The expansion of the global offshore wind market is foreseen ramping up to an annual growth rate of 24% over the next five years, with expectations the worldwide fleet will swell to 85GW by 2024 from the current 22GW installed, according to the latest forecast from Oslo-based business development body Norwegian Energy Partners (Norwep).
Figures from the 2019 report from Norwep, commissioned from UK consultancy BVG Associates, reflect the acceleration of the sector’s development, which last year’s edition expected to grow by 20% year-on-year to 61GW, and in 2017 was predicted to increase by 16% annually to hit 46.4GW in 2022.
The report highlights that yearly capital expenditure in offshore wind could reach €50bn ($55bn) in 2024 compared to a forecast €26bn by the end of 2019. This would translate into a total global spend of €190bn over the coming five-year period, up from the €160bn forecast in last year’s Norwep report to be invested between 2018-2023.
Offshore wind’s cratering levellised cost of energy (LCOE), which has halved to under €60/MWh in the last three years, is credited with transforming the sector into “an important part of the electricity mix in many countries across three continents”.
“Recent competitive auction awards in Europe have been far below the previously accepted headline cost of energy target of €100/MWh. Now, the industry is targeting parity with European wholesale [electricity] prices for projects built in the mid-2020s,” said the report authors, pointing to larger nameplated turbines, higher voltage transmission, reduced cycle times in installation and further technological innovation as factoring in to further drive down LCOE.
The “major drivers” behind offshore wind’s global growth in the near-term will be the ratcheting build-out in Asia and highly prospective US East Coast market. Capacity in Asia Pacific – of which China could account for more than 70% – is expected to mushroom from 7GW at the end of 2019 to over 36GW in 2024, while the US market is foreseen growing to 5GW by 2024 from the 30MW now turning, according the Norwep report.
Offshore wind’s LCOE in the rapidly evolving Asian and North American plays is expected to drop further as regional supply chains “are developed and matured”.
“While experienced European developers, engineers and supply chain firms are the driving force behind the industry as it expands into new countries, Chinese developers and turbine manufacturers are strengthening their presence also in other markets than China, and the US supply industry is gathering momentum,” noted the report authors.
Norwep’s wind and solar unit director, Jon Dugstad, pointed to the potential for Norwegian companies to “diversify from other industries, such as oil and gas, [to] enter the [offshore wind] market” as it takes shape.
“In this fast-growing market, we see a huge need for expertise from other offshore energy suppliers as we know them from Norway. The market offers huge possibilities for the development of a strong Norwegian supply industry also in offshore wind,” he said, spotlighting calculations of domestic and export markets together worth €5bn in turnover annually by 2030.