Offshore wind has ‘colossal six months’ in first half of 2020

The data, drawn from BNEF’s database of deals and projects, show that one sub-sector of renewables – offshore wind – had by far its busiest half year ever for final investment decisions, and this more than offset declines in investment in solar, onshore wind and biomass.

Offshore wind financing in H1 2020 totalled US$35Bn, up 319% year-on-year and well above 2019’s record full-year figure (a revised US$31.9Bn).

The first half of this year saw investment decisions made on 28 sea-based windfarms, including the largest ever, the 1.5-GW Vattenfall Hollandse Zuid array off the coast of the Netherlands, costing an estimated US$3.9Bn.

Other major offshore deals included the 1.1-GW SSE Seagreen project off the UK at an estimated US$3.8Bn; the 600-MW CIP Changfang Xidao array off Taiwan at an estimated US$3.6Bn; and the Fecamp and Saint-Brieuc projects in French waters, together totalling 993 MW and US$5.4Bn. There were no fewer than 17 Chinese installations financed led by the Guangdong Yudean Yangjiang Yangxi Shapa at 600 MW and US$1.8Bn.

BNEF head of analysis Albert Cheung said, “We expected to see Covid-19 affecting renewable energy investment in the first half, via delays in the financing process and to some auction programmes. There are signs of that in both solar and onshore wind, but the overall global figure has proved amazingly resilient – thanks to offshore wind.”

Head of wind analysis Tom Harries said, “Offshore wind is benefiting from the 67% reduction in levelised costs achieved since 2012, and to the performance of the latest, giant turbines.

“But the first half of this year also owed a lot to a rush in China to finance and build, in order to take advantage of a feed-in tariff before it expires at the end of 2021. I expect a slowdown in offshore wind investment globally in the second half, with potentially a new spike early next year.”

Overall investment in new renewable energy capacity (excluding large hydro-electric dams of more than 50 MW) was US$132.4Bn in the first half of 2020, up 5% from a revised US$125.8Bn in the same period in 2019. Onshore wind investment slipped 21% to US$37.5Bn, while that for solar fell 12% to US$54.7Bn.

BNEF chief editor Angus McCrone said, “A clearer picture of the impact of Covid-19 on green energy investment will come with the full-year 2020 figures. Renewables have been helped by vastly improved competitiveness and by investor appetite for assets offering secure cash flows.

“However, project developers face the challenge that key people, whether at the permitting, financing or construction stages, cannot meet face-to-face. And buyers of small-scale solar systems are sensitive to changes in consumer confidence.”