Global offshore wind power capacity is expected to increase almost sixfold over the next decade according to a new report from Wood Mackenzie Power and Renewables, growing from being deployed in only 7 countries at the end of 2017 to 18 countries by 2027.
Wood Mackenzie Power and Renewables published a new report towards the end of January entitled Global offshore wind industry dynamics 2018 which looks at how the global offshore wind industry will evolve over the next 10 years. Locked behind an industry-specific pay-wall, the report predicts that not only will the global offshore wind industry begin to evolve beyond the boundaries of the traditional European markets the industry has grown up in, but that it will expand to 18 countries by 2027, resulting in an almost sixfold increase in capacity over the same forecast period.
With this geographical expansion beyond a handful of markets in Europe comes an attendant focus on local content policies for developers and suppliers as governments seek to strengthen their local industry and open up more job opportunities for local labor forces. “While the influence of local content policies has been limited thus far, these policies will impact 72% of future demand,” explained Soren Lassen, leading author and offshore analyst with Wood Mackenzie.
One of the key factors for the global growth of the offshore wind industry will be the role of next-generation wind turbines which will start out the next decade between 10-12 megawatts in size and grow as demand continues to push development. With larger wind turbine capacity comes the need for fewer turbine installations which will impact the balance-of-plant segment of the industry and, according to Wood Mackenzie, will decrease the average monopile weight per-megawatt by 36% by 2023 in Europe, while the average installation time per-megawatt has for turbine and foundations has been halved in Europe since 2010 and is only expected to continue over the next decade. Similarly, transmission space is also undergoing what Wood Mackenzie analysts describe as “holistic innovations” as capacities are increased and materials are reduced.
Further, Wood Mackenzie expects the average capital expenditure for European offshore wind projects to drop quickly as increased competition in wind farm development, an increase in wind turbine size, and economies of scale begin to make their mark on the industry. “[Capital expenditure] and [operational expenditure] across Europe will drop, on average, by 36% and 55% respectively by 2027,” said Shimeng Yang, report author and European offshore analyst. On top of that, offshore levelized cost of energy (LCoE) across Europe will also drop with “the average LCOE across Europe for grid-connected projects expected to reach 53.6 EUR/MWh by 2027, dropping from approximately 107 EUR/MWh in 2018,” according to Yang.
As the global industry expands beyond the traditional European boundaries so too will Europe’s experience and scaled-up industry begin to expand the reach of Europe’s supply chain and expertise. “The proliferation of demand in new markets globalizes the European supply chain and motivates the entry of new suppliers,” explained Lassen. “This is particularly true when supported by local content policies as the pressures in Europe lead to consolidation across the European supply chain – especially in the installation segments.”
Wood Mackenzie also expects offshore wind to become an ever-increasingly attractive option for the oil and gas industry who are looking to leverage their existing offshore experience.
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