Three key trends are shaping the growth of the global offshore wind market, according to a report from Wood Mackenzie
Citing a global offshore wind development portfolio which it said has grown to 261 GW and continues to grow, Wood Mackenzie senior offshore wind analyst Søren Lassen said important changes are taking place in the ownership and development of offshore wind, and in the size of companies involved.
“With growth and ongoing consolidation as the backdrop, three key trends are shaping offshore wind asset development and ownership,” he said.
“First, leading European players are pursuing higher returns by breaking into emerging markets. Second, the pool of offshore wind investors is being reshaped and expanded, and third, more and more consortiums and alliance are being formed to respond to tenders.
“Ambitious European companies are looking to emerging markets for partnerships and acquiring project pipelines and companies to position themselves for future growth. We saw a spike in offshore asset transactions in 2018 of 19.5 GW – 69% of which came from emerging markets such as the US, Taiwan, Poland and Ireland.”
Mr Lassen said emerging markets with maturing regulatory frameworks are the most appealing targets and offshore wind developers are prepared to invest a significant amount of money to break into new markets, whether acquiring project pipelines or companies. “Both are on the table in some cases,” said Mr Lassen, “as with Ørsted’s acquisition of US offshore wind company Deepwater Wind.”
Although European players dominate the pursuit of new opportunities in the offshore wind industry, only one European company has so far secured a pipeline in China, and Chinese state-owned companies have cornered a huge domestic pipeline of 84 GW.
The pool of investors in offshore wind is expanding as institutional investors, conglomerates and oil and gas majors get involved in the offshore wind market. This growing investment appetite is fuelled by a better understanding of construction and development risks at institutional investors, combined with eagerness on the part of oil and gas majors and conglomerates in the Asia Pacific region to break into the offshore wind industry. “This trend is also apparent in US lease auctions,” said Mr Lassen, “where Shell and Equinor have secured capacity in two of the past three auctions.”
As competition in the market increases, Mr Lassen said Wood Mackenzie has identified a growing number of consortia being formed to respond to tenders. “Almost 90% of the companies participating in tenders in 2019 are expected to participate as part of a consortium,” he said. “Moreover, alliances are increasingly being used by developers to break into and strengthen their position in new markets. In 2018 alone, 15 alliances were formed.”