Over the past two years, the cost of offshore wind in Europe has rapidly declined to the point where projects are now bidding subsidy-free into competitive tenders. Like onshore wind and solar PV before it, it is a matter of when and not if offshore wind will expand to emerging markets.

The wind resource is there, the electricity demand is there and the need for clean, cost-competitive power is there. So, what can be done to assist these countries in “jumping the queue”, allowing them to more rapidly play a role in offshore wind’s bright future?

In tackling this challenge, we must first recognize that offshore wind in emerging markets is not going to look exactly as it does in Europe. In offshore wind’s North Sea “birthplace”, there are strong, consistent winds with a low risk of hurricanes; shallow waters; high power demand from surrounding countries with sophisticated, interconnected grids; mechanisms for regional cooperation on supply-chain development; and strong, creditworthy utilities who are used to dealing with independent power producers (IPPs) and have a long history of putting forward bankable power-purchase agreements (PPAs).

Conditions in emerging markets are different, particularly in Asia where the interest in offshore wind is often driven by land constraints which can hinder large-scale onshore development.

Strong offshore winds abound in promising markets such as Indonesia and the Philippines — but then so do typhoons, which present design challenges for manufacturers who are only just starting to introduce typhoon-class turbines.

Some emerging markets see a good portion of their strong wind resource in deeper waters — as is the case for Vietnam, South Africa and Morocco — that will likely require floating foundations which are only now entering commercial production.

Power demand in many emerging markets — such as Sri Lanka and Bangladesh — is much less than in the UK, Netherlands and Germany, which calls into question the ability to deploy large gigawatt-plus offshore wind farms.

A lack of regional co-operation can drive governments to go it alone, building supply and value chains where they do not necessarily make sense. And finally, utility offtakers do not have a long history of IPP development and have some difficulty in putting forward bankable PPAs.

Faced with this context, we think that an ounce of prevention is worth a pound of cure. By working at this early stage with countries who see the potential for offshore wind, we can identify opportunities and properly assess risks from a technical, commercial, environmental and social perspective.

We can also help guide procurement mechanisms that are transparent and provide appropriate risk allocation between the public and private sector. The end goal is clear: bankable, international-standard offshore wind projects that provide reliable, cost-competitive power.

In March, the World Bank Group — through the Energy Sector Management Assistance Program (ESMAP) and the International Finance Corporation (IFC) — announced an initiative to assist emerging market governments assess their offshore wind potential and develop a pipeline of bankable IPP-led projects.

The $5m programme is being initiated thanks to a £20m ($26m) grant to ESMAP from the UK government to help low- and middle-income countries implement environmentally sustainable energy solutions. This effort will require close collaboration with the wind industry which is why we’re working with the Global Wind Energy Council (GWEC) and its Offshore Wind Task Force, consisting of world-leading OEMs, developers, consultants and supply-chain providers. We will also be drawing on the knowledge and expertise of national partners, think-tanks, financial institutions and NGOs. Ours is a big tent.

It is clear that there will be a learning curve. Initially, offshore wind projects in emerging markets will be more expensive than European ones. But by starting on the right foot with top-quality projects, we are confident that subsequent offshore wind projects will see rapid cost declines, reaching the point sooner rather than later where offshore wind is a cost-competitive part of the energy mix.

The opportunity is particularly great where power demand is close to strong offshore resources — as is the case for Gujarat, São Paulo, Ho Chi Minh City and Manila — thus reducing the needs for long transmission connections.

We’ve seen that it can take years for countries to put in place the policies needed to nurture development of a sustainable, competitive onshore wind industry. In many cases, they encounter early difficulties in establishing an appropriate framework and consequently experience several false starts. But when they get it right — as shown by India, South Africa, Argentina, Brazil and Mexico — they can quickly become global leaders and drive down costs in a short period of time. 

As a first step, the World Bank Group and GWEC will be bringing together representatives of emerging market governments and utilities to meet on the sidelines of the Global Offshore Wind 2019 conference in London in June. We look forward to working with our public and private-sector partners in taking offshore wind global. The time is right and we hope that all of you can join us in this ambition.

Sean Whittaker is senior renewable-energy specialist at the International Finance Corporation, part of the World Bank Group. IFC has financed over 4GW of wind projects in 18 countries including Chile, Argentina, Jamaica, Mexico, South Africa, Jordan, Romania, Sri Lanka, India, and Pakistan.

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How can we accelerate offshore wind in emerging markets?