 25 years from now?

Steve Sawyer is secretary-general of the Global Wind Energy Council

This piece was published as part of the Thought Leaders series. Recharge’s Thought Leaders Club brings together leading thinkers and participants from the renewable-energy sector to examine the key challenges facing our industry