Europe can lay claim to having brought the international offshore wind power sector into being, with almost 25GW switched on in the last three decades, and China looks set to double the global market singlehandedly with its time-warping build-out, but it could be ‘emerging’ regions that end up being key to the industry taking “truly global” role in the world’s energy system, a fast-evolving programme being led by the World Bank is finding.

The institution, working with the International Finance Corporation (IFC) and the Global Wind Energy Council (GWEC), is seeing its Going Global initiative, launched last year to “accelerate adoption” of offshore wind in secondary international markets, expanding dramatically, with countries ranging from Turkey to Brazil, India to Vietnam now in discussions to road-map development of national and regional offshore wind plays.

“More and more countries are in offshore wind – expansion in the northern European countries, new southern European countries joining, China racing ahead, and other Asian markets set to establish themselves in the coming years,” Alastair Dutton, the head of GWEC’s offshore wind taskforce, who is working with the IFC’s Sean Whittaker and World Bank’s Mark Leybourne to lead the the ESMAP Offshore Wind Development Programme, told Recharge.

“But then you have a host of countries that approached [the World Bank] which won’t be active markets until the 2030s, when all the policy and legislation can be put in place … developing countries sure, but they are going to make a big difference to the global build-out.

“Offshore wind is increasingly international now, but the next decade is going to make it truly global.”

Technical resource maps published recently by the IFC-World Bank for 62 countries’ offshore zones underline the size of prize: over 15TW, two-thirds of which is in water depths demanding floating arrays.

But Whittaker notes that along with the “usual suspects” in the Black and Caspian seas, off Asia and Latin America, the biggest advance since the programme got underway has been the number of “unusual suspects” that are now at the table exploring the potential to hatch domestic sectors.

“When we started the project you rather knew who the countries would be that would be first to engage with us, the usual suspects that had been looked for some time for their offshore wind potential,” he told Recharge.

“But there are also been ‘unusual suspects’ who have come forward – some countries that weren’t talked about and now are jumping up and saying ‘We are paying attention, offshore wind is of real interest to us’.

“The diversity of reasons that these countries what to engage in offshore wind is also revealing: energy security, available land, promixity to demand centres, even complementarity with solar or hydrogen,” Whittaker adds. “They all come to the same conclusion in terms of interest in offshore wind but for different reasons.”

The IFC-World Bank resource maps spotlight the Caspian, with a technical potential upwards of 700GW, and Poland, with a standalone 116GW, as central to Europe’s total 1.2TW total, while Latin America and the Caribbean came in with the highest regional potential at 6.3TW, Asia Pacific with 4.4TW, and Sub-Saharan Africa 2.3TW.

Dutton states that while “these countries are interested in low-cost, renewable energy [offshore wind can supply] it is the economic benefits that have been underplayed” to this point. “As sooner a country can start deploying wind turbines the sooner they can start attracting supply chain companies to set up in their country, and so create greater export potential.

“We are not just dealing with the energy departments in these countries, we are dealing with the finance ministries. And we are showing them how the UK, Germany and other nations have benefitted from the inward investment in their offshore wind supply chains.”

Leybourne adds: “There a larger number of countries that had never considered offshore wind. From a regional perspective, when we are in discussion with a country’s representatives, we are always trying to keep minds open to the bigger picture.”

He cites a roadmap recently completed for Vietnam where “a big part of that was done in consideration of how it fit in with the wider Asia market we see developing, the exports and imports of componentry, service and maintenance, with markets, both nearer-term and longer-term, in their vicinity”.

The highly prospective economic development potential available to many of these smaller international plays – set against a backdrop of a global market foreseen by many industry analysts and the International Energy Agency alike ballooning to be worth in the region of $1.4trn by 2050 – has come into sharp focus during the Covid-19 outbreak, says Dutton, and awakened interest in a range of investors than had previously marked offshore and floating wind as over-expensive technologies.

“Many of the investors I speak with have investments in aviation, transport, infrastructure [as well as offshore wind] and so and they are loving offshore wind because it is delivering return to their expectations [during the pandemic],” he says. “It is moving beyond the influence of government this way [and the need for subsidy].”

Whittaker adds: “‘Don’t let a good crisis go to waste’, right? We’ve not seen a slowdown when it comes to projections for offshore wind due the Covid-19 outbreak. In fact, we are seeing the oil majors waking up one by one – Shell, Equinor, Total, now BP – to the reality that offshore wind is something they have to pursue.

“And they bring with them tremendous clout through their relationships with governments around the world, to which they are saying: ‘This is a place we have to go and will do best if we do it together’.

“The opportunity to use this moment to transition to a renewable energy are not lost on the oil companies themselves, or the governments that are considering the boost their ports, harbours and coastal industries will get.”

Leybourne notes: “The World Bank has tried to be very responsive in supporting emerging markets during Covid and have had long discussions with many governments on helping fund green recovery stimulus, which in a number of cases would include offshore wind.”

The commercial ascent of floating wind, which is working up the gears in its industrialisation buoyed by recent forecasts of some 260GW of turbines turning by 2050, will be central to much of the emerging offshore wind market expansion due to the greater water depths off many of the countries in now dialogue with the IFC-World Bank.

“Just from the data that the World Bank has pulled together, floating wind trebles the global resource from around the emerging markets we have looked at – so it is complementary by definition,” says Dutton.

“The oil & gas companies we have seen move into the floating space in the last year see it as a technology advantage in their wider offshore wind ambitions – and pull that line forward and you can include hydrogen as well. And they have different risk models for the stage that floating wind is at. The finance costs are very material because of the capital intensity of these offshore projects.”

Whittaker thinks the oil industry’s deep pockets and ability to “drop the cost of financing and so the LCOE [levellised cost of energy]” using time-tested project de-risking methodologies will have a redoubled impact on emerging offshore wind markets where “you are not going to get $50/MWh on the first projects, definitely not floating” and could match-up well for a “blended finance [where ‘ catalytic capital’ from public sources such as the World Bank boosts private sector investment in sustainable development] approach”.

“If you want to accelerate countries down the cost curve especially for floating wind – which outclasses fixed-bottom wind potentially globally you have got to bring climate finance,” he says. “That’s the trick, blending the two [public and private investment] to get these first few projects out of harbour. If we don’t, we will have to wait 15, 20 years or more – and we don’t need to – for adoption of these technologies.”

Dutton says the push to develop offshore wind in many hitherto marginal plays is a case of being “at the right place at the right time – with sleeves rolled up”.

“It took us 30 years in Europe to get to where we are [in terms of installed offshore wind capacity],” states Dutton. “Some of these so-called emerging countries could do it in five [years].”

· The IFC-World Bank’s three-day Offshore Wind Virtual Study Tour, which will be attended by over 120 policymakers from 30 different emerging markets, starts today

Wind

'Europe took 30 years to build an offshore wind industry, some new markets will do it in five'