Asia’s pathway to a low carbon future is challenging. Coal dominates in the key markets of China and India, gas is central to the power sectors of Japan and South Korea, but offshore wind offers enormous potential – up to 1,500 GW of technical potential, according to Wood Mackenzie Asia Pacific vice chair Gavin Thompson
Mr Thompson and his colleagues anticipate that by 2030, 5% of this massive potential capacity will be in place, with new annual offshore growth in Asia doubling from 4 GW a year to over 9 GW a year.
“China is Asia’s largest offshore wind market today, with the strongest pipeline of future projects,” said Mr Thompson. “We now expect 38 GW of new added offshore wind capacity to come online in China by 2029. And while China has no official target beyond 2020, its project pipeline will support offshore wind growth in the long-term.”
But Wood Mackenzie believes challenges still need to be overcome. The Chinese Government plans to remove current subsidies by the end of 2021, slowing the rate of growth over the next five years while costs remain relatively high. “Through the short term we will see record new offshore installations – up to 5 GW – as developers race to complete projects before feed-in tariffs expire next year,” Mr Thompson explained. “Thereafter the pace of growth is likely to slow as China offshore wind needs up to US$32/MWh of subsidy to support new capacity additions from 2022 to 2025. Falling costs should see wind competing without subsidy by 2028.”
Looking across the rest of Asia, future growth targets are ambitious. Excluding China, the region aims to add a further 54 GW of wind by 2030.
To achieve this, Mr Thompson said, supportive policy is essential. Some markets are taking the lead, with Taiwan leading the pack, having approved 5.7 GW of projects by 2025.
As he also noted, the opportunities for business to prosper through the growth of the offshore wind sector is not limited to capacity investments. Supply chains are a critical part of the sector and are experiencing huge growth.
“We estimate the offshore turbine supply chain presents more than US$200Bn of opportunity in the next decade globally. Offshore growth in Asia offers scope for turbine supply chain localisation in those markets. The supply of key components has seen a consistent shift towards Asian markets over the past decade. Chinese OEMs dominate the domestic markets, although western OEMs have achieved success in other countries in Asia.
“The ambitious targets for offshore wind in many Asian markets provide a glimpse at how the region will move towards a lower carbon future. The sector will also create new opportunities for energy companies, supply chain manufacturers and investors. But this will need support. As with all aspects of the energy transition, government intervention and policy are critical to long-term success.”
In June, Riviera held a series of webinars on offshore wind. These are available to view in our webinar library