The massive increase in demand materialising around the world for offshore wind power combined with the industry’s economic need to move into deeper waters to harness the steadier, heavier wind stream there, has created an urgency to develop floating wind technologies. For more mature sea-based markets such as off the UK, floating could open tens of gigawatts of new capacity potential; in emerging markets, such as South Korea and Japan, with few shallow water sites and ambitious decarbonisation targets, floating wind is arguably one of few long-term energy transition solutions.

Green is the new black. Subscribe to Accelerate

Get the market insight you need into the global oil & gas industry's energy transition – from the new newsletter from Upstream and Recharge. Sign up here

To seize the opportunity represented by floating wind through large-scale adoption, both cost and development risks will need to be reduced. Floating wind’s levellised cost of energy (LCOE) is currently more than three times that of bottom-fixed projects – but also on a similar trajectory in terms of cost, technology progress, financing and scale that has been seen in conventional offshore wind market (and previously onshore). It is expected that by 2030 floating’s LCOE will be in the €40-60/MWh ($48-72/MWh) range.

To get floating wind into bona fide commercialisation in the next ten years – if not sooner – there are, in my view, seven key steps:

One, project pipeline. The UK government recently announced a target of 1GW of floating wind by 2030, but few other markets have such forward visibility – though both France and South Korea have gone further in setting out their project pipelines and route to market. Governments need to work with industry to set realistic targets and provide suitable sites in order to exploit ‘floating wind-depth’ resources. Scotland’s ScotWind leasing round, which will unlock utility-scale deep water sites, is good example of how to help enable the first phase of utlity-scale floating wind project development.

Two, revenue support mechanisms. The Scottish government in their recent offshore wind policy statement has a stark warning that, without intervention, floating wind – being at an earlier stage of technology maturity with only 80MW installed compared to 30GW for bottom-fixed – is unlikely to develop at the rate or scale required. The offshore wind industry has an excellent track record of reducing costs, but support mechanisms are needed in the ramp up phase as is being done very successfully for bottom-fixed projects.

Three, ‘bankability’. The combination of a strong interest from financial players to invest in green energy and future global utility-scale investment opportunities make floating wind an attractive target finance – but only at an acceptable risk level. The availability of finance ensures sufficient capital for floating wind projects to be built, requiring a shift from balance sheet to project financing. The cost of finance is significant and driven by project risk, so critical to overall cost reduction. Project bankability will improve with a growing construction and operational project track record and focus on proven solutions.

Four, deployment. A focus on industrialisation, and move on from demonstration and pilot projects, will lead to the scale-up and proliferation of projects. This will have a huge impact on cost reduction, as proven in both onshore and bottom-fixed offshore wind. Projects are starting to increase in size - the largest commissioned floating wind farm is Equinor’s 30MW Hywind Scotland, but the 50MW Kincardine is near completion and Equinor’s 88MW Hywind Tampen floating wind-powered oil & gas project is on the way for 2022.

Best estimates are that there will be a near 1,000-fold increase in floating capacity to 70GW by 2040. This build-out would give a steady pipeline of projects to enable the industry to gear up through its industrialisation phase to small commercial-scale projects (50-200MW) and then utility-scale projects (>200MW), in order to bring costs down further.

Industrialisation of floating wind will have a huge impact on cost reduction, as seen in both onshore and bottom-fixed offshore wind

Five, a strong supply chain. Close collaboration is needed between supply chain, developers and policy-makers to get to the cost and risk reductions needed. The supply chain is critical to floating wind deployment as it will be involved in every aspect of design, manufacture, installation and operation of projects. The local economy can benefit if commercial projects are brought to a region, but only if the supply chain has the required capacity and capability. Deep water ports kitted out with heavy-duty cranes – identified by WindEurope as key recipient of investment from the €6.5bn calculated needed for infrastructure over the next 10 years alone to support Europe’s plans for a 340GW build-out by 2050 – will be crucial for floating wind.

Six, innovation. Floating structures are not novel and have a long track record in various offshore industries but there are nonetheless technology challenges to overcome for floating to enter the energy mainstream – not least as we start mating the platforms to turbines of up to 20MW. As demonstrated by the over 20 operational floating wind units, the technology is proven. The challenges remaining for construction are design optimisation for cost, manufacturability, and installation operations, while on the operational side asset integrity, particularly for mooring systems, heavy maintenance, and the impact of floater motions on the turbine need improvement. These must all be dealt with, but there are no showstoppers.

Seven, de-risked commercial strategies. Floating wind brings commercial opportunities in accessing deeper waters and emerging markets, but also brings commercial challenges. De-risking the commercial opportunity will require all parties to have an understanding of the technology and get comfortable with the associated risks. In particular investors and insurers may not have previous exposure to the market. Standards and regulation can to an extent support the de-risking but must be fit for purpose and harmonised. New geographies bring new environmental risks which will need to be covered by insurers, such as the risk of typhoons and earthquakes in waters off such countries as Japan and Taiwan.

The next 10 years are going to be exciting as floating wind shifts from today’s pilot projects to utility-scale projects towards the end of the decade. There is a need for industry to continue to collaborate on the challenges and drive project development. Governments must urgently provide clarity on their ambition for floating wind and provide support mechanisms to drive cost reduction and enable the floating wind to compete against other sources of energy generation. The potential is huge, but without the buy-in of governments and financial institutions progress will be jeopardised.

· Dan Kyle Spearman is an associate director at consultancy the Renewables Consulting Group and leads its global floating wind practice