Chinese efforts to stimulate a cost deflation in offshore wind will push companies to cut costs across the supply chain and adopt more modern technology, such as recently unveiled 10MW turbines by Dongfang and CSIC Haizhuang show, Fitch Solutions Macro Research said in a comment.

It will at the same time “open up more space for international involvement in the market to aid cost deflation,” the analysts said.

As an early example, Fitch Solutions mentions that Danish company Ramboll has played a key role in designing offshore wind farms for State Power Investment Corporation since 2016, culminating in the company designing the world's biggest and heaviest monopiles for SPIC's Guangdong Offshore Wind Power project in 2019.

Fitch Solutions expects China to become the global offshore wind power front runner over the coming decade, as the country looks to catch up with European counterparts in the technology, as well as continue to make efforts at decarbonising power generation closer to coastal power consumption hub.

Last year, China for the first time installed more offshore wind capacity than the UK or Germany, which had led the market in previous years.

“China is a relative new-comer in the offshore wind power segment, as relatively higher costs compared to onshore renewables segments has seen the market focus on the latter to drive capacity growth and support power generation mix decarbonisation efforts,” Fitch Solutions said.

“However, in line with rapidly falling offshore wind power costs in Western Europe and the rising competitiveness of the technology in markets such as the United States and Taiwan, we expect China to substantially boost offshore wind power capacity over the coming decade.

“This will be the result of efforts to decarbonise power supplies closer to coastal consumption hubs and boost Chinese technological expertise with the aim to eventually export technology.

The researchers expect the downwards pressure on offshore wind prices in China to continue, and highlight China Longyuan’s recent $88 per megawatt hour bid for the 200MW Fengxian Phase 1 project in Hangzhou Bay off Shanghai, which came in well below the average of $105-110/MWh of the bids by its contenders.