New research from Douglas-Westwood forecast offshore wind installations are likely to see an average of 3.2 GW installed and €15 billion ($19.5 billion) of investment per year for the next ten years, hitting a peak in 2016 of €18 billion.
According to the fifth edition of Douglas-Westwood’s (DW) World Offshore Wind Market Forecast, there will still be numerous challenges constricting the market, constraining the development of offshore wind technology and deployment, including the high cost levels associated with the industry.
The report presents a longer-term forecast of the offshore wind industry than previously, and examines the key commercial developments since the last report was published.
“For many countries, including the UK and Germany, offshore wind is a key component in the future electricity generation mix, to date, the UK market has been the main driver of growth, with many important lessons learned along the way,” said report author Dmitry Dovgan. “At the current time, we see increasing activity in Germany with a large amount of new capacity set to come online in the near future.”
“Historically, growth has been slower than expected, and many uncertainties are yet to be resolved,” added DW manager Frank Wright. “However, there is a positive upward trend, with significant expenditure expected, which has attracted many of the largest industrial players from Areva to Samsung Heavy Industries.”
DW specifically address the concerns of a growing industry in an economic environment set for constriction:
Capital outlays and recurring operational spending mean that subsidies are required to support development, at a time when the public finances in key markets such as the UK and Germany are squeezed and the consumer is seeing an upward trend in energy prices. This makes it increasingly difficult for governments to justify support, leading to a focus on identifying cost reduction strategies including tandardisation of business practices and development of larger wind turbines designed specifically for the offshore environment.
The offshore wind sector faces additional challenges as well, including the risks associated with offshore construction, new wind turbine technology, and offshore operations all contributing to make finding additional financing a tricky proposition at best.
However, while DW believe that the current trend of reliance upon utilities to self-fund these investments is unreliable, the good news is that they predict the offshore oil & gas sector will soon enter the fray, and with new wind turbines proving their reliability, will see the sector gain a foothold to start moving forward.
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