June 25, 2017

Global Wind Energy Insight: Offshore Breakthrough

‘A remarkable achievement,’ is the only thing I can say about where the European offshore wind industry finds itself today. It has taken a lot longer and cost a lot more money and effort than we thought back in the late ’90s, but the industry has exceeded its pricing targets by a significant margin and well ahead of the timeframe it set itself, i.e., less than €100/MWh (US$112/MWh) by 2020.

We now have another large-scale and cost-competitive renewable energy technology to add to onshore wind and solar (and of course hydro) with which to bring about the energy revolution in the power sector. Despite all the doubts that emerged over the course of the last decade as projects got larger and more expensive, and as offshore wind struggled to establish and ‘industrialize’ itself, those who have stayed the course are now in a position to reap the rewards.


Cratering prices, a new generation of machines, maturation of the supply chain and continuous improvement through experience have brought the European industry to the point where it can now supply competitively priced renewable power in very large volumes. A new Wind Europe report suggests that this could be 25 percent or more of Europe's electricity demand if key countries increase their ambition to the level required (at least 4 GW/year) to ensure the market volume needed to support continued improvements in the technology and the industry.

Indeed, Germany, Belgium and Denmark signed an agreement earlier this month committing themselves to significant support for new offshore development in the period after 2020, but stopped short of committing to the specific numbers that would get the industry to the 6-7 GW/year necessary for the industry to reach its full potential. The Netherlands has already indicated an increase in its post-2020 ambition, but again, it doesn't set the specific targets the industry is looking for. 

This heightened ambition will be necessary to support the development of even larger machines, for which there were several announcements at the recent Offshore 2017 conference in London — Vestas V-164 has been uprated to 9.5 MW, Senvion has announced a 10-MW+ machine by 2022; Seawind has announced financing for its prototype 6.2-MW two bladed machine, and we're waiting for news on the Siemens Gamesa 1X (10 MW+) turbine. Most of all, people are wondering who's going to be making the 13-15 MW machines necessary for Dong and ENBW to build their 'subsidy-free' projects in Germany by 2024. Not many doubt that it will happen, but the who, when and how remain to be seen.

So now we have to take this show on the road, beyond Europe to countries in Asia, North America and beyond. In recent weeks, there was even an announcement for a 2 GW offshore project off the southeastern coast of Australia.

It won’t be easy. While the machines can be exported, and eventually put into production elsewhere, it is the foundations and associated infrastructure and electrical connection technology that have been a challenge from a technical, logistical and financial point of view. In addition, there is the massive investment in infrastructure which is required: ports, rail links, staging areas, acquiring the appropriate vessels and the rest. All of this requires the kind of joined up thinking between national and local government in concert with industry, which is all too rare.  

What Lies Ahead for Floating Offshore?

Floating offshore wind is in roughly the same place that its bottom-mounted counterpart was at turn of the century. With the technology now moving beyond the demonstration phase and into the pilot phase there are many optimists within the new sector that see floating offshore playing a key, if not the major, role both in Europe and in markets around the world that do not have the same favorable sea-depth characteristics of the broad shallow continental shelf in the North and Baltic Seas.

The potential in European waters alone is estimated at 4,000 GW. However, scale and financing are critical, and floating offshore will have to overcome many of the same barriers that fixed-bottom offshore has faced in terms of narrowing the currently broad range of platform design options, and developing an efficient supply chain. There are also a host of methodological and practical issues that will need to be addressed. This will take time, and money — lots of it; and whether and when the market will have the appetite remains the question. However, floating offshore has definitely moved beyond the 'just another crazy idea' stage and will become a part of the global offshore market in one way or the other in the future, and may someday eclipse its bottom-fixed forbear.

To Build New Empires Offshore?

Offshore is going global, but it will be dominated by Europe, and by fixed bottom technology, at least for the medium term. Over the longer term, this technology offers opportunities for multi-industry collaboration and transformation across the energy sector. In an age when a handful of traditional oil and gas companies are looking to redefine their long-term goals, offshore wind offers a creative and viable opportunity for these behemoths — not just in Northern Europe but across the Americas, Asia, some parts of the Middle East and elsewhere.

In the medium term, however, the bottom-mounted industry is set to boom, not only in Europe, but also in China and potentially in the United States, as well as in Taiwan, Japan, South Korea and, we trust, in India.



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