Offshore wind power will mushroom to become a main engine of the transition toward a decarbonised global energy system in the coming decades, with the worldwide fleet expanding 15-fold to reach at least 340GW by 2040, according to a new report released by the International Energy Agency (IEA).

The IEA’s Offshore Wind Outlook 2019, which dovetailed industry data with a specially commissioned geospatial analysis that maps out wind speed along hundreds of thousands of kilometres of coastline around the world, calculates that the resource could in the next 20 years become a “mainstay of the world’s power supply” while creating a market valued at more than $1trn.

“We will need a host of low carbon technologies ... to meet our global climate and environmental challenges … and although offshore wind [currently] provides only 0.3% of our electricity supply we are witnessing auctions with strike prices falling very steeply and showing offshore wind to be competitive already with certain fossil fuels and [offshore wind] technologies are advancing very rapidly,” said the IEA’s chief energy modeler, Laura Cozzi. “Offshore wind has huge untapped potential – it is just mind-blowing.”

The IEA analysis found that offshore wind has a technical power production potential of 36,000TWh a year for installations in water depths of less than 60 metres within 60km from shore, while current global electricity demand stands at 23,000TWh, and that by moving farther from shore and into deeper waters and adding floating wind plants to its ranks, could unlock enough potential to meet the world’s total electricity demand 18 times over by 2040.

Europe, the current market pace-setter with 20GW installed, is forecast to continue to lead the global pack for the next two decades, with expectations of some 130GW turning offshore by this date – though China by this point is foreseen having at least 110GW online and being on track to outpace Europe’s build-out by mid-century.

The US, meanwhile, is forecast to be in line for “substantial growth” by 2040, with its fleet swelling to around 40GW, while Korea, India and Japan would all see tens of gigawatts of offshore wind turbines installed.

“In general, this goes from a market that has been concentrated in the European Union to one that is truly worldwide – all feeding in to [lead to] a 15-fold increase [in installed offshore wind power],” said IEA head of power generation analysis Brent Wanner. “The market opportunity is very large here. And there is even greater, longer-term potential.”

Based on current investment plans and policies, the IEA report projects that the worldwide offshore wind market will expand by 13% a year, by 2030 witnessing more than 20GW of additions annually – though it notes that for global climate and sustainability goals to be met, the build-out would need to be “must faster”, around double that build-out rate.

The report highlights the success offshore wind has had in cutting costs from over €200/MWh to below €60/MWh and the prospect of further “sharp” reductions taking the global levelised cost of energy another 40% lower by 2030 “to between €30-40/MWh”, and nearly 60% by 2040.

“This is related to the falling cost of [turbine] foundations, the higher performance of the turbines, as we as from efforts on the operations and maintenance side. We are seeing the industry really maturing here,” said Wanner. “Capacity factors [for offshore wind farms] are climbing from 43% in 2018 toward over 50% in the years to come.

“This puts [offshore wind] on par with some dispatchable technology such as gas-fired generation – the world average for which is around 50%,” said Wanner, noting offshore wind’s capacity factors are already “three times as much as solar PV and significantly more than onshore wind”.

The report also spotlights that offshore wind’s high capacity factors and tumbling costs “make it a good match” to produce green hydrogen, which could be used help decarbonise various heavy-emitting industrial sectors such as steel and shipping, as well as in heating and transport.

“This spectacular growth could have impacts beyond the electricity sector,” said Cozzi. “We see it having potentially another important role in the production of green hydrogen. By 2030, we foresee offshore wind being able to supply hydrogen at a cost of $20/mbtu [million British thermal units, the traditional unit measure of heat] – comparable to hydrogen being produced by other sources. including natural gas, today.”

The report authors caution that governments and regulators need to “clear the path ahead” for offshore wind’s development “by providing the long-term vision that will encourage industry and investors to undertake the major investments required” to build and link projects on land-based power grids.

This, said Wanner, will call for “careful market design” to ensure low-cost financing and regulations that take into account that the development of onshore grid infrastructure is “essential” to the integration offshore wind power production.

“Industry needs to continue the rapid development of the technology so that wind turbines keep growing in size and power capacity, which in turn delivers the major performance and cost reductions that enables offshore wind to become more competitive with gas-fired power and onshore wind.”

“The growth of offshore wind into a trillion-dollar industry in the coming decades cannot be taken for granted,” said Cozzi.

The International Renewable Energy Agency last month doubled its 2050 forecasts for offshore wind, saying it now expects more than 1,000GW will be installed and turning around the world by mid-century.